Does a creditor have to stop interest and charges?
Several important codes of practice in the credit industry say that creditors should consider stopping or reducing charges and interest on a debt if you tell them you’re in financial difficulties.
These include the Lending Standards Board Lending Code [PDF] and the Credit Services Association Code of Practice [PDF]. The majority of large UK consumer credit lenders and debt collectors are signed up to one of these codes, or something similar.
In practice, it’s unusual for a creditor to continue adding interest over a long period if you’re in financial difficulties. If you have arrears on your account, eventually it’ll default and the creditor is likely to pass the debt to a collection agency. It’s also rare for interest and charges to continue after this point.
If you’re struggling to pay and you want a creditor to consider stopping interest and charges, you’ll need to let them know about your situation. They’ll usually want more information from you about your income, living expenses and other debts. We can help you get this information together - use our online debt advice tool for help.