Debt picture worsens for Scots as bankruptcy jumps by 25%

Just days after it was revealed that Scottish people have taken on more debt than the rest of Britain, it has now emerged that bankruptcy cases north of the border have soared dramatically in the last few months.

Accountant in Bankruptcy (AIB), the body responsible for personal insolvency in Scotland, recorded an increase of 25 per cent in the number of people filing or being pushed into bankruptcy in the last four months. A total of 5,000 people were declared bankrupt in Scotland between the months of April and June this year, a figure which is down 1 per cent compared to the same period in the previous year but is very worrying nonetheless.

This increase mirrors the findings of similar research by the insolvency group R3, which revealed that 539,000 Scots have seen their debt problems worsen in the last three months. These people admitted taking on more credit card debt as well as loans and increased overdrafts in order to cover their spending and outgoings.
One charity that is dealing with the crisis, Money Advice Scotland, expressed concern at these recent findings but warned that the debt management situation in Scotland could get worse before any improvement can be seen. Convenor of the charity’s board, Christine Sinclair, explained:
“Increases in the cost of living, people struggling to pay credit cards and loans will have a bigger impact to come on people with debt problems. Yes we have seen some impact already, but with the big rises in utilities, gas and electricity, I think it will actually get worse before it gets better.”

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Shoppers more wary of debt problems this summer, research shows

The latest statistics on shopping, spending and debt management have revealed that consumers were less likely to make big purchases last month (June 2011).

The Nationwide Consumer Confidence Index came up with the data, which showed that both consumer confidence and spending dropped in June, despite it rising in May around the time of the Royal Wedding, a period of sunny weather and an extra bank holiday.

Consumer confidence dropped by four whole points last month, according to the UK’s third-biggest savings and mortgage provider, falling to just 51. Coinciding with this was a fall of six points in the Spending Index, which dropped from 80 to 74 in the space of a month.
All of the latest statistics point to increased caution about spending amongst consumers, especially when it comes to larger purchases, and this is possibly due to concern over rising energy and fuel prices, the threat of redundancy or long-term unemployment, and high inflation. Another important factor is worry over debt management, as the squeeze on household budgets has made less people willing to splash out on large purchases.

Mark Saddleton, who is the Head of Economic and Market Analysis at Nationwide, commented on the findings of the latest Consumer Confidence Index and offered some more positive news for consumers. He said:
“There are signs that the weakness of consumer spending power is beginning to exert downward pressure on prices in the High Street, and better than expected inflation figures for June give hope that there may be some respite for consumers ahead.”

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Ballymena brothers banned from being company bosses after bankruptcy

Two brothers who ran businesses in the Country Antrim town of Ballymena in Northern Ireland have been banned from being company directors after they were forced into bankruptcy.
Joseph and Gerard McLarnon were brother and business partners who ran a hotel management company called MCL Investments (NI), which formerly operated the Leighinmohr House Hotel in Ballymena. The hotel is still up and running, but is operated by another company.

MCL Investments (NI) ran up huge debt problems under the direction of the brothers, and was eventually pushed into administration in summer 2009. The company had debt management problems in excess of two million pounds, whilst only having assets of £253,000.

At the time it wound down and all of its debt problems were revealed, it was found that MCL Investments (NI) owed nearly £1 million to unsecured creditors, £500,000 to the bank and £625,000 in unpaid tax. An investigation undertaken by the Department of Enterprise, Trade and Investment suggested that the brothers had effectively financed the running of their hotel by not paying tax.
The investigation also found that the brothers had misused around £484,000 of company money by lending it to themselves and other related parties.

The brothers themselves faced personal bankruptcy soon after their company was dissolved, with Gerald McLarnon being declared bankrupt in October 2009 and Joseph McLarnon being declared bankrupt in November 2010. They have both been banned from acting as company directors for a period of at least eight years.

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Football legend Colin Hendry discharged from bankruptcy

The retired Scottish footballer Colin Hendry has officially been discharged from bankruptcy, to the annoyance of creditors who will only recoup £36,000 of the £2.1 million he owes.

Hendry, who formerly captained both Scotland and Blackburn Rovers football teams, was forced into bankruptcy in June 2010 after his debt problems spiralled out of control. The former defender was said to have turned to alcohol and gambling to cope with the death of his wife, Denise, in July 2009.

By the time he was declared bankrupt, Hendry had racked up £1.3 million in tax debt problems with HM Revenue and Customer (HMRC). He also owed £35,000 to his brother, £10,000 to the parents of his late wife and £65,000 to his late father’s estate. A number of Hendry’s most pressing debt problems are said to have been caused by the former footballer squandering his wealth on gambling.
After the custom 12 month period, Hendry has now been discharged from bankruptcy. This news has angered his creditors, after it was revealed that the retired star will only be paying back less than 2 per cent of his original debt.

One of Hendry’s former friends, Hector McFarlane, was owed £95,000 by Hendry. He is reportedly furious that the ex-player lived and continues to live a luxury lifestyle but will not be fully paying back his creditors. McFarlane told the Daily Record:
“I am just flabbergasted. I stand to get back £1800 of the money I loaned him. It’s an absolute disgrace.”
“My wife and I have not received one penny of the £95,000 he owed us, while he can get on with his life.”

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Posted in: Bankruptcy,Colin,discharged,football,Hendry,legend

R3 report shows Scots have greater debt problems than rest of UK

A new report produced by the insolvency trade body R3 has suggested that people living in Scotland are facing greater debt problems than anywhere else in Britain.

The report, R3’s quarterly debt snapshot, showed that 13 per cent of Scottish people had taken on extra debt in the last few months, in the form of loans, increased overdrafts and credit card debts. In the rest of Britain, this figure was just 12 per cent.

The research also found that 43 per cent of Scots struggle to make it to payday. Whilst this was 3 per cent less than the figure recorded for the rest of Britain, it was found that 200,000 Scottish people had taken out payday loans (small, short-term loans designed to cover the borrower’s bills and
expenses until the next payday) to cover their budgetary shortfall in the last year.

R3 revealed that one in five Scottish people who had taken out these payday loans struggled to pay back what they owe, which is considerably more than the one in ten Brits who admitted the same.
John Hall, who is an R3 Scottish council member, said:

“It is extremely worrying that such a large percentage of people are struggling to make it to payday and that many are using payday loans to bridge the gap.
“These loans tend to have high interest rates and often those who use this type of credit find themselves in a vicious debt cycle, especially if they then experience a sudden job loss.”

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Brits need to focus on high interest debts

There are many people these days who use any spare cash that they have into savings in order to ensure that they have some money towards their future – which is something that would normally be highly commendable. However, many of these that are saving their spare money are also struggling with a range of high interest debts such as credit cards, loans and store cards, which means that they are effectively putting money into savings accounts that earn them little or no interest whilst wasting money on huge amounts of interest on their debts because they are dragging the repayments out.

One industry official has now said that it is important for those that have high interest debts to make sure that they put any spare money that they have toward repaying their high interest debts rather than putting it into a savings account that offers hardly any interest or returns. The warning comes from Justin Modray of online resource Candid Money, who said that in the current climate getting finances sorted was the most important thing to think about.

He said that many people were paying huge amounts of interest on their debts but rather than trying to pay them off when they had a little cash to spare they were simply putting the money into savings and continuing to pay huge levels of interest on the debts. He said that things were difficult for those that had no savings to pay off debts and that saving for the future for many people in today’s climate was something that was unattainable.

He stated: “Those fortunate enough to have savings can use them to stave off debt, but I think for many it’s more a case of just trying not to drown in debt and saving for the future remains a pipedream.”

Tags: Brits, interest, interest debts, Finance, debt consolidation, United States, little cash

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Scotland takes on more debt than rest of UK

A recent report has revealed a worrying trend of taking on too much debt in Scotland, with Scottish consumers said to have taken on far more debt than other consumers in the UK. The data came from the quarterly personal debt report released by the insolvency trade group R3. The data showed that Scots have been taking on a variety of new debts including debts from credit cards, loans and overdrafts.

The data also showed how Scottish consumers were finding it difficult to make their money last from one payday to the next, with around 43 percent of Scots are said to be struggling to make their money last until payday. This figure is worrying but it was actually around 3 percent less than the rest of the UK.

When it came to payday loans, the R3 report showed that in the rest of the UK there had been around 2 million payday loans taken out over the past twelve months whereas in Scotland alone there had been 200,000. One fifth of Scots are said to be struggling to pay back these payday loans, whereas in the UK only one tenth of consumers said that they were struggling to pay back their loans. According to Citizen’s Advice Scotland the figures do not come as any great surprise, as it has been evident for some time that the debt problems in Scotland have been on the rise.

R3 Scottish council member John Hall said: “It is extremely worrying that such a large percentage of people are struggling to make it to payday and that many are using payday loans to bridge the gap. These loans tend to have high interest rates and often those who use this type of credit find themselves in a vicious debt cycle, especially if they then experience a sudden job loss.”

Tags: scottish council, council member, United Kingdom, loans, new debts, great surprise, debt cycle, Advice Scotland

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Debt ridden parents raiding children’s savings

A recent report has suggested that many parents in the UK who are bogged down with debt and struggling to make ends meet financially are now having to delve into the savings that they had put aside for their children’s education in order to be able to afford bill payments and essential living costs.

With the cost of living having soared to such a high level and with wages having been frozen for so many people, many households are now finding it increasingly difficult to cope with their financial obligations. The recent energy hikes will have simply tipped many households over the financial edge, which has resulted in many now having to raid money that they had put aside for the future of their children to try and make ends meet.

According to the results of a recent study around 2.7 million people have now been forced to take money from an account that had been created to put money aside for their kids’ education. Around a third of the value of these funds is said to have been withdrawn on average. It has also been revealed that around 1.3 million households are now worse off than they were nine months ago due to soaring bills.

It was also revealed that many people whose kids were in private education or planning to go into private education had been affected by financial issues and had been forced to make some difficult decisions with regards to their kids’ education.

One official said: “The rising cost of living is placing a major strain on household finances. Many of those who are already paying for private education are facing some tough decisions over the summer. Some have decided to reduce the amount spent, while others have had to withdraw children from private education. Our research shows that many people have been unable to save adequately for private education and of those who have, other financial necessities have forced many to raid their educational funds.”

Tags: difficult decisions, Personal finance, private education, financial necessities, tough decisions, debt, financial issues

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Posted in: childrens,parents,raiding,ridden,savings