Could the end of the Furlough Scheme trigger a debt crisis?
As the government furlough scheme draws to a close at the end of September 2021, thousands of workers could be facing redundancies and job losses and could therefore be plunged into debt. Those who are already carrying debts could find themselves in serious difficulty. With an estimated 1.9 million people still on furlough in the UK, the impact of the scheme ending is set to be detrimental for many people.
What happens when furloughing ends?
The biggest concern for people currently on furlough is, what support will be available when it ends? The government has advised that there will be a Job Support Scheme (JSS) put in place for employers to help protect jobs if they are struggling with the impact of coronavirus on their business. The JSS will help employers to keep paying staff to reduce the threat of job losses. The scheme will come into play in October 2021, and it is planned to run for six months.
I am self-employed, what support is available for me?
For anyone who is self-employed, the Self-Employment Income Support Scheme, that is currently in place, will be extended for six months. This will run from 1 November 2020 to April 2021. If you’re self-employed, there are potentially two lump-sum grants that you could be eligible for, with each grant covering a three-month period.
- This will cover the period 1 November 2020 to 31 January 2021 – This is a taxable grant that will cover 80% of your monthly profits. It is one payment that will cover three months’ profits, up to a maximum of £7,500 in total.
- This will cover the period 1 February 2021 to 30 April 2021 – This second grant will also be paid in one lump-sum to cover the full three-month period. However, as of today’s date, the Government is yet to confirm how much this grant will be.
My income level has changed, how can I manage my debts?
Such change is not only incredibly worrying for your finances, but also for your mental health. So, it’s important that you try not to panic, there are lots of options for dealing with debts. There are also alot of good organisations that will be able to help you.
What debt solutions are available?
If your debts are below £5,000 and you feel that you are able to pay them back in full, within a relatively short time, but just need some breathing space, you may wish to consider an informal arrangement with your creditors such as a Debt Management Plan. There are lots of reputable charity organisations that can help you to do this.
However, if your debts are £5,000 or over and you are struggling to manage the monthly repayments on your household income, you may wish to consider a more formal route. In this case Bankruptcy, a Debt Relief Order or an IVA may be a much better option for you. If you have assets, such as your home or car that you would like to safeguard, an IVA may be a solution that could help you.
It is important that you are fully aware of the advantages and disadvantages of each. An Insolvency Practitioner can help you with this. It’s important you get independent advice to help you find the best way to deal with your debts. Organisations may offer advice in person or over the phone. You should choose an option that you feel comfortable with and one that best fits your circumstances. At Arthur Boyd and Company, we offer free face-to-face, video and telephone advice. We have over 26 years’ experience in helping people to become debt free.
Get in touch
If you are struggling with problem debt and want to know about the options available to you, get in touch to arrange a call from one of our specialist debt advisors. Our advice is confidential, impartial and there are no upfront costs. We are here to make the road to debt recovery a little easier.
Professional Debt Advice You Can Trust.