We all enjoy having the option to spread the cost out, especially at times like birthdays, Christmas or other holidays when money is tight. ‘Buy now, pay later’ schemes can therefore be very attractive. However, they can also cause debt to build over time. 

What is catalogue debt?

Catalogues provide a method of buying in which you either pay in full at a later date or spread the cost over time, making weekly or monthly instalments. When purchasing this way, you open a credit account with a catalogue company who you then owe catalogue debt to.

However, these often come with high interest rates, meaning your catalogue debt can build up over time, making it a more expensive way to pay. High interest rates could also lead to your account being in persistent debt, which is when your minimum payment can’t cover both interest and the amount owed. If you receive a letter about this, the creditor will ask you to take action to stop your persistent debt within 36 months.

Catalogue debt is considered a ‘non-priority debt’, meaning that paying your household bills and living costs are more important. That doesn’t mean you should ignore it though — or ask for help and advice if needed.

What happens if I fall behind on my payments?

If you miss a payment, the initial response from the creditor will be to contact you, asking you to catch up and make the payment. However, if you can’t, you will likely receive a default notice, which gives you at least two weeks to pay the full amount remaining. You can ask to pay in instalments but it is up to your creditor whether they agree or not. If you can’t pay in time, your account will default, meaning your contract with the creditor may be cancelled and the creditor can take further action to collect debt.

Examples of further action include the catalogue company passing the debt over to a Debt Collection Agency (DCA). It’s important to note that DCAs don’t have legal powers, meaning they can only ask you to make a payment arrangement. However, if the situation escalates, the creditor may take legal action, meaning an enforcement agent or ‘bailiff’ can pay you a visit. You will receive warning, however, and in the case of collecting catalogue debt, they are not allowed to force entry into your home.     

Can I cancel or return my catalogue purchase?

Most purchases from catalogue companies have a two week cooling off period, meaning you can cancel the order up to 14 days after you receive them. You may have to pay the postage costs and go to the post office yourself. However, this is only a small fee in comparison to paying high interest rates for items you don’t want.

You’re also entitled to a refund or replacement if the item you receive isn’t as described or is faulty in any way.

Will catalogue debt affect my credit score?

As catalogue debt is a credit agreement, it will impact your credit score. Although catalogue debt can help your credit score when you make your payments on time, it does risk your credit rating if you fall behind. It’s therefore important to avoid the debt where possible in the first place and if you’re already in debt, try to clear it as soon as you can to minimise the effect on your credit score.

Can catalogue debt be written off?

If you can’t pay off your bad debt catalogues, seek debt advice to find a debt solution that works for you. As catalogue debts are unsecured, there is no collateral, such as your house, which can be repossessed if debt is secured against it. Therefore you may choose to take out an Individual Voluntary Agreement (IVA) which covers most unsecured debts. An IVA is an agreement between you and your creditors to repay your debt over a set period of time, usually five or six years. When this time has passed, the remaining balance is officially written off.

Are you struggling with catalogue debt?

Dealing with debt can be really stressful and anxiety-inducing but there is help and advice available. At MoneyPlus, we will take the time to understand your financial situation and offer guidance on how to be in control of your debt again. Don’t hesitate to reach out for advice from our specialists today.