Catalogue Debt

What Is Catalogue Debt?

Catalogue debt is a form of credit debt, built up when you've purchased items from shopping catalogues - if the catalogue balance is not paid off, then you may find yourself in arrears.

Catalogue debt is classed as a 'non-priority debt'. It shouldn't be prioritised over essential bills, such as rent and utility bills, which are essential for your household. However, that doesn't mean that catalogue arrears should be ignored either, as having debt of any form will affect your credit rating and further action could be taken against you if your debt is not paid off eventually.

Catalogues can be expensive to buy from, and the interest rates are often high, so it's important to clear your debt as soon as possible. If payments are repeatedly missed, a debt collection agency may be contacted in order to try and recover the debt, which is something you want to try and avoid if possible. As an unsecured debt, catalogue debt can't be taken from your assets, but your credit file will still be affected.

Paying the Minimum Payments of Your Catalogue Debt

In a similar way to store cards and credit cards, catalogue companies allow you to pay off your debt in minimum payment instalments each month. Some people will see this as a positive, as you won't have to pay off the full amount all at once. However, paying only the minimum payment could lead to more debt accruing over time, as the amount may only cover the interest and not the debt itself, keeping you in a constant cycle of debt.

If, after 18 months, your debt is still ongoing, you may receive a persistent debt letter from the catalogue company. Persistent debt typically impacts people that choose the minimum payment option - those who have struggled to make any headway with reducing their debt. You will be deemed to be in this category of debt if you've paid more in interest and charges than the actual outstanding balance of the debt.

If you stay in persistent debt, the catalogue company will contact you once again at 27 months to ask you to increase your monthly payment. They’ll explain to you that doing so will mean paying back less overall.

At 36 months, you will be contacted again if your status still hasn’t changed. Here, you'll usually be offered an affordable payment plan based on your situation. If these ongoing payments aren't adhered to, or you remain in persistent debt, your account could be suspended, which will impact your credit score.

Can You Write Off Catalogue Debt?

The good news is that catalogue debt can be written off, with several different options available to you, depending on your circumstances. The best way to write off catalogue debt is to pay the debt off naturally when it occurs, keeping up with your regular, ongoing payments if you can.

If this is not possible, don't worry, as there are a variety of options available to you.

At NDH Financial, we specialise in IVAs, although there are a range of other debt solutions available too if you feel that an IVA isn't right for you.

Writing Off Catalogue Debt with an IVA

IVAs can be used to pay off catalogue debt - they're specifically designed to be used with unsecured debt, usually consolidating several debts from different creditors together into one affordable repayment plan.

An IVA is arranged by an insolvency practitioner. It is a legally binding agreement between you and your creditors to pay off your debt. Instead of having to keep track of multiple ongoing payments to several different creditors, you pay one direct payment to your insolvency practitioner, who will then deal with the creditors on your behalf. This makes an IVA a lot less time consuming to manage.

As IVAs are legally binding, both you and your creditors have to follow the terms of the agreement, and you have to continue to pay the contractual payments until the IVA has elapsed. However, a major positive of using an IVA is that your creditors aren't allowed to keep contacting you once the agreement has been set up.

An IVA will typically last for 5-6 years, with any outstanding debt left after the end of the arrangement generally being cleared after this time, although this isn't always set in stone. At NDH Financial, we’ll liaise with your creditors on your behalf and distribute the money evenly from the contractual payments you supply each month.

For more information about IVAs, head to our IVA Learning Hub. If you think an IVA might be right for you, get in touch today via our online form for a no obligation consultation call.

Will Catalogue Debt Affect My Credit Score?

The answer to this question is yes, catalogue debt will affect your credit history, as it's classed as a credit agreement, just like store cards and credit card payments.

Because of this, it's important to try and limit your spending and avoid getting into debt in the first place, if you can. If this isn't possible and you're already in debt, then you should attempt to clear the debt as soon as you can to minimise the impact on your credit score. If your credit score is affected, it could lead to difficulty in any future applications you make for other forms of credit, such as credit cards, phone contracts and mortgages.

Debt solutions such as IVAs will also affect your credit score - however, your score would be affected regardless, and a debt solution may help you to recover your finances and credit history at a quicker rate.

Once your IVA has been completed and 6 years have passed, the negative aspects from your previous catalogue debt should be wiped from your credit report. From here, you can begin to start building your rating back up again.

Like credit cards, catalogue debt can actually help your credit score so long as you pay off your outstanding balance within the time frame given. In this instance, you are showing future potential creditors that you can be trusted with their money. However, if you only make the minimum payments, your credit score will be affected.