Your questions answered

June 30, 2020

Every month we receive thousands of questions from consumers about their rights when things go wrong. Here are some of the most common queries we received during the last month….

Q: I was temporarily let go from my job in April, as a result of the COVID-19 situation. Thankfully, my husband retained his job, but our household income was significantly reduced. To help alleviate some of the financial pressure on us at the time, we applied for a mortgage payment break for three months. We also got into a habit of using our credit card to pay for our utilities, weekly shopping and online orders. As a result, we’ve accumulated a considerable amount of debt on our credit card. I will be back at work next week but our mortgage payment break is due to come to an end next month. How can we get our finances in order, so that we can meet our regular payments again?

A: The COVID-19 situation has affected many aspects of our lives, including our personal finances. In situations where we are suddenly trying to manage the household bills on much less it can result in us falling into debt.

Firstly, it’s important to be aware of the financial supports available to you. Government departments and a number of financial institutions are now offering a range of financial supports, including payment breaks for mortgages for up to six months. If you are worried about resuming your regular mortgage repayments at this time, you should contact your bank directly to discuss your options.

During these challenging times, it’s so important to look after your financial wellbeing, and managing your credit card debt is central to this. There are a number of steps you can take to get you on track to being debt free.

  • Stop using the credit card: If you want to clear your debt, you need to stop adding to it.
  • Make a repayment plan: Start by figuring out how much you can pay each month. It is important that you pay as much as you can afford. By paying more than the minimum repayment by even a small amount you will reduce the time it takes you to get debt free and will save you money in interest. The CCPC has a free credit card calculator to show you how long it will take you to clear your debt.
  • Check out if switching could save you money: Credit card interest rates currently range from 13.8% to 26.6%, so it could pay to switch. Some financial providers offer a 0% interest on transferred balances for a limited introductory period. So, if you move your balance, every cent you pay will reduce your debt, as you won’t be paying any interest for that period of time. Check out the CCPC’s credit card comparison tool to see what’s on offer.
  • Consider taking out a personal loan: Although you may feel reluctant to take on more debt, it might make better financial sense to take out a personal loan to pay off your credit card debt. Interest rates on personal loans are generally lower than on credit cards. If you do this, make sure you stop spending on your credit card, or else you will be faced with both the loan repayments and credit card repayments. Check out the CCPC’s personal loan comparison tool to compare the costs of loans and to work out what your repayments would be.

Learn to manage your credit card. There are some small steps you can take to help you keep your debt to a minimum and ensure that your credit rating is not affected.

  • Firstly, try to keep your credit limit low and don’t view it as a spending target.
  • Consider reducing the credit limit to an amount you can comfortably afford to repay every month, so you are not able to run up debt you can’t repay.
  • Set up a monthly standing order or direct debit for the minimum monthly repayment, or more if you can afford it, to avoid late payments.

 

Q: I recently placed an online order for electrical goods from a local business. I’ve since heard rumours that they are struggling financially, due to the effects of the COVID-19 situation, and are on the brink of closing down. Am I entitled to a refund if I’ve already paid for the items and they go out of business before my order arrives?

A: It can be worrying when you hear that a company is closing down or has gone out of business, if you have bought goods which you have not yet received.

If the business goes into examinership, liquidation, or receivership, you will be treated as an ‘unsecured creditor’. A creditor is someone the company owes money to. If you have paid for the electrical goods that the business has not delivered yet, and it goes out of business, then you are a creditor, as they owe you money. However, as an unsecured creditor you rank behind secured creditors, such as Revenue, employees who are owed wages and banks that are owed money.

If a company changes ownership, the new owners may not have bought the previous owner’s liabilities. This means the new owners may not be responsible for fulfilling orders placed with the previous owner, which have not yet been delivered.

In general, if you have paid money to a business that closes down before your item is delivered, you can:

  • Contact the liquidator: If the business goes into liquidation before you receive your product, contact the liquidator to see if you can get the item.
  • Check online: Check the website of the business and also the website of the liquidator, examiner, or receiver to get the latest news on the situation. Contact the official appointed to look after the affairs of the business for further details.
  • Consider a ‘chargeback’: If you paid by credit/debit card for goods or services that have not been delivered, contact your card provider (usually your bank) to find out if it is possible for them to reverse the transaction using a chargeback. Find out more about chargebacks.
  • If you are trying to contact the business and they are not replying to you and you think they are gone out of business you could contact the Companies Registration Office (CRO) as they may be able to give you more information.
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