Posts Tagged ‘debt’

Fake loans warning for those in debt

Monday, July 19th, 2010

The Citizen Advice Bureau has issued a warning for borrowers struggling to get credit from their banks and building societies. They have been urged to beware of companies offering fake loans for a fee.

The agency says that it has enough evidence to prove that there are bogus companies out there in the market who are preying on people who are already in debt. These companies offer fake loans by advertising directly on the internet or sometimes via a cold call or text. The modus operandi is to persuade borrowers to pay an initial set up fee that can range from anything between £35 to £2,000 to secure a loan, and then ask for bank account details too. As you may have guessed, the promised loan then fails to materialize.

Director of policy at Citizens Advice, Teresa Perchard, said: “In a recession loans can be hard to get, and people falling into debt or unable to get mainstream credit are being targeted with ads and direct contacts offering loans that really are too good to be true.”

She further pointed out that the problem is further likely to be compounded with public sector cuts because of cutbacks in services such as Trading Standards that are in a position to crack down on rogue lenders. 

Research conducted by R3, a trade body for insolvency practitioners, shows that up to 67,000 or 7% of people struggling with debts have contacted a loan shark or doorstep lender, while a further 13% have considered doing so. 

R3 president, Steven Law, said: “Going to this source for financial resolution will simply build up a larger store of debt and create more pressure and stress. We must highlight the importance of obtaining professional advice over panic measures that will worsen the problem.

“Post-recession we stand on the brink of a personal insolvency crisis that will take years to work through the system, as this finding indicates.”

Stress does take its toll when you are in debt but it is essential to proceed cautiously and seek debt advice before deciding on a course of action. Most reputed debt management companies in the UK offer debt advice for free and by consulting them you can avoid falling into more difficult situation.

There are many debt management plans like an IVA (Individual Voluntary Arrangement) that enable you to pay off your debt without taking further loans. Remember, advice and help is at hand if you’re struggling and help and guidance.

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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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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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Bankruptcy a growing concern for pensioners

Wednesday, April 7th, 2010

Welcome to the latest edition of my blog and I hope you all had a pleasant and relaxing Easter Break.

Earlier this week, I read a research report by Prudential, the financial management and investment company. One of the points that stood out the most is that people retiring this year are extremely concerned regarding the amount of money their pension will be worth.

So what does this mean in real terms? Pensioners retiring this year believe they will receive £1,270 a year less than those who entered retirement in 2009 and more than £2,150 less than those who retired in 2008. Almost one fifth of pensioners expect to receive £10,000 or less.

Andy Brown, director of investment funds at Prudential, said that the recession has clearly had a major impact on peoples’ expectations of their pensions and they had adjusted their expectations as a result of the economic turmoil of the last couple of years.

Added to this is the fact that there has been a drastic fall in housing prices and those who were depending on their home equity to help them manage their finances are now facing a negative equity situation.

Again, this report highlights the need for people regardless of age to act quickly if the burden of debt is becoming unbearable. Remember – help and advice is freely available. ClearStart is here to provide expert debt advice for different debt solutions including IVA and Debt Management Plans.

On a lighter note, if you are a golfing fan – enjoy the Masters this week!

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Insolvency numbers hit a record high

Tuesday, March 23rd, 2010

It will come as no surprise to many of you but the number of people who filed for bankruptcy hit a record high in the last three months of 2009. The figures from the Insolvency Service reveal that a total number of 134,142 people became insolvent over the course of the year out of which 35,574 people were declared bankrupt between October and December. Without doubt, these figures are startling and certainly food for thought.

Of course these numbers dwarf the figures from the last recession in the 1990s when 36,800 insolvencies were recorded in 1992, a time many of us still remember and hoped we would not see again. That said, these statistics unfortunately point towards a similar trend of that of the early 90’s, this time with bankruptcy numbers likely to hit the 145-150,000 mark in 2010.

Bearing in mind all this, one would suspect that insolvency practitioners are very busy at the moment, however, it is important to point out that despite the rise in numbers, the banks are still monitoring the situation. And while most banks are not extending credit, they are not calling in the debts either. Similarly, even though the Inland Revenue has started to exert some pressure on companies that have not paid their PAYE/NI and VAT bills, they are not as yet, adopting a very aggressive stance. With that being said, the general feeling amongst the debt management companies and insolvency practitioners is that this might just well be the quiet before the storm and that post election, the country would witness a dramatic rise in the insolvency cases.

So what has contributed to the rise in the cases of bankruptcy? The 2008 recession, is of course, the most important factor. The adverse economic times has resulted in a large number of people losing their jobs and consequently their inability to pay off their debt. The double digit fall in housing prices have also added to the woes of people who had traditionally depended on the equity in their homes to bail them out of difficult times. Another interesting finding is that there has been an increase in the number of people who have had multiple marriages. This is because they have had fund ex-wives, ex-husbands and kids when the marriage broke down, all this taking a heavy toll on their finances.

If you find yourself in a bad debt situation, then you are not alone. The figures quoted in this blog alone highlight then seriousness of debt in this country. What ever be the reason of your financial crisis, remember that at the end of the day, there is always a way out. You can seek debt advice to understand what options are available to you.

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Enjoy Christmas on a budget, to avoid a financial hangover in the New Year!

Monday, December 14th, 2009

The festive season is without doubt the biggest drain on finances during the year and can very easily spiral out of control, leaving many people with a mountain of debt in the New Year.

At ClearStart we are committed to helping people avoid serious debt problems and with Christmas fast approaching, here are a few handy hints and tips on how to enjoy Christmas on a budget, which hopefully should serve you well both this Christmas and many more to come!

  1. If you’re cooking for a crowd on Christmas day, write up a list of everything you need and ask everyone to help out.  That way you dramatically cut down on the expense of Christmas dinner and all the trimmings.
  2. When visiting a supermarket for that all important Christmas shop, make sure you prepare a shopping list beforehand and stick to it.  Don’t be tempted to purchase those unnecessary luxury items.
  3. Shop around for presents. Try shopping online. There are some great bargains to be had, very often you can compare prices on line and find some good savings – very often postage and packing is included in the price and you will save on petrol and parking.
  4. If you exchange gifts with work colleagues, why not suggest a ‘Secret Santa’ with a limit you can all afford?  You will all have some great fun unwrapping the presents and not have to spend more than you need to.
  5. When buying presents, have a budget and stick to it! Don’t get into debt by trying to buy something you cannot afford.
  6. Don’t be tempted to skip paying your bills in December to give yourself extra cash.  Remember you will only have to pay them in January and could also incur some nasty late payment charges.
  7. Consider joining a savings club for Christmas next year – you can spread the cost of Christmas over 12 months and ensure you and your family have a few less things to worry about at Christmas!

Please remember that if you do find yourself in financial difficulty in January, don’t ignore the problem and hope it will go away.  It’s vital that you seek the advice of an impartial debt solutions company such as ClearStart, to help get your finances back on track and avoid having to look into a more severe debt solution such as a Debt Management Plan or an IVA.

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The importance of seeking the correct debt advice!

Wednesday, November 4th, 2009

For anyone experiencing serious debt problems, a well managed IVA or Debt Management Plan (DMP) can both be effective ways of climbing out of the debt trap and back on the road to financial recovery.

It is vital however that you choose a company who offers impartial debt advice best suited to your individual situation. If you don’t, you could be offered a debt solution which is completely unsuitable for your needs and destined for failure, which sadly so often happens and has in fact been highlighted in a recent article in the Observer.

When entering into any debt solution, its success relies on keeping up with the agreed monthly payment.  Any reputable company will make sure that you have enough money to live on each month, whilst also ensuring that your creditors are receiving an acceptable return on their debt.  Once you have reached the end of your debt repayment plan, you are free to start afresh, rebuild your credit file and take control back of your finances.

Unfortunately as I previously mentioned, sometimes people fail with their plan leaving them with no option than to go bankrupt or look at alternative debt solutions. In many instances the money they have already paid into the failed plan has been taken up with fees, so they are still stuck with the original debt and deeper in financial ruin.  

The main reasons for failure is when the customer is given an unrealistic amount to live on each month, or they have been ill advised which solution to enter, so the importance of finding a reputable company with your best interests at heart, cannot be stressed highly enough.

For an ‘at a glance’ look at the type of debt solutions available and which one may be suitable for you, I’d recommend visiting www.clearstart.org/debt-solutions/product-suitability, although please remember no two problems are the same and we wouldn’t be able to make a confirmed recommendation until you had spoken to one of our advisors.

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Budget and avoid the debt trap!

Monday, November 2nd, 2009

The current financial crisis has caused many of us to sit back, re-evaluate our spending habits and ensure that we are managing our money in a responsible manner to avoid any financial problems.

By simply drawing up an income and expenditure budget each month, you can try and make sure that you are not spending beyond your means.

There are so many other things you can do to try and make your money go further each month.

  1. Don’t take on credit you cannot afford to repay.
  2. If you have to use a credit card, carefully manage your repayments each month, if you only pay the minimum payment, it may take you many years to pay off the amount you have borrowed.
  3. Don’t use your credit card for a cash advance – there will be a handling fee and you will probably pay interest from the date of withdrawal.
  4. Try and monitor your current account regularly, not only will you be keeping a look out for someone fraudulently using your funds, but also you will avoid unauthorised overdrawing on your account. Most banks and building societies will charge you heavily if you try and spend money you don’t have!
  5. Opt for paperless billing and pay by direct debit. It’s amazing how much extra you could be charged by receiving a traditional bill through the post.
  6. Look to see if you have an old mobile phones to sell – there are lots of sites where you can find out how much cash you can get for returning an old phone.
  7. Look into switching to a water meter.  A general rule is if there are more bedrooms than people living in your home a water meter may save you money.
  8. Turn your household thermostat down by just one degree.  You’re unlikely to notice a change in temperature, but will certainly notice a reduction in your energy bill.
  9. The AA have said that by reducing your speed from 70mph to 60mph  it will reduce fuel consumption by between 14% and 16%.
  10. Keep receipts and guarantees, just in case things go wrong!

Remember ClearStart is here if you need advice for different debt solutions including IVA Individual Voluntary Arrangement and Debt Management Plan.

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Seek debt advice before it’s too late!

Tuesday, October 13th, 2009

Being in debt can be a very stressful or even frightening experience. Many people can have a tendency to “bury their heads in the sand” and hope that things will get better.  Sadly this seldom happens and if action is not taken, the consequences can be disastrous.

If not addressed quickly, debt problems can mount which can ultimately lead to County Court Judgements, Repossession, or even serious health problems.  The recent press release by the Citizens Advice Bureau regarding Advice Week has also highlighted the difference that getting help with a problem will make, especially if it’s tackled early enough.

Finding the correct debt management service can be a daunting experience in itself.  A quick search through the internet will produce hundreds of debt advice companies all looking for your business and some without your best interests at heart.   It is vital that you find a reputable debt company who offers free advice and a range of solutions to suit your individual needs, otherwise you may find yourself worse off financially than before.

At ClearStart we aim to give you free debt advice, a full range of best-value debt solutions and immediate support to help you improve your life by solving your debt stress.   

Over the coming months I will be using this medium on a regular basis, to communicate my thoughts on the debt industry, the economy, hints and tips on how to make your money go further and what to do if things start to go wrong financially.

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