A large rise in compensation claims has led to Brighthouse falling into administration. If you’re an existing customer find out what this could this mean for you.
Will my debt be written off or will I have to continue making my scheduled repayments?
You will still need to continue making your loan repayments, even if the company goes into administration. If you miss any repayments, you could still be hit by additional fees and charges.
Missing or making late repayments could also harm your credit rating because lenders look at how you’ve managed your existing credit when working out whether to lend you money.
What if I have just taken out a Rent to Own agreement with Brighthouse?
If you have recently taken out a Rent to Own agreement with Brighthouse, you have a minimium 14-day cooling off period. So, if you’re in the first two weeks of your agreement you can still cancel it. The cooling off period runs from the day the agreement was concluded or from when you receive a copy of the paperwork.
Will I have to return items I have already received?
No, you shouldn’t have to return any goods provided to you as part of your credit agreement provided you maintain the scheduled repayments as part of your credit agreement.
Will my Brighthouse warranty still be valid?
Brighthouse insurance policies are provided by a third party called Caversham Insurance Limited. If this is the case, then you will still be covered under the terms of your policy. Should the company go into administration any policies provided directly by Brighthouse will unfortunately no longer be valid. You can check who your warranty provider is by looking at the terms and conditions provided to you when you took out the policy.
What should I do if I have an outstanding compensation claim?
If you made a successful claim before the company went into administration, but you’ve not been paid, you will join the list of creditors.
Once the business has been wound up, the administrators will then distribute any assets that are left. There is a strict order for who gets paid first. This could mean you might not receive any or only part of the settlement you were granted.
Can I still make a new compensation claim?
Once the administrators have been appointed, we expect the Financial Ombudsman Service (FOS) to clarify the impact on compensation cases brought since the announcement was made. However, it is likely you might not receive any or only part of the settlement you were granted. This is because your claim will be added to a long list of people and organisations that the company owes money to.
You are not entitled to claim against the Financial Services Compensation Scheme (FSCS) because loans aren’t covered under the FSCS scheme.
I’m struggling to meet the repayments on my credit agreement. What help can I get?
You are still liable for repaying the loan, so if you are struggling it is important you get free debt advice to help you get back on track with your money. Our debt advice partners offer impartial and confidential advice face-to face, online or by phone. They will be happy to talk with you, however big or small your problem.
Alternative ways to pay for purchases
Rent to Own can be a very expensive way to pay for larger household purchases and it’s worth looking at the alternatives.
Cut back or save up
See if there is any way you can cut back on other household expenses to find the money you need.
If what you need to buy isn’t urgent, then see if you can save up the money first. It might take a while, but it will cost you less than borrowing the money.
If you need to replace something urgently, you might be able to use an authorised overdraft, but make sure it’s authorised or included in your interest-free overdraft limit. You will have to pay significant fees if you go into an unauthorised overdraft.
Using other forms of credit
If saving up for a purchase is not an option, there are several ways to borrow money at a lower interest rate than Rent to Own agreements.
But before you make a decision make sure you know:
- exactly how much it will cost
- whether you can afford the repayments.
Personal loans can offer good rates of interest, depending on your credit score. However, you might end up borrowing more than you need as most lenders will not offer loans of less than £1,000, which might be more than the amount you need for a household purchase.
Credit cards are another option, but you need to be sure you can make more than the minimum repayment each month. If you can’t afford to make significant repayments, borrowing on a credit card can be very expensive.
Loans from credit unions are much cheaper than from other lenders and you can pay the money back at a rate you can afford.
If you’ve been turned down for credit by high street lenders, then you can look at fair finance providers. Their interest rates are lower than high-cost credit providers but higher than a credit union. Repayments are based on an affordability assessment which ensures the borrower can keep up with the repayments.
Pawnbrokers are another option where you leave something valuable, such as jewellery, as security for a loan. The rate of interest you will be charged is normally lower than a high street bank and it’s unlikely you will get the full value of the item, but you will get a quick decision.
Borrowing from friends and family
Borrowing from friends or family might be an option which helps you avoid the risks of high-cost borrowing. Make sure you and the person you’re borrowing from:
- work out an affordable repayment plan
- discuss what will happen if you’re late or cannot afford to repayments
- put your agreement in writing.
If you’re claiming benefits
If you’re on certain income-related benefits, including:
- Income Support
- income-related Employment and Support Allowance
- income-based Jobseeker’s Allowance
- Pension Credit
- Universal Credit.
you might be able to apply for a Budgeting Loan (or Budgeting Advance if you’re on Universal Credit) to cover the cost of:
- baby items (such as cot or pram)
- household appliances (such as cooker or fridge)
- clothing or footwear
- work clothes or tools
- travelling expenses
- childcare costs to cover training courses.
Local welfare assistance
If you’re struggling to pay for an essential household item like a cooker, fridge or washing machine and you are getting certain benefits you might be able to find one through your local council’s welfare assistance scheme.
Some local authorities might also give loans to help you buy what you need:
How to avoid high-cost credit
If you can’t take out a rent to own agreement and you would find it difficult to use the mainstream credit options, like an overdraft, personal loan or credit card you might be tempted by other kinds of high-cost borrowing like payday loans or doorstep lenders.
These forms of credit can work out to be very expensive and you need to think very carefully before you decide to borrow in this way. Before you make a decision read our guides.
Avoid loan sharks
Loan sharks are illegal lenders who often target people who are desperate and who can’t get mainstream credit. They might seem friendly at first but borrowing from them is never a good idea – even if you feel you have no other options.
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