Catalogue and store debts – what you need to know

August 3, 2016

If you have any catalogue or store debt, your creditors may be able to take legal action to recover the money through the courts. The flexible ‘buy now, pay later’ terms offered by catalogue companies are very attractive, but can encourage people into debt if payments fall behind.

That’s why, if you owe money to a mail order catalogue company, it’s important to take action quickly so your financial position doesn’t decline any further.

How do catalogue repayments work?

Catalogue companies such as Very, Littlewoods and Shop Direct, offer special deals with low rates of interest, or no interest added. Repayments can usually be made on weekly or monthly terms, generally over a period of between 20 and 40 weeks. If payments are always made on time, it can be a very convenient way to shop.

Problems arise, however, if a single payment is missed. This often triggers the removal of any 0% interest offer, and the application of a high rate of interest – sometimes as much as 40% APR. You could also be charged a late payment fee, and further charges for chasing the debt.

The prices in some catalogues may also be higher than on the high street, to reflect the convenience of this type of shopping. It’s also worth noting that some companies regularly increase customers’ credit limits, providing an incentive for them to buy more.

Add to this the potentially high rate of interest when a payment is late, and without great care, this combination of circumstances can result in a sudden decline into debt.

Acting as an agent for the catalogue company

A further issue arises if you sell catalogue goods to your friends and family, collect their payments, and send them off each week or month. It’s important to keep these accounts separate from your own, so you don’t become liable for your customers’ debts.

Keeping good accounting records means that if one customer misses a payment, you can send their details to the catalogue company, and shouldn’t be involved in any recovery action taken.

Additionally, you should have a separate credit agreement between yourself and each customer, as well as with the company. It’s interesting to note that if there’s no signed credit agreement between yourself and the catalogue company, they may be unable to enforce the debt.

If you’re unsure about whether or not you signed an agreement, a copy should be requested in writing. The company then has a period of 12 days to send the agreement if there was one – after which time they may not be able to hold you liable for monies owing.

How to deal with catalogue and store debt

When you know that a payment is going to be missed, you should contact the catalogue company to explain why, as you may be able to negotiate a lower repayment amount. If they’re not open to negotiations, several formal insolvency procedures exist that will help.

In Scotland, the Debt Arrangement Scheme (DAS) allows people in debt to pay an affordable amount each month, without the fear of legal action by creditors. This and other options, such as a Trust Deed, freeze all interest and charges so the total amount owing doesn’t increase. At the end of the arrangement, any remaining debt is written off.

For more information about the options for repaying catalogue and store debt, contact the team at Scotland Debt Solutions. We’ll guide you on all the available options, and help free yourself from debt.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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