Covid: What help is available to pay my bills?

The UK’s various lockdowns have one unifying feature – a squeeze on the finances of many whose jobs have been affected.

There is some help available if you are struggling to pay your bills, but it will usually require action on your part.

This is many people’s biggest monthly bill. Since the pandemic started, some two-and-a-half million homeowners have taken a mortgage holiday.

That means they deferred the payment, but will probably have to pay more each month when repayments resume.

In England’s new lockdown, anyone can still request a mortgage holiday, unless they have already had one for six months,

the City regulator – the Financial Conduct Authority (FCA) – has proposed.

A new one can last for six months. An existing one can be extended to last for six months in total. Applications can be made before the end of January, under the new plans.

Under the FCA’s plans, there will be no repossessions before 31 January, unless a homeowner specifically asks for one.

In addition, a mortgage holiday should not show up on your credit record, so should not affect future borrowing.

That said, future lenders may ask other questions to find out whether you have had previous difficulties paying.

In these cases, the FCA proposes that your lender gives you “tailored support”.

They will assess your circumstances and devise an arrangement that could include extending the mortgage term, accepting partial payments, or – only in the short-term – another deferral.

However, this will show up on your credit record.

For tenants, the situation is less clear-cut.

The best option is to talk to your landlord, explain your circumstances and agree a payments arrangement.

It is likely to be in the landlord’s interests to do this, as eviction is likely to be a drawn-out process.

Courts will remain open to hear eviction cases but, in England, bailiffs will not be used to enforce evictions until 11 January at the earliest – except in the most serious cases.

There is some financial help to pay the rent through the benefits system if, for example, you are on universal credit.

Some hardship funds are also available in some UK nations.

Again, the FCA is proposing an extension of the payment deferrals system seen during the first lockdown.

About two million people made use of payment holidays for loans, credit cards, and other debts in the spring and summer.

Similar to the proposed mortgage system, payment holidays for credit can be extended to six months, or taken for the first time.

This is also true of motor finance, rent-to-own, and buy-now-pay-later products, and for pawnbroking customers.

Again, if you have used up your six-month holiday, ask your lender for other, specific support. This will be marked on your credit file.

There is short-term assistance for what is generally a short-term, high-cost product.

Payday loan customers who have not yet had a payment deferral will be eligible for a one-month payment holiday.

There is a host of free guidance and advice available, including:

During the spring lockdown and up until the end of October, borrowers had an interest-free buffer for the first £500 of an overdraft.

This is not being extended. So, customers are now facing overdraft interest rates, typically of 40% – a rise for many on what it cost at the start of 2020.

Pre-payment meter users who cannot top up, possibly because they are self-isolating and cannot get to the shops, will be helped.

Meanwhile, any gas and electricity customer struggling to pay will be offered a “realistic and sustainable repayment plan”.

So far, these have been voluntary agreements with suppliers, but will become a regulatory requirement from 15 December.

Customers who had payment holidays or who are struggling financially may have their risk reassessed to make a policy cheaper, be given more time to pay, or have charges reduced or cancelled.

However, anyone finding it difficult must contact their insurer, rather than their insurer contacting them.

Councils have a hardship fund designed to reduce payments for those finding it hard to pay.

Bailiffs are unlikely to pursue other debts during lockdown.

Lenders have a duty to identify and support those who are vulnerable, and mental health issues will fall into that category.

Is is important to seek free, independent advice and not to bottle up any serious concerns.

Nobody knows when that will be. The regulator is keen to stress that a debt problem delayed is not a debt problem solved, so you should make repayments if you can.