What to do if my loan provider goes into administration

What to do if my loan provider goes into administration

If you've got a loan with a provider that has gone into administration, it's important to know where you stand.

In recent years a number of UK loan providers have either gone into administration, are no longer providing new loans or are not accepting new customers as they wind down operations.

Here, the Dot Dot team will try to explain what it might mean for you, and what to do if your loan company is struggling financially and goes into administration.

What happens when a lender goes into administration?

Put simply, a loan company can go into administration if it has severe financial problems and becomes insolvent. This means that it may not have enough money to pay its debts and the firm is put under the management of licensed insolvency practitioners.

Providers that have closed their doors recently, many of whom offered payday loans, include brands such as Uncle Buck, Sunny, Satsuma, Peachy, Ferratum, The Money Shop and MyJar. Some lenders might be closed for legal reasons, or as a result of losses incurred due to compensation claims. Some might have granted unaffordable loans to people or had poor collection practices.

If a loan company goes into administration, they’ll no longer be able to offer new loans.

But if you have an outstanding loan with them, your existing debt will still need to be paid.

What do I need to do?

You should continue making your loan payments as normal.

In the vast majority of cases, the administration process won’t affect the repayment term of your loan, so if you hear that a lender is in administration, you shouldn’t miss any payments.

If you have any questions, try and contact the loan company directly.

If my lender shuts down, do I still owe them the full amount?

A loan provider going into administration doesn't release you from the responsibility to pay your loan back in full.

Whether it's a payday loan from a payday lender, a mortgage or a credit card, whenever you borrow money, you sign a legal contract.

This contains specific terms and conditions related to your monthly payments, interest rates and more. The legal obligations in this contract won't necessarily change if your lender goes into administration or shuts down.

There's a chance that you may not notice any difference when you're making your repayments.

Any outstanding loans owed to the provider that's in administration are classed as its assets. The loans may be sold off by the administrators – although this may not always be the case. Keep an eye out for communication from your lender and their administrators and follow their advice.

If your loan is sold, you’ll owe the money to the new lender, who should be regulated by the Financial Conduct Authority, and they will start collecting your further payments with the same terms.

What happens if I stop making loan repayments?

If you stop making payments when your loan provider goes into administration, any new firm managing the account will notice.

By not paying the loan back, you risk damaging your credit rating and credit score.

The terms and conditions with some loans contain a transfer clause, which means that that if your loan is transferred for whatever reason, you still owe the money to whoever is now collecting it.

Keep on top of your outstanding loans

If a new company buys your loan, here are a few ways to keep on top of what you owe:

• Set up a new online account with them to easily access your account information.
• Review your repayment terms to ensure your monthly payment is still correct.
• Keep hold of any paperwork. Important documents could get lost in the changeover between the loan companies managing your account - especially if they aren’t in digital form. Keep your old statements and any other important documents handy, just in case something needs checking.

Get plenty of advice

If your loan provider goes into administration and you are still unsure about what to do next, there are a number of organisations that can help you manage your borrowing.

PayPlan is one of the UK’s largest free debt advice providers and helps more than 100,000 people every year. They partner with providers like Dot Dot Loans to offer a free debt advice service.

MoneyHelper can arrange for you to speak with a debt advisor online or face-to-face. Their debt advisor locator tool can help you find a local advisor for free.

You can also get free confidential advice from Citizens Advice, who have plenty of information on debt and money which is available free to everyone.

StepChange offer free online debt advice and can provide basic financial advice and guidance on how to avoid further debt.

A lending alternative

Dot Dot Loans may be able to offer a suitable alternative to other lenders who have gone into administration.

Our loan alternatives come in the form of short-term loans and long-term loans.

Dot Dot are a well-established financial services company who are experienced in keeping things straightforward. Our loans aren’t right for everyone, and you should only borrow what you can afford to pay back.

Visit our FAQs section to find out more details about the eligibility criteria for a loan.

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