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COVID-19: We have answered some of our customer's most frequently asked questions
Brexit is arguably one of the most contentious issues of our time. Regardless of how you voted in the referendum, and the reasons for doing so, our decision to leave the European Union has created many questions – mostly relating to the future of our country and economy.
Although we could speculate how Brexit will affect food prices, trade options, or immigration – or even whether we will leave the EU at all – we’re not qualified to discuss those matters. What we are experts on, however, is debt.
According to one financial charity, households in the UK owe – on average – around £59,000 worth of debt. Although a significant sum, it could also be affected by Brexit. For example, in the event of economic uncertainty, it’s not completely unrealistic to imagine a situation where creditors could start calling in debts.
Realistically though, Brexit won’t have an immediate impact on your debts. Leaving the European Union probably won’t have any long-term effects either – although this is more uncertain.
Let’s take debt recovery as an example. The laws surrounding this issue aren’t tied into the EU and, generally, the matter is handled by our government. Consequently, there shouldn’t be any changes.
Considering that most UK debts are held by domestic companies, there probably won’t be any impact on how companies lend, request, or manage these sums.
Here’s the bottom line: If you’re currently in debt, and worried whether Brexit will affect how much you currently owe, you should be fine.
Many of the consumer rights enjoyed by UK customers are also found in EU law. For example, the protections associated with standard contract terms found in credit card applications and loans.
As these rights are now part of UK law, it seems unlikely these will change. However, if the UK decides to distance itself more from the European Union, we may see adopted EU legislation repealed or amended.
In so doing, this may make our laws feel more ‘British’ but – in reality – it could affect the terms and conditions of multiple financial products.
In the UK, we’re privileged to have a wide variety of flexible debt solutions and – due to the Insolvency Regulation – these measures are recognised across other EU member states, excluding Denmark.
Assuming Brexit concludes with no deal, there’s a possibility that the Insolvency Regulation will no longer apply. Therefore, if you qualified for an IVA in the UK, but live in Europe, this arrangement might no longer be recognised by default.
This is still an aspect which is unclear but it’s possible that cross-border regulation won’t automatically apply after Brexit. Chances are, both the EU and the UK will come to an agreement on this matter – but probably not immediately. As a result, Britons abroad could be left in the dark surrounding the status of their debt.
Brexit shouldn’t drastically affect current debts as most of the relevant regulations are already part of UK law. However, it’s important to note that many of the ramifications surrounding leaving the EU are still unknown.
Consequently, as the new deadline approaches, it doesn’t hurt to be cautious. If you’re concerned about the impact Brexit could have on your finances, contact one of our advisors today for a no-obligation chat about your circumstances. You can either get in touch today via email or by calling 0161 956 2691.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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Free money help and advice can be found at the MoneyAdviceService.org.uk