Turn Debt Around

According to research by insolvency trade body R3, more than four in ten adults in Britain struggle each month to make it to 'payday' (11% on a regular basis and 31% occasionally) and the average day this struggle begins is the 20th day after payday.

The main causes for this struggle have been identified as:

• Credit card payments - cited by 35% of those who often or sometimes struggle to make it to 'payday'
• Spending on going out or non-essentials - 25% of those who struggle
• Paying off bank loans, 'big ticket' purchases, making mortgage repayments - between 15-17% of those who struggle

R3's President, Steven Law, said:

"Our addiction to credit cards is still out of control, despite the recession and a 'tightening up' of lending criteria.  There needs to be a cultural shift in consumer attitude to debt.  For too long we have got used to the idea that this is money we are entitled to.  Using a credit card is just delaying the inevitable day of payback - the sooner this is tackled and professional advice is sought, the smaller the final bill will be for individuals."

Source:  R3 Press Release

Four in ten adults in Britain are worried about their debt, according to research by R3, the insolvency trade body.  The findings show that Londoners are the most likely to be worried, with almost half saying that they are concerned about their current level of debt.

Londoners are followed closely by those living in the North East and North West where 44% of residents are worried about their debts.

For those who worry about their debt, credit cards caused the most concern followed by overdrafts and then bank loans and mortgage payments.

Those living in the East of England were the least worried with just under a third saying that they were concerned with their overall level of debt.

R3's President, Steven Law commented:

"It is alarming, but not surprising that so many people are worried about their debt.  The research shows how debt has become a fact of adult life - starting with a student loan and eventually graduating to a mortgage, credit cards and loans.  However, seeing debt as a way of life can lead to years of worries about financial stability.  People who feel that they are struggling with personal debt should seek professional advice on managing their household budget early."

Source:  R3 Press Release

As the UK faces up to public sector cuts - some 600,000 jobs will go within six years according to the Office for Budget Responsibility - it is increasingly important that if you are in debt, you have access to the right advice to help you tackle any personal debt issues.

With job losses, pay freezes and benefit cuts all likely to be a feature of the coming years, the repercussions will be felt far beyond the public sector.  Some private sector employers are likely to face reduced income from public contracts for example, which may lead to further cost-cutting measures.

As redundancies take effect, many people who were just about coping with personal debt could suddenly find themselves out of their depth and unable to meet repayments.

Although the hope is that the private sector growth will offset public sector losses; how that will ultimately play out is unclear for now.  For those who do manage to secure new posts, figures from the Office of National Statistics suggest many will earn less than before; the ONS reports that in the three months to May 2010, the number of part-time workers in the UK rose by almost 150,000.

If you find yourself struggling with debt and unable to keep up with your repayments, contact us today.

As we hopefully celebrate a few gold medals at the 2012 Olympics, baby boomers will also be celebrating turning 65 years old in record numbers - in fact, according to Credit Action, around 800,000 in total.

But, as this historic year approaches, not all these pre-retirees are looking forward to retirement age and the possibility of having to juggle a pension and debt repayments.

It is an unfortunate statistic but, as highlighted in a report from Age UK, more than a third of equity release customers have used the cash to help clear their debts.  If you are thinking about this solution to clear your debts before or during retirement, you must consult an Independent Financial Adviser to ensure you understand the full implications.

If you do have a substantial amount of debt, there are some things you should do before you consider equity release:

• Check to ensure you are receiving the correct personal tax allowance
• Budget carefully - if you have more money going out than coming in, you'll need to make cut backs
• Pay monthly for your utilities so you're not faced with large quarterly or annual bills and ensure you're getting the best deal by using price comparison websites e.g. uSwitch.com
• Consider downsizing your home which might free up some cash to help you pay off your debts
• If you live in a larger home and your children have flown the nest, why not investigate the possibility of renting out a room to increase your monthly income

If you are struggling with debts, contact us today.  We may be able to help you.

New guidance from the Office of Fair Trading (OFT) has been issued to ensure lenders do not mislead borrowers and ensure that customers can afford to repay loans.

The OFT said they expect all consumer credit businesses to fully comply with both the 'word and spirit' of the guidance.

The guidelines make it clear that lenders should:

• not use 'misleading or oppressive behaviour' when advertising, selling or enforcing a credit agreement
• make a 'reasonable assessment' of whether a borrower can afford to repay the loan
• explain the key features of a credit agreement so borrowers can make an 'informed choice'

If you are struggling with loan repayments or other debts, contact us today.  We may be able to help you.

Reported in The Telegraph, British households are now more indebted than any other major country in reported history.

Families in the UK now owe a record 173% of their incomes in debts, official figures from the Office of National Statistics have shown.  The ratio of debt to income is higher than any other country in the G7, the group of seven leading industrialised economies, and is sharply higher than the 129% of incomes it was five years ago.

Read the full article here.

Debt advice....Bankruptcy....Insolvency....IVAs....you may have heard these words in relation to debt but do you know what they really mean?  Would you know what debt solution is right for you and your financial circumstances?

If you're in financial difficulty and need to speak to us, you may want to familiarise yourself with the options that we may outline to you.

Bankruptcy

Bankruptcy is probably the most well known debt solution but it is by no means the only one.  Bankruptcy is usually a last resort debt solution because of its severity.  You will be bankrupt for 1 year only but the impact on your credit file can last for a minimum of 6 years plus your home and other assets are at risk of being sold so that contributions can be made to your creditors.

Sequestration

Sequestration is the Scottish equivalent to bankruptcy.  Although broadly similar, there are some differences in the process they follow.  As with bankruptcy, sequestration should only be considered as a last resort when all other debt solutions have been ruled out.

IVA (Individual Voluntary Arrangement)

An IVA involves paying a proportion of your debts over a number of years as arranged by an Insolvency Practitioner who negotiates the agreement between you and your creditors.

Protected Trust Deed

Protected Trust Deeds are only available in Scotland.  Very similar to an IVA in England & Wales, it involves surrendering certain assets to a Trustee and making a regular contribution from your income.  The Trustee arranges a legally binding agreement between you and your creditors which must be adhered to during the time period (usually 3 years).

Debt Relief Order

Available if you have very few assets and debts of less than £15,000, a Debt Relief Order will allow you to write off your debts without having to resort to full bankruptcy.

LILA

LILA is the equivalent in Scotland to a Debt Relief Order.  It is for people who have low income and low assets (LILA).

Those are a few of the debt solutions available.  Your ideal debt solution will depend on the amount of debt you have, the assets you own, your income and your individual circumstances.  The important thing to remember is that help is out there if you need it.

Don't be afraid to ask for help, you're not alone.

According to a recent report from Credit Action, every adult in the UK now owes an average of £30,228 including their mortgage - that's 126% of average earnings.

The impact of these debts can go far beyond just affecting spending power and wealth, with relationships and health also being jeopardised.  And it's not just one group of society that's feeling the effect; the recent recession has brought these problems to a wider section of the population.

Statistics suggest that more couples have been looking to professional counselling to ease relationship problems caused by financial worries.  According to The Telegraph, there was a 59% increase in enquiries received by the relationship charity Relate's advice helpline in 2008 compared with 2007, including twice as many calls related to money arguments.  These figures may well have increased in 2009/10 as the recession continued.

It has also been reported that the economic downturn can have an effect on health and can increase the risk of a stroke. 

Earlier this year, a leading psychologist reported that the risk of suffering real mental and physical health problems, including the likelihood of a stroke, is higher during a recession.

If you are experiencing debt problems, seeking professional debt advice is recommended.  There are a number of debt solutions designed with you in mind that will offer real help to turn your debt around and take the strain out of your financially-induced relationship and health worries.