If you’re dealing with Little Loans debt, this usually means that you’re in debt to one of their lenders. This is because Little Loans are a credit broker, which means they find you a lender and take commission from that lender.
If you haven’t responded to your Little Loans lender or paid your debts for a long time, you may be being chased by debt collectors. While this is stressful, debt collectors don’t have nearly as much power as they make out, and there are lots of ways you can get debt free for good, no matter how much you owe.
It’s important not to ignore debts and debt collectors, though. Although debt collectors can’t do things like enter your home, remove your goods or send you to prison, they can eventually take you to court over the debt. This could end in a County Court Judgement (CCJ), with bailiff action, or an Attachment of Earnings order, where money is taken directly out of your wages to pay your debts.
The good news is, there are lots of steps you can take to stop this happening, and even get your debts written off in some cases. In this article, we’re going to cover exactly how to deal with Little Loans debt, your rights against lenders and debt collectors, and how to access debt support.
How do I deal with Little Loans debt?
You can deal with Little Loans debt by checking if you actually owe the debt and it’s not statute barred, talking to your Little Loans lender to see if they will lower interest rates or allow you to make smaller repayments, making a careful budget to increase your repayments, and speaking to a debt charity for support.
You can also deal with Little Loans debt by using psychological debt repayment tactics such as the debt snowball or debt avalanche method, consolidating your debt, increasing your income and refusing to take on more loans.
Let’s dive right in, and look at who Little Loans are, and how to deal with debt from one of their lenders.
Who are Little Loans and what are their services?
Little Loans is a credit broker, not a lender. A credit broker finds you a loan from an external lender, based on factors like your credit score, the amount of money you want to borrow and your desired loan repayment term. Little Loans make their money on commission from the lenders they match you with.
Little Loans offer a range of loans, including loans for people with bad credit and loans for people on benefits. It’s important to note that if your credit score isn’t great, you’re more likely to get a loan with a very high APR (interest rate). They offer loans between £100 and £10,000.
Little Loans give the example on their website that if you borrowed £1200 for 18 months, with repayment of £90.46, you’d end up repaying £1628.28, at an interest rate of 49.9%. This means you’d have to pay £428.28 on top of the amount you borrowed. 49.9% is a very high interest rate to pay on a loan, so make sure you explore other options if you need money. Your local Citizens Advice Bureau can direct you to charity and council grants for things like washing machines or fridges, or to food banks if you can’t afford groceries.
Little Loans will check your credit file when you apply for a loan, to see if you are eligible for a loan, and, if so, what sort of loan is appropriate. Little Loans claim that they don’t use a hard credit check which would show up on your credit file and potentially affect your score.
Little Loans is regulated by the Financial Conduct Authority (FCA). This means that Little Loans have to obey certain rules set out by the FCA, including checking that you can repay the loan before they lend you money. Because Little Loans are regulated by the FCA, you have the right to complain to the Financial Ombudsman if you feel you have been treated unfairly in the lending process. The Financial Ombudsman will look into the issue, assess the lender’s behaviour, and potentially even offer you compensation if they feel the lender behaved wrongly.
Little Loans is part of the Digitonomy group, which was founded in 2013, and owns other loan companies like Cashflex and CashLady. Digitonomy claims that it provides an “innovative and technology-led approach” to help customers easily find and compare financial service products (including credit products).
9 steps to deal with debt from Little Loans
We understand how anxiety provoking debt can be, especially if you’re struggling to make even minimum repayments. Here are the steps you should take to deal with debt from a Little Loans lender.
Talk to your creditor
One of the first things you should always do when you’re struggling to repay your debts is to talk to your Little Loans lender (this will be the company who Little Loans has found to lend you money). Every Little Loans lending company will have their own policies for people who are struggling to repay their debts, but they might agree to:
- Allow you to repay your debt in smaller instalments (although you should be careful, as this usually means you’ll pay the debt off over longer and end up paying more in interest).
- Cancel late payment charges, so that you can focus on just repaying the debt.
Check if you actually owe the debt
In some situations, you may not actually have to pay the debt at all. Yes, even if you owe it! If the debt you owe to a Little Loans lender or anyone else is over six years old and your creditor hasn’t taken any action on it until now, your debt is a ‘statute barred’ debt. This means that it is legally unenforceable, and your creditor can’t take you to court over it. The debt will still technically exist (although it will drop off your credit file after six years), and debt collectors can still contact you about it, but as there’s nothing they can do to make you pay it, that’s a waste of their resources that they’re unlikely to allow.
Similarly, if you signed a Consumer Credit Agreement (CCA) when you took out the debt, and a debt collector chasing you can’t produce it, your debt is unlikely to be legally enforceable. This usually only works if you’re being chased by a debt collection agency, though, and not the original creditor.
This might seem to obvious even to mention, but actually, a huge number of us don’t know how to budget. One in 10 British people spend more than they earn, one in ten don’t have a penny in savings, and 28 % go over budget, which makes you much more likely to fall into debt and then struggle to pay it off.
A great way to budget is the Three Accounts System, developed by debt charity Christians Against Poverty. They encourage you to have three bank accounts – one for your direct debits (this includes things like rent and mortgage, car insurance and debt repayments), one for your weekly spending and one for savings.
Make a list of all your expenses (including debts). When you get paid your income (salary or benefits), divide the money up among the accounts, making sure that you have enough to buy the essentials such as groceries, as well as cover all your obligatory payments. Set aside the amount of money you need that month to pay your bills, and put it into your direct debits account.
Next, put the exact amount of money you’ve allocated for your weekly spending for, for example, your family’s food shop and the occasional treat, into your weekly spending account, which should be a basic cash account, with no overdraft. This will stop you from accidentally overspending, as once your money is gone, it’s gone! Whatever you have left, you can save. It’s important to save a little every month if you can, because this will protect you from getting into further debt if there’s an emergency.
Always pay your priority bills first
If you’re struggling with debt from Little Loans, it’s important to know that you must pay your priority bills first, even if you’re very behind on other loan repayments. Priority bills are the bills which keep a roof over your head and which have the most serious consequences if not paid on time. These include:
- Rent or mortgage
- Utilities bills
- Council tax
- Income Tax and National Insurance
Never prioritise debts over your basic needs, like food and warmth. Remember that there is lots of help and support out there for dealing with debt, and there is always a way through the situation, no matter how much you owe.
Don’t take on more loans
We know how tempting it can be to take on more loans if you’re struggling to pay off an existing one, but taking out further, high-interest debt can be expensive and harmful to your finances. Rather than taking out debt, check if you’re eligible for government benefits to top up your finances. If you earn below a certain amount or are unemployed, you could be entitled to benefits like Working Tax Credit, Child Tax Credit or Universal Credit, which could really help support your finances while you’re trying to pay off debt. Your local Citizens Advice Bureau can direct you to support including:
- A Discretionary Housing Payment (DHP) from your council, to help you pay rent if you’re struggling financially.
- Getting your benefits paid early.
- Welfare assistance from your local council in the form of vouchers to pay for things like furniture or household appliances. This could be a lifesaver if, say, your washing machine breaks and your only other option for getting one would be taking out a loan.
- Grants to help with different expenses. Make sure you check out the charity Turn2Us which has a Grant calculator, and shows what grants you could be entitled to in your local area.
The debt snowball method
The debt snowball method is a psychological tactic that keeps you motivated to pay off your debt. You start with the smallest debt first, and focus on paying that off while making the minimum repayments on your other debts. This means that you get the sense of success from completely paying off a debt earlier than you would if you carried on chipping away at your larger debts. When you’ve paid off your smallest debt, you then focus on your next smallest and so on until they are all paid off.
The debt avalanche method
The debt avalanche is also a useful tactic for paying off debt, and may work better for you than the debt snowball method, depending on how many high interest loans you have. With the debt avalanche method, you focus on paying off the debt that is costing you the most interest first, saving yourself more money in the long run. Then, you focus on the debt that has the highest interest after that, and so on and so forth until all your debts are paid off.
If your credit score is in pretty good shape, you could consider taking out a debt consolidation loan. This is when you take out a low interest loan to cover the cost of all your debt, and use the money from the loan to pay all of your debts off. This hopefully leaves you with one, manageable repayment (the low interest loan), rather than multiple, high-interest debts to juggle. A debt consolidation loan may cost you less in terms of interest in the long run, and decreases your chance of forgetting to pay off debts, as you only have one loan repayment to think about every month. However, it’s important to remember that debt consolidation doesn’t eliminate your debt, it simply moves it around. Also, if you have a poor credit score (which is likely if you’re struggling with debt), you will find it difficult to find the type of low interest loan that makes debt consolidation worthwhile, so think carefully about whether this is the option for you.
Debt consolidation options include:
- 0% balance transfer credit card. This type of credit card allows you to transfer the balance from multiple, high interest credit cards onto one credit card which offers you a 0% interest period. In theory, you’ll save money on interest as you work to repay your debt on 0% credit card. However, you must make sure that you can pay off your debt within the 0% interest period, as interest rates may spike sharply after this is over.
- 0% money transfer credit card. This type of credit card allows you to transfer money from the card itself and into your bank account, which is especially useful if you owe money to your bank. You’ll then be able to pay off the credit card, which hopefully offers you much less in interest.
Some balance and money transfer cards charge fees for transfers, so make sure you check this before you go ahead with consolidation. If the fees are too high, it might not be worth it to consolidate your debt.
Get support from a debt charity
Getting emotional and practical help with debt is a really good way to see that you’re not alone in what you’re facing. In the UK you can get free, expert debt advice from charities including StepChange, Christians Against Poverty and National Debtline. Some charities even offer free debt management plans, where they will negotiate with your creditors on your behalf, and support you to pay off small amounts of your debt off each month until your whole debt is repaid.
What happens if I still can’t pay my Little Loans lender?
There are some situations where your debt is just too much, and you can’t pay off the full amount even with a budget or a debt management plan. The good news is that the UK does have government approved solutions if you are close to insolvency (in severe financial distress), and you can enter into these even your Little Loans lender has started court proceedings. Let’s look at solutions to write off your debt.
Individual Voluntary Arrangement (IVA)
An IVA is a government approved debt help scheme, which supports you if you are really struggling to pay your debt. An IVA is a legal agreement between you and the people who you owe money to, and it is managed by an Insolvency Practitioner. An IVA allows you to pay back a small percentage of your total debt, and get the rest of it cleared. At the end of the IVA (which runs for 5-6 years), no matter how much money you have left to pay back, the debt is written off, and the IVA will drop off your credit record after it is discharged (ended). Don’t worry, you’ll always be able to afford your basic living expenses, like food and your rent or mortgage. You will make small, monthly payments towards your debt, based only on what you can afford. If you already have a County Court Judgement (CCJ), an IVA will reverse this. At IVA Advice, we offer free, expert advice on IVAs, so if you think an IVA might be the right solution, feel free to give us a call.
Debt Management Plan (DMP)
A Debt Management Plan, either through a charity or a debt management company, allows you make reduced payments to creditors based on what you can afford, and usually freezes the interest on your debts. This allows you to focus on repaying your debts and actually see the amount you owe going down, rather than dealing with spiking interest. Debt collectors are unlikely to keep chasing you if they know you have a repayment plan in place. You can also protect your valuable assets, such as your home or car, whereas if your debt goes to court, you may have to put these up as security for your debt.
Debt Relief Order (DRO)
A Debt Relief Order (DRO) is available if you don’t own any valuable assets, for example, your own home, and you have less than £50 in disposable income. A DRO gives you legal protection against your creditors (they are no longer allowed to contact you about the debt) and writes off your debt after around 12 months. If you have a CCJ, it can be included in a DRO.
Going bankrupt should be a last resort, after you have explored every other solution. While bankruptcy does write off your debt, it has a serious effect on your life and credit rating. You can’t be the director of a limited company during your bankruptcy, so it can affect your career if you manage a business. In some jobs, you may have to tell your employer that you’ve gone bankrupt, although this is rare. Bankruptcy will clear your debt after around 12 months, although you may have to sell assets to pay off your creditors. You should always seek free debt advice before deciding to go bankrupt.
Can Little Loans take money from my bank account?
Some credit brokers and loan companies use something called a Continuous Payment Authority (CPA) to take loan repayments from your bank. CPAs allow a service provider to take payments from your bank account whenever the service provider decides that money is due. CPAs are most frequently used by Payday loan lenders, but popular subscription services from gym memberships to Netflix also use them.
You may have signed a Credit Agreement without realising that you’ve agreed to a CPA. You can cancel the CPA by contacting your bank and asking them to stop further payments, or by telling your credit broker to cancel the arrangement. You can also ask for a refund from your bank if a payment has been taken without your permission.
According to the Financial Conduct Authority, a firm is not allowed to take money from your bank account unless they’ve explained to you that they’re going to do this, and you agree to it in your Credit Agreement.
There are now new rules governing CPAs which protect you further as a borrower. While lenders used to be able to make unlimited attempts to remove money from a bank account under a CPA, and to remove partial debt repayments if the full amount wasn’t there, there are now rules that limit lenders to two attempts to take money, and only for the full amount that is due, for example, your regular £100 loan repayment per month.
Remember that a lender cannot take money from your account, unless you have given them permission. If they do this without properly notifying you of a CPA, you can complain to the Financial Ombudsman and potentially get compensation.
Can Little Loans lenders send bailiffs to my home?
Little Loans lenders do not have the power to send bailiffs to your home to remove your possessions, unless they manage to get a County Court Judgement (CCJ) against you.
It’s important to understand that debt collectors – who your Little Loans lender may send to chase your debt if you persistently fail to make payments – are not bailiffs. Bailiffs (sometimes called enforcement agents) are only ever allowed to visit when ordered by the court, and there are many, many steps before your debt goes to court. Even if your debt gets to this stage, an IVA will reverse the effects of a CCJ, meaning that you’ll be legally protected from bailiff action.
In fact, if a representative of your lender or a debt collector every claims to be a bailiff, they’re committing fraud, which is an illegal act. Report them immediately to the Financial Ombudsman.
Can Little Loans lenders force entry into my home?
Little Loans lenders, or any debt collectors they may send if you persistently fail to repay your debt, absolutely cannot force entry into your home. Debt collectors are technically allowed to come to your front door and knock, as well as request to see you, but they are not allowed inside without your permission.
How do I get Little Loans lenders to stop contacting me?
If communications from your creditors (or potentially a debt collector, if they’ve assigned your debt to one) are stressful, there are a few ways you can temporarily stop contact from them, or change the way they contact you. These include:
- Breathing space. You’re allowed to request a 30 day ‘breathing space’ from your creditors, in which creditors are not allowed to contact you. In May 2021, this will increase to 60 days, given the impact of Covid-19 on people’s finances and debt. If you’re receiving mental health crisis treatment, you can request a special mental health crisis breathing space, where your creditors are not allowed to contact you for the duration of your treatment, no matter how long this takes.
- A Debt and Mental Health Evidence Form (DMHEF). This is a form which helps creditors understand any mental health issues you may be experiencing, so that they can be more considerate of your personal circumstances when communicating with you.
It’s important to remember that these approaches won’t remove a creditor’s right to pursue the debt eventually. However, if you get a plan in place to deal with your debt and come to an agreement with them to repay it, even if it’s in small amounts every month, they are unlikely to keep chasing you.
If you decide that an IVA or DRO is the best solution for your finances, this process will legally stop your creditors from contacting you directly. With an IVA you’ll have an Insolvency Practitioner who will contact creditors on your behalf, and with a DRO your Official Receiver will communicate with creditors rather than you.
What will happen if I continue to ignore contact from Little Loans lenders?
Unfortunately, debt collectors are unlikely to give trying to collect your debt, because they want to make a profit, and get back the money they’ve invested in chasing it. While you might like your only option is to ignore debt collectors and hope they eventually give up, you have far better options than these. The sooner you get free debt advice, the sooner you can find a solution to pay off your debt in reasonable amounts, stop creditor contact and even get some or all of your debt written off.
Can Little Loans lenders take me to court?
If you continue to ignore a lender you owe money to (or a debt collection company they may have passed the debt over to) hey won’t just go away. They may end up taking you to court and getting a County Court Judgement (CCJ) order against you, which demands that you repay the debt. This will arrive in the form of a letter, and will detail:
- how much you owe
- how to pay (in full or in instalments)
- the deadline for paying
- who you have to pay
A CCJ stays on your credit profile for six years, even if you pay it off within six years, so it will affect your ability to get important loans like mortgages. A CCJ is not a criminal judgement, and won’t go on a criminal record. You also can’t go to prison in the UK for being unable to pay your debts (with the exception of debts like council tax and child maintenance arrears, in certain circumstances).
After you receive a CCJ, your creditor can apply for you to pay your debts off in three different ways:
- Attachment of Earnings
- Charging Order
- Bailiff action.
An Attachment of Earnings is an order which tells your employer to deduct money straight from your salary to pay off your debt.
A Charging Order is an order which allows your creditor to secure your debts against, for example, your home. If you don’t keep up with the debt repayments, you could lose your home. When your creditor gets a charging order, they can often apply to the court to force you to sell your home if you own it to pay off your debts (this is called an ‘order for sale’).
A CCJ can also allow for bailiff action, where bailiffs may come and remove some of your valuable assets. However, bailiffs are not allowed to remove children’s belongings, household goods or tools or vehicles (usually under £1,500) for work.
This is an absolute worst case scenario, however, and there are many steps take to avoid a CCJ, or overturn one in motion, including getting a debt solution in place, whether that’s a Debt Management Plan or an IVA.
Watch out for Little Loans clone company
According to the Financial Conduct Authority, fraudsters are ‘cloning’ Little Loans details to scam people in the UK. Watch out for anyone claiming to uses the company name Little Loans Lender Ltd / Little Loans, with these details:
Telephone: 01244 94 0809, 0161 818 9934, 020-8638-5332
Email: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com
Now that we’ve gone through who Little Loans are and how to deal with debt from Little Loans lenders, we hope you’ve found this a useful read. Remember that although debt feels scary, there are lots of policies in place to protect people struggling with debt like yourself, and many actions you can take to finally become debt-free.