Debt hit, cash strapped Brits love a bargain

As many people face mounting debt, frugal living has become second nature, according to new research.

One in two thrifty Brits admit to going out of their way to find a good deal, according to a price comparison website. 48% of people confessed that they love the feeling of securing a bargain. With many struggling with mounting debt it comes as no surprise that frugal living is a must in order to meet everyday expenses.

However, cheap living doesn’t have to be a chore, and 48% of Brits take great pleasure from making a saving either from as little as £1 or as much as £100. The research found that 24% of people said that it is something to be proud of and the feeling of achievement people get when they save money is not affected by the amount of money they actually save.

Not only that but 58% of Brits get greater satisfaction from telling people about the savings they’ve made. With so many discounts and vouchers widely available, 53% of people said they could go out of their way to save money.

63% of people admitted they feel cheated if they later find out they have paid more for goods than necessary or a cheaper alternative.

Women in particular are keen to find cheaper deals and over half of 18 to 34 year olds said they would rather save £500 on a purchase than be surprised by unplanned weight loss, illustrating how stretched people’s finances currently are.

Eight out of ten men would also rather receive £500 off a major purchase than have their favourite sports team win an important game.

“The most interesting aspect of the research for me is the fact that people feel so euphoric at saving money – irrespective of how much cash is involved,” said Christine Webber, Psychotherapist.

“I believe this is because of the difficult financial times we live in. We have little or no control over the stock markets, our pensions or how much longer we’re all going to have to work. So, hunting down a bargain feels like a real triumph and helps us feel that we have at least some control over our money.

“There is a real satisfaction to be had from knowing that we have done a deal and have not had to part with the full asking price for something that we want.”

The research found that 61% of people are now holding onto their money for the next big bargain. However, many people have to just hold onto their money to make ends meet.

Debt Solutions

If you are living the frugal lifestyle due to debt problems, seek out debt management advice so that you do not have to worry about your mounting financial problems. Solutions such as debt management or an IVA may help you address mounting personal debt.

Debt problems can soon crush the elated feeling of finding a good deal as cheaper living is a necessity rather than an alternative.

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Posted in: bargain,Brits,strapped

Inflation increase pushes consumers deeper into debt

Inflation increase pushes consumers deeper into debt

The inflation rate rose to 4.5% in August, according to the latest figures from the Office for National Statistics.
The main contributing factors included rising utility bills, higher food and clothing prices.

The rate increased from 4.4% in July and the Bank of England expects the Consumer Price Index to rise to 5% before the end of the year.

This is grave news for consumers as the cost of living soars, plummeting UK households further into debt.

Wages are not rising in line with inflation though, which leaves consumers with less to spend and more debts to cover.

The price of clothing and footwear increased at the fastest rate on record (3.7%) for the July to August period.

The end of the summer sales and introduction to autumn prices saw female clothing increase more than male or children’s wear.

Furniture and home goods also experienced a price rise, from 2% between July and August compared with a 1 % rise a year ago.

The biggest annual rise in the water and energy bills in more than two years has also pushed up the rate of inflation.

Gas and electricity prices from 5 of the “big 6 “energy suppliers have risen by around 20%, adding between £150 and £200 to the average annual fuel bill.

The inflation rate is now double the Bank of England’s target rate of 2%, with little sign of returning to the target rate soon.

The increased rate of inflation will have a detrimental effect on the pockets of cash-strapped Brits.

New research from Alliance Trust Savings found that 65-74 year olds are the age group which will suffer the highest inflation rate at 5.4%, which is the fastest rate of price change since October 2008.

Those under 30 face an inflation rate of 4.9%, which is the highest rate to face people in this age bracket since September 2008.

Mounting debt prevents Brits from saving

Kevin Mountford, head of banking at moneysupermarket.com, commented on the increased cost of living, “Basic rate tax payers now need an account paying at least 5.63 per cent just to preserve the value of their savings, rising to 7.51 per cent for higher rate tax payers and a staggering 9.01 per cent for savers paying the top rate of tax. Currently no savings accounts pay enough to offset the damage done by inflation.

“While most savers won’t be able to secure an inflation beating product, it is still vitally important they check their rates and be prepared to switch if they are not on the most competitive deal. The difference between the average and top paying rates is considerable, so moving to a better deal can go a huge way in helping savers limit the impact on their pots.

What do you think? Post your views in the comments.

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Posted in: consumers,deeper,increase,inflation,pushes

Brits spend 9 billion a month paying off debt

One in four Brits spends more than 40% of their wages on repayment of non-mortgage debt, the latest research has found.

According to a price comparison website, the average amount of debt paid off per person per month is £322.

Cash strapped Brits already struggling to cope with the rising cost of living and increased in winter fuel bills are also now paying off debt.

Britain’s skyrocketing personal debt is clear, with debt repayments swallowing up monthly incomes.

The average monthly income for a UK adult is £1,288 and if Brits are paying £322 out of that, that’s a staggering 25% of their monthly wage.

Shockingly, 8% of people said they spent 80% of their monthly income on debt repayment.

Women owe less money than men with only £6,739 in debt compared to £7,944 for their male counterpart.

Londoners have the highest amount of personal debt in the UK owing on average of £8,478 compared to those living in Yorks & Humber who owe an average of £5,796.

However, Londoners are less likely to pay off their debt. The research found that those living in the capital would use 22% of their monthly wage for debt repayment compared to those in the Yorks & Humber who will commit to 28% of their wage to paying off debt.

Single men and women are most likely to accumulate debt. Women aged between 40 and 59 are said to be those currently struggling with debt the most, according to the Consumer Credit Counselling Service.

Debt management solutions

Whilst it’s good news that Brits are paying off their debt, there could be more effective and efficient ways to manage debt problems.

By adopting debt consolidation to merge debts into easy repayments over a set period of time you could ease the repayment process without having to use up 80% of your monthly income!

Seek debt advice about effect debt solutions.

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Posted in: Billion,Brits,month,paying,spend

Demand for debt advice likely to increase

Anyone who has needed to see a debt advice professional over recent years will know how much more difficult this has become due to the soaring demand for these services from the many consumers who are struggling with their finances and finding it difficult to repay their debts. Many have had to wait for long periods of time in order to get an appointment with a debt counsellor to discuss debt problems and issues.

There are now fears that the situation could actually get worse with the demand for debt advice rising as a result of government cutbacks amongst other things. The austerity drive that was announced by the government last year and is due to be imposed over the course of this year and next year will have a profound impact on the finances of many people, such as those who see their benefits cut or those that will see their jobs go due to cutbacks in the public sector, which can then have a knock on effect in the private sector.

However, officials have said that it is not only the austerity drive in the UK that will drive people into worse financial situations but the similar situations that are going on around the world, which has a knock on effect on the UK. Some even think that the UK could be in line for another recession, which would bring dire news for businesses and consumers alike.

One official spoke about the cutbacks and economic situation in the UK and in other countries, stating: “At the moment it just seems to be a worldwide trend. I think the inevitable consequences of that is it is going to be a difficult period ahead, not just for the UK but for much of the world.”

Tags: Financial Services, knock on effect, debt advice, financial planning, economic situation, consumers, appointment, fears

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Posted in: advice,Demand,increase,likely

Set up a direct debit to avoid late payment fees

Late payment fees are fees that can be imposed on a wide range of debts and bill accounts by creditors and companies who have received a late payment or in some cases have not received a payment from you. In the current climate more and more people are at risk of missing payments or making late payments that could incur fees, which can make finances even more stretched at a time that is already very difficult for many.

A lot of people these days find that a large chunk of their income goes on paying off debts, leaving them financially crippled and unable to handle any charges that are then added to their debts or accounts. One industry expert said: “It’s worrying to see such a high number of people needing to use so much of their income just to service existing debt.”

In order to make sure that you do not incur fees by making late payments and missing payments on debt and bills it can pay to set up a direct debit. In fact, this can help in a number of ways, as it means that you do not have to go to the hassle of making cheque or card payments to individual companies each month, which can be very time consuming. It also means that you won’t have to try and remember who to pay and when to pay them, as the bank will have all of this set up for you. It also means that you are far less likely to miss a payment or make late payments that could result in fees being charged to your account.

One official said: “Setting up a direct debit helps consumers avoid missing payments and forking out significantly more than expected in interest payments and fees.”

Tags: fees, card payments, climate, chunk, large chunk, risk, late payments, individual companies, consumers, industry expert

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Posted in: avoid,debit,direct,payment

Women hit hard by struggling labour market

This week’s unemployment statistics reveal the impact the tough economic environment is having on the self-employed and women in particular.  Leading debt solution expert and DEMSA member, Atlantic Financial Management is warning of a deepening debt problem in the UK as lower income and part-time jobs traditionally taken by women juggling work with childcare, are now being taken by men and foreign workers as full time job opportunities become scarce.  

Loss of income is the biggest cause of people entering a Debt Management Plan (DMP) with Atlantic, who deal with a number of clients who are eligible for Jobseeker’s Allowance (JSA). 

The ONS figures show that number of employees and self-employed people working part-time because they could not find a full-time job increased by 70,000 on the quarter to reach 1.28 million, the highest figure since comparable records began in 1992.  

Of the 1.58 million people claiming JSA in August  2011 (up 20,300 on July), the number of women claimants reached 519,200, the highest figure since January 1996. In addition, in the three months to July 2011, 162,000 people became redundant, up 47,000 over the quarter. This increase in redundancies occurred mainly among women. 

Kevin Still, Atlantic Director comments: “These figures confirm the increasingly tough time women and the self-employed are having, trying to make ends meet. Many former fulltime employed are now on shorter hours or having little choice but to work as self-employed with employers trying to avoid employer NI payments. And women are being hit hardest by redundancies. The public sector alone saw 111,000 jobs go and sadly not all of the skills are transferable to the private sector which creates a major challenge for those seeking alternative employment. 

 “The fact is, when you are facing loss of income for any reason, you need to start prioritising your payments - mortgage/rent, council tax, essential insurances and utilities must come first.  Speak to your lenders and service providers to flag up your financial status and seek professional debt advice at the earliest opportunity if the situation becomes unmanageable. The temptation is to keep things ticking along using credit cards but this can create a deepening spiral of debt. Tackling debt problems early on can save a great deal of heartache and anxiety and allow individuals to focus on a plan to get back into work and their finances on track.”

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Former football directors investigated by Insolvency Service

Wednesday 14th September 2011 Four former directors of Luton Town Football Club (LTFC) have been disqualified from acting as directors or in any way managing or controlling limited companies.An investigation into their activities was conducted by the Insolvency Service which found that, between July 2004 and February 2007, the directors were deemed to have breached Football Association (FA) and FIFA rules and regulations on payments to football agents.The FA enquiry found that LTFC had dealt with unlicensed football agents and made payments of £157,000 through its holding company Jayten Stadium Limited, using funds provided by LTFC which should have been paid by LTFC itself and routed through the FA. During the same period, the directors had also caused or allowed LTFC to trade at the risk and detriment of HM Revenue and Customs (HMRC), which was owed just over £3.5 million. They had arrears with PAYE and NIC within a few months of starting to trade and recently had not declared or paid the company’s VAT liability. The court heard there was a pattern of non-payment and chasing from HMRC.Robert Burns, head of investigation and enforcement services at the Insolvency Service, stated on their website that: “One of the main purposes of the Company Directors Disqualification Act is to ensure that proper standards of conduct of company directors is maintained and to raise those standards where appropriate.”William John Tomlins, the former Chairman of LTFC, was disqualified for 6 years, Derek Robert Peter, the former Chief Executive and a chartered accountant, was disqualified for 7 years, while Richard Sidney Bagehot and John Mitchell were each disqualified for 3 years.Robert Burns added: “These disqualifications should serve as a reminder that the Insolvency Service will investigate unacceptable conduct by company directors regardless of the nature of the business involved.”

LTFC started trading in mid-2004 and on 22 November 2007 went into administration owing its creditors approximately £7m.

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The impact of upping the retirement age

The retirement age is set to increase to 67 as the government begins implementing its plans to extend the working life of those aged 50 and below.

Ministers are currently pushing through the Pensions Bill, which plans to raise the age at which men and women can claim a state pension to 66 by 2020, and the retirement age now looks as though it may rise to 67 by 2026.In an interview, Pensions minister Steve Webb saidthat the current timescales for increases to pension age are too slow. “If it is 67 in the mid-2030s we will be going backwards in terms of share of your life in retirement. I mean the problem would be worse than 20 years before.“If you think of male pension age, it hasn’t changed for a century. How much has life expectancy improved in a century? So, in a way, what is going on is a big dam that is finally breaking.’”

Over 8 million people in their 40s, who currently anticipate retiring at 66, will be affected if the age of retirement rises to 67.

So how does this look set to affect those already in debt?Michelle Mitchell, a director at Age UK, told the Telegraph: “Any increase to the state pension age needs to ensure that people have enough time to plan for the change – Age UK believes that people require at least 10 years’ notice. “We also believe that the process of deciding the state pension age should be informed by independent advisers considering a range of factors.”Furthermore, according to the Scottish Widows Workplace Pension report, more than half of those individuals without a pension have said that have no spare money to invest in one. The increase of an extra year before individuals are eligible for a state pension would therefore have serious consequences for those without a private pension with which they can support themselves during the interim. TUC general secretary Brendan Barber told the Mail Online: “Making people wait longer for a state pension has much less impact on the better off. “They lose a smaller proportion of their lifetime pension income, are more likely to have a decent pension of their own, and are more likely to have the kind of jobs that they will enjoy doing for longer.“But it has a major impact on the less well-off. “They are far less likely to be in work in their 60s, and even if they are may well have heavy physical jobs that they will not be able to extend.”
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Referral plans may send insurance sky-high

The government’s plans to ban referral fees may lead to drivers facing increased debt problems as insurance premiums climb even higher.

Referral fees refer to the practice of insurers trading details of accident victims with lawyers in exchange for cash. Claims firms often pay solicitors to pass on possible personal injury claims – on a no-win, no-fee basis. This technique has often been blamed for pushing insurance prices up – the average comprehensive policy now stands at nearly £1,000.

The government’s proposal seems likely to increase the cost of insurance even further, applying pressure to already tight finances.

Admiral chief executive Henry Englehardt told the Mail Online: “The Government needs to set a cap for injuries such as whiplash at, say £750 and £150 to lawyers. At the moment, victims can get £2,000. If referral fees are banned, the result would be car insurance going up.”

For Admiral, referral fees reportedly account for six per cent of their profits. After the plans were revealed, shares in the company fell seven per cent – reducing the value by more than £260 million.

Justice Secretary Ken Clarke announced the proposed ban last week, with Justice Minister Jonathan Djanogly calling for the “compensation culture” that benefits the “middle man” to end.

Martin Saunders, the technical manager in the claims department of insurer Allianz, said: “Banning fees still leaves money in the system and it’s the money in the system that ultimately equates to the premium that consumers... are being charged for insurance,” reports Cleardebt.

If insurance premiums rise further, households will struggle each month, particularly considering the price of insurance has already risen by 40 per cent in one year.

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Sale and rent back regulation - protecting the vulnerable

In the FSA’s recently released quarterly consultation paper, the authority revealed its plans to extend the scope of its regulation of sale and rent back (SRB) contracts.

Debt Management Today spoke to industry experts to find out the perception of SRB companies and how the additional regulation is likely to affect the debt sector in general.In June 2010, the FSA introduced full regulation of SRB sector, in order to provide a ‘package of measures designed to meet our statutory objectives, including that of consumer protection. Under that regime, persons that entered into regulated SRB agreements by way of business (among other things) required FSA authorisation.’The loophole in this regulation lay in the fact that firms were only regulated if rent-back was their main business. As a result, the FSA has now revealed it is “concerned that a considerable number of unregulated SRB transactions are happening, which means some homeowners are still exposed to the same potential detriment identified by the 2008 OFT report.”Sale and rent back agreements involve companies that offer to buy the homes of those struggling with debt, who need equity quickly. The companies, who buy the homes at significantly less than the market value, then pledge to rent the houses back to the original homeowner. Lee Schofield, Broker Account Manager at Ashley Park Debt Solutions, explained: “Usually when a client contacts us for help after going down the sale and rent back route you find that whilst they have settled their secured debts out of the sale of the house they have not been able to settle their unsecured finances in full and as such are still struggling with their commitments each month.”Whilst SRB can seem attractive due to the fact it lets a client access equity quickly, while ultimately allowing them to remain in their own home, the sector is in need of transparent regulation to ensure that people are not forced out of their homes within a few months of selling.Matt Smith of Money Debt & Credit Limited highlighted industry fears. “Those people in debt should only consider SRB as a last resort solution. There are other options out there that may suit the debtor’s needs, so it is important that people do their research.“Individuals have turned to other debt solutions after trying SRB and seeing negative consequences, which is why shopping around and doing the relevant research is so important. It is better to find the right solution the first time around,” he said. Vance Parsons, Director of debt solution specialist and DEMSA member EuroDebt, commented: “Sale and rent back can be a viable alternative for homeowners facing repossession and struggling with other debt problems. EuroDebt does recommend some clients to see a properly authorised sale and rent back advisor where the circumstances look appropriate alongside a debt solution to deal with their unsecured debt.“The sale and rent back advisor ensures all risks are clearly signposted to the customer, through FSA literature, during the sales process.“It is, however, more common to find clients being referred to us where sale and rent back is not viable for the client or in their best interests, but the client has unmanageable debts and requires professional debt advice. As a DEMSA member we follow a strict code of conduct which has been approved by the OFT.”Craig Bullock, regional debt solutions advisor for EuroDebt, highlighted his own experience with SRB clients. “Over the last few years we have seen increasing numbers of families in extreme debt levels – usually due to unforeseen circumstances, beyond their control, such as unemployment, ill health, loss of income.” He suggested that in these situations, SRBs can sometimes be valid and useful debt solutions. “They are on the verge of being repossessed, losing their property due to arrears on their mortgage or loans secured against their property, and the perception within the debt solutions industry would be that in these circumstances an SRB is a viable, and often welcome, option to allow them to remain in their family home, regain control of their finances and provide peace of mind going forward,” he said.Can SRB be used in conjunction with other debt solutions?Craig Bullock continued: “Clients in this situation almost always have considerable levels of unsecured debt in addition to their secured debts, where they have utilised other forms of borrowing in order to try and keep their properties – and so usually we would provide advice on an appropriate debt solution for their unsecured creditors, allowing them to regain control of their finances, ensure they can maintain the rent payment on the property and their ongoing priority household expenditure.” Lee Schofield explained that whilst there may be situations where “SRB is the best option for a client, our primary business model is to ensure a client’s assets are retained – the opposite occurs with SRB. “If we are unable to offer a client assistance through a debt management plan or IVA/Protected Trust Deed and SRB would appear to provide some benefit to them we would always recommend they seek independent legal advice and deal only with regulated firms.”So what do the new regulations propose?The FSA believes that some firms are attempting to circumvent the current regulation by claiming they are not carrying out rent-back activities ‘by-way-of-business’. The regulator has therefore consulted on changing its ‘by-way-of-business’ test – meaning that any firm which carries out even one sale and rent back transaction would need to be FSA authorised. The only exception arises when the individual providing the contract is related to the seller.Vance Parsons welcomed the new proposals: “Since the FSA implemented the new rules in June 2010, which built on the interim regime from July 1 2009, it has provided clients with greater protection. We welcomed the confirmation of the rules to ensure consumers have a security of tenure for a minimum of five years and that an affordability and appropriateness check was introduced.”Matt Smith agreed. “The recent news that the FSA is planning to extend the scope of its regulation regarding ‘sale and rent back’ is good news for those consumers who are in debt and may be considering the scheme. Losing a property is a serious matter and vulnerable people in a desperate situation should be protected as much as they can.”Craig Bullock, commenting on the wider scope of regulation, said that new regulation could only be good news. “Anyone entering into an SRB contract will have the confidence that they are dealing with a reputable company and have assurances that the SRB provider has met the FSA requirements.“After all, prior to the FSA’s previous regulatory involvement the SRB industry was widely criticised in the media and many unsuspecting individuals and families were left in extremely difficult situation, which the FSA appears to have largely remedied by introducing regulation.”
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Wednesday 31st August 2011

Celebrity Dragon paying £25k a day on debt
Wednesday 24th August 2011

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OFT warns borrowers of scam

Wednesday 24th August 2011

The Office of Fair Trading (OFT) has released an official warning advising consumers of the dangers of scam loan companies.

For those in debt, it can be very tempting to accept what seems a quick and easy deal from a loan company, however the OFT is warning against accepting loans from companies who take upfront fees but do not provide credit or offer clearly unsuitable credit alternatives. The OFT has released the warning after a 50 per cent year-on-year rise in complaints regarding loan scams. Consumer Direct, an OFT-managed advice service, saw complaints increase from 2,059 between July 1 2009 and June 30 2010 to 3,167 during the same period in 2010-11. OFT Director of the Consumer Credit Group David Fisher said: “We have seen an increase in companies who are not interested in the applicant’s credit history, that ask for payment of fees upfront and then disappear with the money.“We advise people to check out the company carefully before agreeing to anything, including asking for a landline number, a physical address and doing a search about the company online, as well as checking that they have a valid credit licence.”The OFT also released a number of Dos and Don’ts for those needing to take out a loan. The Dos included being ‘very careful when dealing with loan companies that charge upfront fees’, being ‘cautious if a loan company cold-calls you’ and checking ‘that the company has a credit licence on the Consumer Credit Register’.The Don’ts, on the other hand, included not believing ‘adverts which indicate a loan is ‘guaranteed’’, not wiring ‘money to loan companies using money transfer services when applying for loans’ and not giving ‘out your card details ‘for security reasons’ as the company may then debit your bank account without you knowing’.David Fisher advised: “If consumers think that they have been approached or tricked by an advance-fee loan scam, they should report it to Consumer Direct.”For advice on loan scams or any other consumer issues call Consumer Direct on 08454040506 or visit www.direct.gov.uk/consumer. Free, confidential debt advice services are available for those facing financial difficulties through their local Citizens Advice bureau by visiting www.citizensadvice.co.uk/.
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Diary of a Debt Advisor: F for Family

I’ve always been a very family-orientated person. I’m still close to my parents and my siblings, and I know how tough it can be to watch one of your relatives struggling. 

I think that’s why Matt’s case really meant a lot to me. He was a young, good looking, single guy who seemed to have it all. He had quite a good job and lived in a multi-million pound house. So it came as a bit of a surprise to me when Matt responded to our advertising. We had the first consultation at his house, and I can remember thinking to myself as I pulled up outside his amazing house – ‘what am I going to be able to do to help this guy?’Matt was up-to-date with all of his payments on a couple of loans and some cards, but was really struggling due to the help he was having to give to his family. After talking to him, it emerged that the house he was living in belonged to his parents. His father, who used to be a successful businessman, had unexpectedly had a stroke and was now unable to work. With no income from his father and a large mortgage still to pay off on the house, Matt was struggling to make ends meet. The family had tried to sell, but with the current disappointing market, unfortunately they had no luck.Obviously, further borrowing was just not an option. After talking both with Matt and the rest of his family, we came to the conclusion that entering a debt management plan (DMP) would be the best option. This would reduce Matt’s payments by several hundred pounds a month and allow him to contribute more to his family’s household expenses.What’s more, a couple of months later I was contacted again by the family and ended up providing DMPs for each of his parents and for his younger brother who had recently lost his job.As a result of these plans, we were able to help the whole family by reducing their monthly unsecured debt repayments, which enabled them to retain their house and cover their essential expenses.
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Bankrupt website owner faces wrath of 100,000 solicitors

Solicitors from Hell website owner Rick Kordowski is being threatened with court action by more than 100,000 lawyers after he set up the website which names and shames members of the profession alleged to have given bad service.

It is not the first time Mr Kordowski’s website has been the cause of controversy. The bankrupt self-employed graphic designer has been sued 16 times for libel and still owes more than £150,000 in fines. Mr Kordowski, who sees the website as a public service, told the Independent: “There’s a need for my website, as many people have said, and it makes them feel better for being able to post on it.“All I need is an appropriate story from someone which is useful to other people and their contact details.“I see it as helping people voice their complaints – and it has been working: authors have contacted me and said, ‘I’ve now sorted it out with my solicitor, please can you take my listing down’.”If Mr Kordowski refuses to close his site down, he will appear before a High Court Judge to face charges of alleged defamation, harassment and breaches of the Data Protection Act. He must also promise not to launch a similar site in the future.More than 100,000 solicitors, represented by the Law Society, have banded together to threaten him with legal action if he fails to shut down his website.

It seems that Mr Kordowski remains defiant, having reportedly threatened to sue the Law Society’s chief executive Des Hudson himself for defamation.

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Former Man Utd star sued by bank
Wednesday 31st August 2011

Schofield Speaks: The summer of discontent
Wednesday 31st August 2011

Celebrity Dragon paying £25k a day on debt
Wednesday 24th August 2011

Fraudster flogs phantom luxury cars in broadsheets
Wednesday 10th August 2011

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Posted in: 100000,bankrupt,faces,owner,solicitors,website,wrath

Debt collection agency's licence revoked

Carltons Business Limited has had the OFT’s decision to revoke its consumer credit licence upheld by the First-tier Tribunal.

The company, based in Dartford, Kent, was found to have failed to comply with the standards necessary to hold a licence. Furthermore, the OFT has warned companies collecting consumer credit debts that they must ensure they do not mislead consumers and that they communicate clearly and fairly.The Tribunal dismissed Carltons appeal because they found that the company lacked sufficient skills, knowledge and experience to operate a consumer debt collection business. In addition, Carltons were seen to not have sufficient practices or procedures in place to deal fairly and properly with consumers.They were also found to have flouted OFT guidance by designing their payment demand letter in the style of a legal or official document. Carltons was also persistently obstructive in dealing with enquiries from the OFT and Trading Standards.OFT Director of Consumer Credit, David Fisher, said: “This decision reinforces the need for licensed debt collection businesses to comply with the relevant OFT guidance, otherwise they risk losing their licences.

“These businesses need to treat consumers fairly and be clear in all communications, providing accurate information that does not have the effect of misleading consumers.

Facebook campaign targets loan sharks
Wednesday 7th September 2011

Former Man Utd star sued by bank
Wednesday 31st August 2011

Schofield Speaks: The summer of discontent
Wednesday 31st August 2011

Celebrity Dragon paying £25k a day on debt
Wednesday 24th August 2011

Fraudster flogs phantom luxury cars in broadsheets
Wednesday 10th August 2011

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Posted in: agencys,collection,licence,revoked

Office of Fair Trading Consultation on Debt Management Guidance – ClearDebt Response

by Andrew Smith on September 7th, 2011

We’ve published, below, ClearDebt’s response to the Office of Fair Trading’s just closed consultation on new guidance for debt management companies and charities.

Those of you who also read the Debt Resolution Forum’s (DRF) response will notice many similarities.

The two documents have been principally authored by the same people and the issues are, broadly, those on which most debt resolution companies would agree  (in the case of the DRF response, the views of members have been incorporated too).

ClearDebt’s principal concerns lay in creating a level playing field between fee-charging and non fee-charging providers and also in the industry’s future freedom to market itself (ethically and transparently) on the internet. This topic is discussed in more detail in a recent article in the Daily Telegraph and in a response by our colleague and web marketing consultant, Paul Gailey which you can view here: Response to the OFT Debt Management Guidance.

The OFT consultation document can be found here.

By Andrew Smith and is filed under Government policy on debt.
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Posted in: ClearDebt,consultation,guidance,Management,Office,Response,Trading

Restrict credit card debt with “the Island Approach”

Debt Example

Here's how a debt management plan can help you repay debt. Benefit of a Debt Management Plan

Current monthly payment: Term: 10 years (for credit card) New monthly repayment:
Term: 3 years 8 months*

Just a quick message to say thank you for everything you have done for us. I remember having a creditors threaten me, Since then things have changed, you have definitely gone more than the extra mile for us. You made sure that everything was resolved.

We aim to reduce debt in the shortest possible time. We are members of DEMSA - (The Debt Managers Standards Association). We adhere to the code of conduct as set out by DEMSA which aims to protect the interests of both consumers and lenders. The DEMSA code of practice is approved under the OFT (Office of Fair Trading) Consumer Codes Approval Scheme (CCAS).

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Posted in: Approach,Credit,Island,Restrict

Government plans offer protection from bankruptcy threats

Debt Example

Here's how a debt management plan can help you repay debt. Benefit of a Debt Management Plan

Current monthly payment: Term: 10 years (for credit card) New monthly repayment:
Term: 3 years 8 months*

Many thanks for all your help in setting up our IVA you’ve been very patient with us, been a long haul but we’re there at last

We aim to reduce debt in the shortest possible time. We are members of DEMSA - (The Debt Managers Standards Association). We adhere to the code of conduct as set out by DEMSA which aims to protect the interests of both consumers and lenders. The DEMSA code of practice is approved under the OFT (Office of Fair Trading) Consumer Codes Approval Scheme (CCAS).

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Posted in: Bankruptcy,Government,offer,plans,protection,threats

Pensioners forced into equity release

Debt Example

Here's how a debt management plan can help you repay debt. Benefit of a Debt Management Plan

Current monthly payment: Term: 10 years (for credit card) New monthly repayment:
Term: 3 years 8 months*

No more hassle from creditors and help is always on the other end of the phone. I am not pressured into clearing the debt quicker, although of course it recommended, it is purely at my own pace and affordability. I have my life back. Brilliant.

We aim to reduce debt in the shortest possible time. We are members of DEMSA - (The Debt Managers Standards Association). We adhere to the code of conduct as set out by DEMSA which aims to protect the interests of both consumers and lenders. The DEMSA code of practice is approved under the OFT (Office of Fair Trading) Consumer Codes Approval Scheme (CCAS).

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Posted in: Equity,forced,pensioners,Release

People in their 30s and 40s face the highest level of financial pressure

For many people these days, the financial pressures are mounting up with a huge number of people struggling to keep on top of their finances and many finding it hard to keep up with payments on bills and rent or mortgage never mind additional debts such as loans, credit cards, overdrafts and other forms of unsecured debt.

A recent study has been carried out with the results showing that it is actually people that are in their mid-thirties to their mid-forties that tend to face the greatest level of financial pressure and debt. Between these ages, according to the study results, spending on credit cards and mortgage repayments is higher than at any other time of the life. The study was carried out by Standard Life.

Between the mid-thirties and mid-forties overall spending on bills, debts and household financial commitments reaches around £1160 per month on average. Mortgage repayments account for around £600 whilst credit card payments account for about £350. However, when it came to loan repayments, not including student loans, it was actually people aged fifty five and over that were under the most pressure.

The data was revealed as part of a report entitled Your commitments, Your Future, which is part of a wider campaign to help people to develop greater understanding with regards to financial commitments at different times of life.

An official from Standard Life said: “This understanding can help substantially with planning our personal finances so that we can feel confident about the future and achieve our goals. If people were to dedicate more time to their long term financial planning, they wouldn’t just be better off financially, they’re likely to be better off all round.”

Tags: different times, credit card, credit cards, financial commitments, term financial planning

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Posted in: financial,highest,level,people,pressure,their

Parents facing debt problems due to childcare costs

A new survey has revealed that parents from some of the UK’s poorest families may be facing severe debt problems in order to afford rising childcare costs.

The survey, conducted by Save the Children and the Daycare Trust, involved questioning a total of 4,359 parents on childcare costs and general household finances.

The findings revealed that nearly a quarter of parents admitted that the cost of childcare has landed them with debt problems. Other results from the survey showed that 58 per cent of parents questioned had cut their spending on essentials such as heating, clothing and other bills. Meanwhile, four out of ten parents said that they spent nearly as much on childcare as they did on their rent or mortgage.

The survey focused on the differences in spending and debt problems between poorer families and those earning more than £30,000. Of those included in the survey, around 250 brought in an income of £12,000 or less a year. It was found that:

58 per cent of poorer families believed they were no better off working and paying for childcare, compared to 19 per cent on higher income families who shared this view.47 per cent had made cutbacks to the amount of after-school activities their children participated in, compared to 22 per cent of higher income households.61 per cent of low-income families admitted they were struggling to afford childcare. Just 37 per cent of higher earners also admitted this.

Kate Groucutt, from the Daycare Trust, said:

“Our research shows that childcare costs have risen every year for the last 10 years.

“This, combined with the recent cuts to the childcare element of working tax credits, means that the financial burden on parents is greater than ever.”

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Posted in: childcare,costs,facing,parents,problems

HMRC crack downs on business owners who see bankruptcy as an easy solution

HM Revenue & Customs (HMRC) is reportedly starting to take a tougher line on small business owners who see bankruptcy as an easy solution to theirs and their company’s tax debt problems.

Officials at the deparatment have become increasingly concerned about unpaid taxes amongst the owners of small businesses. It seems that many of these indebted entrepreneurs are using bankruptcy as a way to tackle their tax debt problem.

Leading law firm Wedlake Bell has warned that HMRC will start to crack down on those who see bankruptcy as a way to avoid facing up to their tax responsibilities. Edward Starling, who is the head of business recoveries at the law firm, said:

“The authorities are making an example of business owners who have allowed their businesses to run up insurmountable tax debts by banning them from involvement in senior management positions of a company for a long time,”

Meanwhile, the Insolvency Service has reported that the number of bankruptcy restriction orders it has secured has increased by 21 per cent in the last year. These orders, which are granted only when a court is convinced that the dishonest or reckless behaviour of company directors contributed significantly to a business’ debt problems, were issued to 443 business owners in the last twelve months.

This is a huge leap compared to four years ago, when only 80 bankruptcy restriction orders were obtained. If a business owner is issued such an order, it limits their access to credit and may even stop them heading up a company for up to 15 years.

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Posted in: Bankruptcy,business,crack,downs,owners,solution

Transferring Your Way to Debt Consolidation

Debt consolidation is difficult, it changes the way a person lives, instead of spending it is all about saving and paying things off. One of the ways to do this is to transfer your way to debt consolidation. This might sound strange, but it is something that is done every day and that can lower the amount of money being paid out each month on credit cards.

Credit cards as a rule are usually a higher rate of interest than lending institutions. But, if the debt is not tremendous one of the easier ways to consolidate debts is transferred the balance of high interest credit cards. Transferring the balance of high interest credit cards onto a credit card that has a lower amount of interest will save money in the long run. The charged amount of funds with a lower interest rate means paying the money less the compounded interest charged to the high interest card.

• Getting a lower rate interest credit card may not be as difficult as most people think, by personally calling their own credit card company that they owe money to might be the place to start. As long as credit card payments have been kept current, many credit card companies will consider a lower finance rate of interest.

• Research credit card companies and see who offers interest rates is lower than what your current cards carry. Applying for a new credit card can be a way to get 0% interest with some companies, which is an incentive so that you will apply carry and use their credit card. Getting a credit card with a 0% interest for a certain amount of time, means that the balance from higher interest credit cards can be transferred to this card and paid off. It is easier to pay a balance off for what you actually charged without all the interest added to it.

Transferring debt onto a credit card with lower interest, it will be able to be paid off faster and it is a way of debt consolidation without taking a loan, which means payments for a certain number of years. Especially if the card is a zero interest card, it means it is only the amount that was on the other credit cards and not all of the interest that would be building each month.

Much of this will depend on your credit standing and that your current debts are being paid on time. This may not be an answer for a person with poor credit, because credit cards are normally offered to them will have a higher rate of interest. It is also not for the person that is trying to stay consolidation after they have become delinquent on their repayment of debts owed. This is a way to get finances under control, but there also has to be a strict budget adhered to and there should be no charges placed on the credit card with a low interest rate, as it should only be used to consolidate debts.

Tags: high interest credit cards, rate interest, credit cards credit, Research credit card, credit card, incentive, lower finance rate, tremendous, current debts

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Posted in: Consolidation,Transferring

Controversy over banks’ tactics to help avoid mortgage arrears

There are many homeowners at present who are just about managing to keep on top of their mortgage repayments each month, with the financial relief coming as a result of the rock bottom base rate, which still stands at just 0.5 percent, where it has been for over two years. However, many of these homeowners could find themselves in serious trouble if the base rate increases and their repayments rise.

Some banks are now taking what is being considered an approach that is proactive by some, but is being hailed obtrusive by others. The bailed out banks Northern Rock and Bradford & Bingley are planning to carry out credit checks on existing mortgage customers to assess their financial situations and will be contacting anyone that they consider to be at risk of defaulting to advise them to cut back on their spending.

Basically, the banks want to inform high risk customers that if the interest rate rises and they fall into arrears they could end up losing their homes, so they need to start cutting back on spending now in order to free up more income. They will be advised to reduce their spending on non-essentials and luxuries such as mobile phones, cable or satellite TV, going out, and spending on treats. There has been a mixed reaction from consumers and officials with regards to this approach.

One bank official said: “Some people won’t cope when interest rates rise, but for others there are remedies. They need to think about what is their most important debt. It is not their credit card or renewing their Sky subscription, or going out for the latest mobile technology. It is their mortgage. We want customers to look at their finances and change their behaviour.”

Tags: Finance, Bingley, luxuries, finances, controversy, arrears, managing

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Posted in: arrears,avoid,Banks,Controversy,mortgage,tactics

Many unable to save due to debt and cost of living

It has been revealed in a range of recent reports and recently released figures that many households across the UK are unable to save any money and are living off credit because of their financial situations, their debts, and the soaring cost of living, which has made their financial situations extremely difficult. It is thought that around five million households fail to save enough money and around 50 percent are worried about their debts.

The Consumer Credit Counselling Service commissioned the report and there were also figures released by the Financial Inclusion Centre showing that around 4.3 million households had no savings put aside at all whereas over 1 million had savings of less than £1000.

There are also concerns that many households could face additional risks if they are hit with unexpected costs. According to figures from the Department for Business, Innovation and Skills (BIS) around 27 percent of households with no savings put aside were relying increasingly on credit for day to day spending whilst this was true of only 9 percent of those with savings of between £1000 and £10,000.

Only 5.4 percent of those that contacted the Consumer Credit Counselling Service had any savings at all according to the charity, with officials concerned that increasing living costs and inflation could make this situation even worse. Any households have turned to higher interest borrowing to get credit, as they are unable to get credit at reasonable rates from mainstream lenders in the current climate.

One official said: ‘Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions. Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control.’

Tags: debts, climate, credit card, recent reports, GBP, Innovation and Skills, mainstream lenders, Consumer Credit Counselling Service, debt

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Posted in: living,unable

Many face debt due to government cutbacks

According to the data in a recent report there are many low income people in the UK who are suffering severe financial problems and debts due to the widespread cutbacks that have been put into place by the coalition government. It was claimed that many people are in so much financial trouble due to cutbacks that they are being forced to turn to legal loan sharks in order to keep their heads above water financially, which is affecting their debt levels.

The government has made many cutbacks since coming into power, many of which took place from the start of this year. However, officials from the left wing pressure group Compass have said that many of these cutbacks have had a severe impact on the finances of many low income households, using data from a survey of over 250 social housing tenants as evidence of the hardship that many were facing.

The data showed that amongst those that were polled the average household income was less than £8000 per year. However, a quarter of this was going on debt payments, with the average debt amongst those polled coming in at £1200. With the cost of living and bills soaring, having to pay out such a large proportion of such a small income on debt was leaving many struggling to make ends meet, forcing them towards borrowing more money from legal loan sharks.

One official from the group said: “What makes this particularly alarming is that the Government is banking on personal debt increasing as a way to reduce the deficit but 28 per cent of those we surveyed are finding debts increasingly unmanageable. The Government’s economic plan could be driving borrowers into the arms of legal loan sharks which is a particularly unpleasant experience.”

Tags: average debt, Loan shark, left wing, debt payments, Business Finance

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Posted in: cutbacks,Government