Posts Tagged ‘debt management’

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Interest on student loans to rise

Monday, September 6th, 2010

Welcome to my weekly blog and I hope you are enjoying the spat of warm weather! This week, I going to look at student loans, given it’s the that time of year again. According to a report published in The Telegraph, millions of undergraduates could be burdened with higher interest rates on loans driven by the fact that universities were “severely at risk” from budget cuts imposed to service Britain’s debt.

The Student Loans Company (SLC) has confirmed that interest rates on student loans will increase. This means bad news for the millions of students who are still repaying their debt.

According to the new rules, students who took loan before 1998 and those who borrowed later, will now have to pay interest on their debt. The SLC confirmed that those who took on the debt after 1998 will now be charged 1.5% interest. On the other hand, those who borrowed the money before this period will have to pay 4.4% interest on their outstanding balances.

What this means is that people with newer loans amounting to £10,000 will pay £150 a year, and those with older loans of £10,000 will pay £440.

According to estimates, there are over 3.3 million people who are still carrying a student debt from after 1998, while around 355,000 still have `pre-1998 loan debts`.

With the threat of double digit recession looming large, the rise in interest on student loans has further made the picture bleak for those already in debt and those who could find themselves in similar circumstances. The need of the hour is to plan finances wisely and keep expenses in control. Those already in debt, can seek expert debt advice to take control of the situation via different debt solutions like IVA and Debt Management Plan. It may be noted that most companies offer debt advice for free and so seeking expert opinion will not add to your costs.

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Insolvency figures still at a high despite recovery

Friday, August 27th, 2010

Welcome to the latest edition of my blog and this week I will be discussing the recent insolvency statistics released by the Insolvency Service.

The latest statistics from the Insolvency Service show that though there has been a slight decline in the number of people who declared insolvency in the second quarter of the year, the number still remains a worryingly high.

The data released by the Insolvency Service shows that in England and Wales, 34,743 people entered a formal insolvency procedure to deal with their debts. Of these 14,982 of them entered bankruptcy, 13,466 entered an IVA (Individual Voluntary Arrangement) and 6,295 opted for a DRO (Debt Relief Order).

Compared with the previous quarter, the number of people who entered into a DRO or IVA has gone up. While the DRO figures rose by 11.5%, IVAs were up by 14.3%. However, on a positive note, the number of people who entered bankruptcy went down by 17.9%.

The overall number of people who entered insolvency was down 2.6%, however, the number is still very high when you compare it to the fact that only the previous three quarters have ever seen more people declared insolvent.

The latest figures from the Bank of England also show that more people repaid their unsecured debt than they took on in June – in figures, £98m more.

Debt analysts are citing two reasons for this trend. First, the lenders are showing more caution in lending and second, borrowers have themselves woken up to the fact that in these uncertain economic times, it is prudent to refrain from borrowing more than they can repay.

An interesting point to note is that more people have opted for IVA rather than declaring bankruptcy. Talk to the debt advisors, most of who offer debt advice for free, and they will tell you that an IVA is definitely a better option to bankruptcy given the fact that you can repay your debts in five years and be declared free from any remaining debt at the end of the period. Also, you don’t risk losing your property and other valuable assets.

Thanks,

Nigel

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UK consumers not aware of financial products

Tuesday, August 10th, 2010

A recent survey by comparison site Confused.com has thrown up some startling results, one of them being that consumers in the UK are confused by financial products, do not read the finer print or understand the hidden costs before applying for one. This is one reason why many of them require a debt management plan in the near future.

The survey took into consideration 6,000 UK consumers and found that 71.9 per cent of people do not know how to use their money wisely. Another 38 per cent of consumers could not estimate how much their fuel bills would be and 42 per cent claimed that having to make decisions about money caused them to stay awake at night.

A further 79.1 per cent said that mortgages were confusing and 83.9 per cent stated that they did not fully understand pensions.

This could lead people to seek a debt management plan when they retire as they may not have enough knowledge on putting money aside to see them through a comfortable old age.

Darren Black from confused.com said: “It’s not surprising that financial products and terms account for so much confusion in modern life, especially given the changes that have taken place in the sector over the last couple of years.”

Only last week, moneysupermarket.com had revealed that a third of savers had never checked the rates on their accounts, implying they were missing out on the best deals.

Going by the recent reports, the number of people in debt is showing a steep rise notwithstanding the fact the economy has started showing signs of revival. Not knowing about the financial products you buy can easily lead you into debt. If you are already in debt, you can seek free debt advice about different debt solutions including an IVA and to understand how you can take control over your finances.

As always, we are here to help you if you are struggling so don’t hesitate to contact us if you would like help or advice.

Have a pleasant week.

Nigel

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Home repossessions can reach 175,000 by 2012

Wednesday, August 4th, 2010

Welcome to my weekly blog and I hope you are all keeping well. This week, I’m going to look at a topic that is close to the heart of many people struggling with debt problems and that is the fear of losing their home.

According to an unpublished report, home repossessions in the UK could reach 175,000 by 2012. The report commissioned by the Department for Communities and Local Government last year, was compiled when the economy was in a much worse state than now.

The Council of Mortgage Lenders says that there were 47,700 repossessions last year. For this year, it’s predicting not more than 53,000 repossessions.

The drop in the figures can directly be attributed to the fact that the economy is rising from the recession. However the drop in the numbers predicted this year does not mean that repossession is not a serious problem. If 53,000 homes are taken back this year, it means that more than 1,000 households a week will be affected. This further means thousands of people will be left homeless and this by no means is a small figure.

If you are behind with your home loan, remember that by taking measures now you can ensure that your home remains safe. One measure that you should immediately take is to seek debt advice. If you are worried about further costs, there are  a number of companies that will provide debt advice for free and it can throw light on the various debt management plans and debt solutions available that can help you get hold of your debt situation before it spirals out of control.

You can consult a number of debt management companies for free debt advice to study the range of options available. Based on the information you receive, you can then decide to opt for a debt management solution that best meets your circumstances.

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North East UK more in need of debt management

Tuesday, July 27th, 2010

A new research shows that the North East of the country may be more in need of debt management such as Individual Voluntary Arrangements and Debt Relief Orders to deal with debt problems.

The bankruptcy map of the UK was compiled by R3, the insolvency trade body. The results of the study show that the likelihood of becoming insolvent is almost seventy percent (69.5%) higher in the North East than in London.

Commenting on the findings, R3’s President, Steven Law said, “Prior to the recession, the North East had a higher than average unemployment rate and the region’s construction industry was badly hit during the economic downturn so it is understandable that personal insolvencies are more common there.”

There were almost six thousand (5,923) new personal insolvency cases in the North East, which means that for every ten thousand people, 29 of them became insolvent. The figures indicate that people who live in London are least likely to go into a formal insolvency procedure.

A further analysis of the insolvency figures show that recession has hit men harder than women, with a rising number of men seeking debt advice to get on track. According to the Consumer Credit Counselling Service (CCCS) report, there was a 51 percent increase in the number of men seeking debt advice since 2007. Factors such as rising unemployment, a slower rate of salary increases and rising household expenditure combined took toll on men’s financial status.

The top ten insolvency regions (new personal insolvency cases per 10,000) according to the report by R3 are:  

1.    Torbay, South West (45.8)

2.    Kingston upon Hull, Yorkshire and the Humber (40.7)

3.    Lincoln, East Midlands (39)

4.    Plymouth, South West (38.8)

5.    North Tyneside, North East (37.4)

6.    Gateshead, North East (37.1)

7.    Corby, East Midlands (37)

8.    Hastings, South East (36.9)

9.    West Devon, South West (36.9)

10.    Thurrock, East Anglia (36.7)

An effective debt management can help you control your debt and improve your financial situation, but before settling for a specific debt solution, it is always advisable to seek professional debt advice to explore your options.

I hope you have found my blog useful and enjoy the rest of the week. Lets hope the rain goes away first!

Nigel

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11% of the UK population having problems in repaying debts

Thursday, July 15th, 2010

Going by the recent government figures, Britain seems to be caught into one of the worst credit binges in history with about 11% of the UK population having problems with repaying their debts. More alarming is the fact that the figure is continuing to rise.

According to Citizens Advice while it is true that some people took loans they shouldn’t have taken in the first place, there were others who were lent irresponsibly far too much.

Cases of bankruptcies, insolvencies and unemployment are rising. A recent article in the Journal of Health Economics has also noted that there is a direct link between rising debts and mental health problems, highlighting the wider and perhaps a more serious impact that the society is facing.

For the last few years, the government has funded debt advisers to provide the free face-to-face advice to help people understand their financial situation and, more importantly, to help them negotiate with their creditors for manageable repayments. The Financial Inclusion Fund is the only dedicated government fund for providing free debt advice.

However, the fund is within the Department for Business, Innovation and Skills, which has to make £1bn of cuts in the coming year, and no decision has been made on whether to continue free provision.

In this climate of austerity, one option is to seek debt advice from reputed debt management companies who can help you deal with your financial problems. If you are dealing with multiple unsecured debts, you can seek a face-to-face meeting with a debt advisor who can give you a clear picture of what’s going on and how you can engage with the problem.

Seeking debt advice can save you a lot of stress, especially if you’re facing eviction, have rising multiple debts, complex financial problems, and bailiffs knocking at your door.

So remember, free advice and help is available for you to take advantage of and we are always happy to give you the help and support you need.

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New mothers forced to go back to work to deal with mounting debt

Wednesday, July 7th, 2010

Welcome to my weekly blog and I hope you all are having a nice summer and enjoying the World Cup – now from a neutral point of view!

A recent study reveals that more than half of new mothers return to work due to financial pressures, with many cutting their maternity leaves. According to the survey, 56% women admitted they were unprepared for the fiscal impact of having a child. The survey was conducted by the comparison website uSwitch.

The study paints an image which is a stark contrast to that of modern mothers “having it all”. More than half (52%) of those returning to work after the birth of a child do so because of debt problems.

These are some of the highlights of the study:

  • Only 22% women choose to return because they want to continue their career.
  • The average net household income drops by 34% from £3,431 to £2,266 a month while on statutory maternity pay. However, costs soar, with parents spending an average of £2,152 in the run up to the birth on baby items, and a further £2,521 – more than a month’s reduced net household income – after the baby is born.
  • The average amount saved in anticipation of having a baby is £3,265, but 56% of the 1,000 mums questioned for the survey said they were not fully prepared for the impact of surviving on a reduced income.
  • Nearly a third of new mums were not aware of their company’s maternity package when they decided to have a baby.
  • More than four in 10 mums have ended up in debt while on maternity leave, incurring an average of £1,329.

Ann Robinson, consumer policy director at uSwitch, said: “Debt and financial considerations combine to be the biggest motivating factor behind new mothers returning to the workplace. Despite women being told that they can ‘have it all’ and can choose whether to be a working or stay-at-home mum, the fact is that most have this choice stripped away from them by the financial realities of modern life.

With the new government planning to cut child trust funds and the impending budget causing concerns over pay freezes and redundancies, family finances are under more pressure than ever. The high cost of living coupled with the often crippling cost of a mortgage means that many households today need two incomes to get by. Unfortunately, new mothers are often paying the price for this by seeing their choices taken away.”

I always stress the importance of seeking impartial and good debt advice. It is the first and often the most difficult step to take but it is also the most important. If you are worried and are struggling, act now.

Thanks

Nigel

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CAB: Additional 2.4 million people sought debt advice in 2009

Tuesday, June 22nd, 2010

Welcome to the latest edition of my blog.  According to the latest annual statistics from the Citizens Advice Bureau (CAB), an additional 2.4 million enquiries for debt advice were received by its call centres in 2009 compared to 2008.

The CAB report shows that of all the calls they received, 34 percent were from people who sought debt advice. In fact, debt advice was the largest topic of advice sought by CAB callers.

The report further shows that compared to the previous year the debts owed to private bailiffs increased by 38 per cent. A total of 19,090 enquiries regarding private bailiffs were made compared to 13,845 the previous year.

Chief Executive of the CAB, David Harker said “We know from our frontline that the human impact of the recession is far from over for people who have lost their job or their home, or both, in the past two years. Yet, there are millions more people struggling with debt and poverty, or missing out on welfare benefits, that Citizens Advice Bureau want to be able to assist.”

Between April 2009 and March 2010 the CAB provided advice on 7.1 million issues which is an increase of 18 per cent on the previous year. Enquiries regarding mortgage and secured loan arrears also increased by 21 per cent over the same period.

David Harker further said, “We were able to help more people last year thanks to some generous additional funding from the government and many local councils. However much of this was short term, and our network of community based services, which rely on the generous help of 21,000 volunteers, may not be able to help as many people in future if funding is cut. It is absolutely vital that we are able to continue to provide the invaluable service we deliver to local communities without risk of major cuts.”

If government cuts are carried out people will still need professional debt advice to help them find a solution based on their personal financial circumstances. Aside from the Citizen Bureau, there are many debt management companies in the UK that are providing free debt advice. If you are in debt, it is important to get reliable, helpful and free debt advice at the earliest.

We ClearStart understand how stressful debt can be and we offer advice on all debt solutions including IVA (Individual Voluntary Arrangement), specific to your needs. Remember, advice should always be in your best interest.

Thanks

Nigel

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Average household in Britain owes £57,950 in debt

Friday, June 4th, 2010

Another day goes by and the nation sees itself further in debt. According to the latest figures, the collective debt of personal debts in Britain amounts to £1,460bn, which means as individuals, people owe more than what the whole country produces in a year.

A more disturbing fact is that the debt problem is only getting worse. The figures for March 2010 show that personal debt further increased by £0.6bn. The interest payments on that debt were £67.8bn in the last year alone. What this means is that the average household now owes £57,950 while the average amount owed by every UK adult is £30,258. Further, the average interest being paid by each household on their debt is about £2,692 each year while £186m-worth of personal interest is paid out each day in the UK.

Apart from mortgages, people also owe an increasing amount on plastic and loans. Studies show that the average consumer borrowing through overdrafts, credit cards, motor and retail finance deals and unsecured personal loans went up to £4,593 per average UK adult at the end of March 2010. Also, a property is repossessed every 11.4 minutes and someone is declared insolvent or bankrupt every 3.69 minutes.

There are various reasons that have contributed to this. The ‘buy now and pay later’ concept is definitely to blame but added to this is the fact that many people have lost their jobs during the recession. Also, the earnings too have taken a nosedive. As a result, people are now in a situation when they are unable to make their monthly payments.

Disturbing as this may sound, what is important to remember is that a bad debt situation can come under control provided you explore all options available. If you are facing serious debt, the first step you should take is to seek debt advice. Most reputed debt management companies in the UK offer debt advice for free. The experts will study your individual situation and suggest whether an informal debt management plan, a debt consolidation loan, or an IVA will help you on the path of recovery or else if everything else fails, you can declare bankruptcy. Seeking debt advice can also help you to understand preventive measures you can take to avoid falling into the debt trap.

I hope you enjoy the weekend and weather and long may it last!

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How to face the threat of bankruptcy

Monday, May 17th, 2010

The record insolvency figures reveal that the economic crisis is far from over and even though the economy is showing signs of revival, it has left a lasting legacy. Going by the reports, more people are expected to go bankrupt in the coming months.

Each year sees more than 100,000 people becoming insolvent and experts warn that if they don’t seek debt advice on time, the problem is not going to go away any time too soon.

Experts attribute the sky-high figures to a debt-lag effect where in bills pile up over a period of time due to overspending at times like Christmas and also because of the ongoing impact of the financial crisis.

Then there are other factors that are responsible for individual debts the most important being the loss of jobs and decreased earnings. Some financial experts also feel that credit was so cheap and plentiful that people were lured into taking loans, using credit cards beyond their means, and taking higher mortgages than they should have.

The ‘buy now and pay late’ culture has also contributed its share to the financial distress. Most people have little idea of how crippling debt can be and once they start getting into debt it becomes hard to avoid falling into a vicious circle.

So how to break out of this vicious circle? 

Well the first and foremost is to seek debt advice. If you are already in debt, this may not seem a viable option because you may not want to add to your expenditure but do realise most reputed debt management companies in the UK offer debt advice for free. You can talk to the financial experts and they will study your financial situation and suggest the best way forward. Usually, debt solutions include striking a deal with your creditors, entering an IVA (Individual Voluntary Agreement), taking a debt consolidation loan, and in extreme cases, declaring bankruptcy. Which is most suitable will depend on your debt level and individual circumstances and so it is important to seek debt advice to understand which option works best for you.

I hope you find this useful and I look forward to any comments you may have.

Thanks

Nigel

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