Debit Card Debts

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What is Debit Card Debt?

Although debit cards aren’t designed for borrowing, you can still get into debt using one.  This can happen if you pay for something when there isn’t enough money in your account, this means you’ll go overdrawn. At this point, fees and charges can be added.

Overdraft charges and overdraft interest can quickly add up if you don’t keep a close eye on them and make a payment to cover them. In some cases, even if your debit card payment is declined, you can still be charged a fee that takes you into your overdraft – and be in debt before you know it.

This can then have a negative impact on your credit score and cause consequences for you in the future.

Worried about your Debit Card Debts?

If you are worried about how you are going to repay your Debit Card Debts, we’re here to help you! There are many people who will find themselves in a financial struggle after racking up Debit Card Debts. Here at Business Helpline, we can discuss all of your options and help you plan for a better future.
Call our team today on 0800 088 2142.

How can you handle credit card debt?

▪️ Keep an eye on your account

It’s important to check your account regularly before you make purchases or withdraw money. This will help you to avoid spending money that you don’t have and it will help you keep track of the money you have left to spend.

▪️ Track your spending

Doing this will help you avoid a low balance and reduce the risk of going into overdraft

▪️Set a budget

Setting yourself a weekly spending budget is one of the best ways to control your finances. This will also help you become more knowledgable on where your money goes and it may highlight certain things that you can cut down on.

▪️ Book a free debt consultation

When you book a debt consultation with us, our expert money advisors will listen to your personal financial situation and help you choose the best debt solution plan for you. All of our advice is free of charge, impartial, and 100% confidential.

What is insolvent liquidation?

Generally, there are two main types of insolvent liquidation procedures. The first is Compulsory Liquidation and the second is a Creditors’ Voluntary Liquidation (CVL).

A compulsory liquidation happens when a creditor, or more than one creditor, petitions to the court for your company to be forced into liquidation. This will be achieved by putting together a winding-up petition (WUP) against your business. 

On the other hand, a CVL is when the liquidation process is voluntarily started by directors within that insolvent company. They usually enter this process because of intense pressure from creditors, leaving directors concerned with nowhere else to go. An insolvent company would hire an insolvency practitioner and they would take control of the whole process – talking to creditors and facilitating the process of selling assets to repay creditors. 

A Creditors’ Voluntary Liquidation, is when the liquidation process is started voluntarily by the directors of an insolvent company. This process is usually entered into because increasing creditor pressures leave the director nowhere else to turn. The insolvent company would appoint an insolvency practitioner who would then call a meeting of the company’s creditors and facilitate the process of selling the company’s assets to repay creditors. Can I claim redundancy if my company isn’t in, or isn’t facing liquidation?

You cannot claim redundancy if your company is not facing liquidation. 

Employees would not be able to claim redundancy while in employment so, with that in mind, a director can only claim redundancy when their company is in the process of going insolvent. Redundancy is designed to help those who have found themselves out of a job as opposed to helping those who simply want to quit their job. 

Therefore, directors cannot seek redundancy in a solvent liquidation as this is seen as putting themselves out of work. There is a choice involved. Redundancy is to help those who lose their job without a say in the matter. 

When can a claim be made for director redundancy?

Timescales are strict for redundancy both before and after liquidation. You have to start the process within 12 months of your company entering liquidation, or before your company is liquidated. The longer that you leave claiming, the more challenging it is to be successful in your pursuit. It is advisable to submit your claim within 6 months if your company has already been liquidated. 

It is better to make a claim before your company is liquidated. People in this situation find that receiving a redundancy payment can help to make the decision to liquidate their company a great deal easier. If you wait until after your company is liquidated, you could miss out on claiming all of your statutory entitlements. So, in short, get it done beforehand!

Get in touch

If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.

Call one of our compassionate experts at 0800 088 2142.

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Did you know?

Are you eligible to claim Director Redundancy?

As a Limited Company Director you may be entitled to claim Director Redundancy – Average UK claim is £9,000*.

Debit Card Debt FAQs

What is the difference between credit cards and debit cards?

Credit cards allow you to access credit which you can then use to buy things, before repaying later.

Every time your credit card is used or you make a credit card repayment, it will be listen on credit history. At the same time, any time you miss credit card repayments, your credit rating will suffer.

Debit cards, conversely, do not affect credit rating at all. It is just a way of withdrawing money from your bank account.

Debit card activity will never be listed on credit history and it will not affect your credit score.

What are the common causes of Debit Card debt?

Payments without the funds

People fall into debt with their debit cards when they use payments for a purchase and thee aren’t enough funds to cover that cost. This can cause somebody to become accidentally overdrawn, potentially incurring charges.


If you withdraw money from your account that you don’t have, you become overdrawn. This would put you into an unauthorised overdraft, resulting in higher rates of interest and a daily fee that may cause you to become further and further overdrawn. You will inevitably be paying back more than you originally borrowed.

Overseas use

If you use your debit card abroad, you can be left with a hefty bill by the time you arrive home. You should check the terms and conditions of your bank account before you travel.

How long does it take to make a liquidation claim after redundancy?

You should be making a claim within 6 months of the company entering liquidation and ceasing trading. Some circumstances could lead to that time frame extending to 12 months but the process, in this case, is a little bit trickier. 

What can stop a redundancy from going through?

There are a number of reasons why a claim may not work. Popular ones are that the company has been incorporated for less than two years, you leave the company before it has gone through the liquidation process, or your employment has been transferred using TUPE regulation. 

What can you claim for with redundancy?

What you are eligible for with redundancy comes down to several factors:

▪️ How long you have been in the role

▪️ Your age at the time you have stopped trading

▪️ Your current salary

With redundancy, salary is capped at £544 per-week. 

£16,140 is the overall maximum pay amount of redundancy pay that you can get. This remains constant, even if your actual earnings are higher or your length of service is longer than is required. 

According to age, this is what you should be entitled to receive: 

    Under 22 – Half a week’s pay for each year of service

22 to 40 – A week’s pay for each year of service

Over 40 – A week and a half’s pay for each year of service

Employer notice

Your employee has to give you a minimum of one weeks’ notice for every year you have worked with them when you are made redundant. This goes up to a maximum of 12 weeks’ notice, worth £6,456. 

Unpaid wages – Up to 8 weeks 

Unpaid holidays – Up to 6 weeks holiday pay

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