Archive for October, 2009

« Older Entries

Informal arrangements – why it’s good to talk about debt solutions

Friday, October 30th, 2009

Knowing that your finances are in trouble can be a troubling time. Sleepless nights, trying to keep the bad news from your loved ones – all of this can lead you into a state of near panic. But as with every other problem in life, a trouble shared is a trouble halved and taking back control of the situation by seeking professional debt help and actually talking to your creditors is the first, important stage of solving your problems.

An informal arrangement is exactly what it says – an agreement between you and your creditor that clarifies the situation on both sides. Your creditor only knows that you owe them money. They don’t know about your financial situation and what may have befallen you to get you into this tangle. The ‘ostrich’ approach to debt management is a sure-fire way of alienating yourself from the people who can help you the most – the creditors. And as most people are facing some sort of financial difficulties at the moment, you will find that your creditors will be far more understanding of your position as long as you talk to them.

By explaining your situation and listening to their position as well, common ground can be found where an agreement to pay off smaller amounts over a longer period of time can be reached. As long as your creditor can see that you are making an effort to establish communication, that you recognise that there is a problem and that you are pro-active with managing the debt situation, then they will be more willing to meet you halfway.

The golden rule though, is once you make an informal agreement, stick to it. If you’re still having problems, keep the lines of communication open and work with your creditors and a professional debt advice service to find a solution. It could mean the difference between surviving the recession and getting out of debt or facing bankruptcy.

Tags: , ,
Posted in Debt advice, Personal debt | No Comments »

Don’t be bullied by creditors – get impartial debt advice

Thursday, October 29th, 2009

Before we look at advice on debt that will help you to defeat credit bullies, let’s take a moment to see why they react in the way that they do. Consider the fact that your creditor originally lent you money in good faith, you agreed to pay it back at a certain rate and, in their eyes, you have now (for whatever reason) broken that original agreement. Your creditor may have dozens or even hundreds of people in the same position, putting them in a very difficult financial quandary themselves. Their jobs or even their businesses may be at risk because of dozens of mounting debts just like yours.

This is why creditors can seem to come down particularly hard on ordinary consumers. To make matters worse, the most common reactions to demands for payment is either an ‘ostrich’ approach (ignore it and hope the problem will go away) or, in the worst case scenario, declare yourself bankrupt and effectively write off the debt, scuppering any chance the creditor has of reclaiming a penny of the debt. Is it any wonder they’re nervous about your debt?

But by sitting down and talking to an impartial debt advisor, you can avoid these scenarios and actually begin a constructive dialogue with your creditors. You will find them much more willing to accommodate your situation if they understand the reasons behind your difficulties. Impartial advisors may be able to put you in touch with intermediaries who can act as a go-between for you and your creditors, helping you to draw up repayment plans or arranging a debt management strategy that will keep everyone happy.

It is also important to know your rights in this situation, and an impartial debt advisor will be able to tell you about the 30-day ‘breathing space’ policy and other legal aspects of debt management. Impartial debt help is available free from the national debt helpline (for example), they won’t sit in judgement of you and it could be the one call you make that will help you stay in control of your finances and keep the wolves from the door.

Tags: ,
Posted in Debt advice | 5 Comments »

Dealing with creditors – why it’s important to know your rights when you’re managing debt

Wednesday, October 28th, 2009

Facing demands for repayment of outstanding debt can be a terrifying time for many ordinary people. Daily deliveries of final demands, letters from debt collection agencies and solicitors can send you spiralling into a nightmare scenario with no apparent way out. But before you start panicking, it’s important that you know your rights and understand that there is a great deal of sound debt advice available to you for free.

Even those in extreme financial trouble still have rights. Since 6th April 2009, borrowers who get in touch with an accredited debt advisor must by law be given 30 days’ breathing space by their creditors. The new rules, agreed by the government and the Credit Service Association (CSA), which represents debt collection agencies, mean creditors cannot pursue any money owed for 30 days. It is hoped that this breathing space will give people time to work with debt advisors to find a solution to repay their debt. This breathing space could be the lifeline you need if you’re in financial trouble. It gives you the chance to get debt help from a professional and impartial advisor and to try and take back control over your finances. If you’re facing mounting debts, it could also give you the opportunity to consider an IVA debt solution or other debt management system.

One of the greatest worries for those in debt is the knock of the bailiff at the door. But even here, you have rights. If you have been issued with a County Court Judgement (CCJ) and your creditor has a warrant of execution against you, then you can ask your local County Court for an N245 form. This is a realistic offer to repay the debt. If accepted, this will suspend the warrant so long as you keep up to date with the agreed payment terms.

These are not ‘delaying tactics’ – these are realistic methods of keeping the situation under control and exercising your rights as a consumer. Make sure you read the small print on all your credit agreements and, as always, if you’re unsure as to your rights, contact an impartial debt advisor who will be able to help you.

Tags: , ,
Posted in Debt advice | No Comments »

Bankrupt Britain? Why the recession is causing many borrowers to seek help with debt

Tuesday, October 27th, 2009

With record numbers seeking debt help, this recession is unlike any that have gone before it. The financial meltdown brought about by the collapse of Lehman Brothers in the US sent shockwaves around the world. As people started to look more closely at the causes of the crisis, an underlying trend began to emerge. The main culprit? Easy credit.

The boom time of the 90s saw hundreds of thousands of ordinary people gain increasing access to easy credit. Store cards, credit cards, ‘interest free’ loans – the list was endless and specifically designed to attract the ordinary man and woman in the street. As the public began to pile up debts, the banks realised that it was only a matter of time before a tipping point was reached and the unsecured financial loan chickens came home to roost, with many people now seeking ways of managing debt or even ways to write off debt entirely.

While the headlines may optimistically state that we’re now climbing (albeit slowly) out of the recession, it still continues to affect thousands of borrowers hard. We’ve just come out of an era of spend, spend, spend. Savings are practically non-existent, and the collapse of the banking industry has wiped out what little savings many people had. Without that financial cushion to fall back on, debt has continued to mount as people rely on credit cards and other high-interest loans to make ends meet.  No surprise then that IVA companies and other forms of debt management solution are increasingly in demand.

The charity Credit Action has shown that total UK personal debt at the end of July 2009 stood at £1,457bn. Although the increase in this enormous sum of money has slowed recently, it’s still a massive debt that will probably never be repaid in full. The financial forecast is still decidedly chilly for average consumers and while we may not be actually bankrupt as a nation yet, unless the wheels of industry start to move again across the world, it is still a spectre on the horizon. However, if you’re looking for debt help there is good news in the shape of the national debt helpline and other debt counselling services – they can offer independent debt advice and strategies for dealing with your debt.

Tags: , , ,
Posted in Debt advice, Debt management | 2 Comments »

A last resort? When does bankruptcy start to look like the best debt management option?

Monday, October 26th, 2009

Figures from Credit Action have shown that, currently, one person is declaring bankruptcy every 3.97 minutes in the UK – that’s 362 people a day admitting defeat, throwing in the financial towel and seeking ways to write off debt. Experts predict that number will rise to 411 people a day over the coming financial year.

Bankruptcy is the end of the line for many people financially. It means that your finances are taken out of your hands and put under the control of the courts. It means you cannot run a business and it will most definitely affect your credit rating for years to come. Insolvency is not an easy option and it pays to consider all the other alternatives such as unsecured debt consolidation or an IVA debt solution before you resort to bankruptcy.

But sometimes, wiping the slate clean and starting again can seem like a tempting option. The stigma of bankruptcy is no longer a cause to hang your head in shame – after all, according to the statistics you are most certainly not alone. But for those in serious financial trouble and in need of urgent debt help, drawing a line in the sand and starting afresh, despite the problems it may cause later on, can seem like the best option.

Before you go down the bankruptcy route, there are other steps you can take to try to stay in control of your finances. The first is obviously to get impartial debt advice, make a financial plan and talk to your creditors. You may be able to arrange an IVA, which is a five-year agreement in which you pay a percentage of the outstanding debts back to your creditors. At the end of five years, you are debt free and do not have the credit stigma of bankruptcy on your record. But if you’ve tried everything and are still in a mess with your finances, bankruptcy may be your only remaining option. In any case, you need to talk things through with an debt management expert to decide the next move. If that move is declaring bankruptcy, they will be able to give you all the information you need to make a fresh start.

Tags: , , , ,
Posted in Bankruptcy, Debt advice | 3 Comments »

A cry for debt help – what to do when you realise your debt is out of control

Friday, October 23rd, 2009

Admitting that your debts are out of control can seem like an admission of failure. But in fact, seeking professional debt advice is actually the first step on the road to regaining control and bringing your finances back into line. It’s not going to be an easy journey and everyone’s experience will be different, but there are things you can do to rectify what initially seems like a hopeless situation.

The first thing to do once you’ve admitted that yes, you do need help, is to get that help. Impartial debt advisors are there to work with you to find options, work out financial plans and help you to get your finances back on track. They will talk you through not only what measures you can take to stop the bailiffs knocking at the door (including unsecured debt consolidation and IVA debt advice) but also your rights as a consumer.

By opening the lines of communication with your creditors, you are giving yourself far more options and a lot more ‘wriggle room’ to get things back on an even keel. By contacting your creditors and stating that you intend to work with them to draw up a mutually agreed pay-back arrangement, you are immediately entitled to a 30 day ‘breathing space’ during which your creditors cannot pursue you for repayment. This gives you a chance to consult with a debt counselling service and to draw up a realistic and effective financial plan to start paying back some of the debts.

Tackling out-of-control debt is not something that you can do on your own. Debt advice services have the means, the know-how and the experience to be able to look at your situation and present you with options. With their help, you can regain control of the situation and begin to get your life back in order, keeping you and your creditors happy and avoiding the stigma of bankruptcy.

Tags: , , , , , ,
Posted in Debt advice, Debt management | No Comments »

In your interest – why seeking debt advice can lower your debt immediately

Wednesday, October 21st, 2009

If the recession has kicked in a little harder than you anticipated and your finances are looking decidedly tangled, rest assured you are not the only one in that unenviable position. Thousands of ordinary people are realising that the fiscal chickens are coming home to roost and the era of plentiful credit that we’ve all enjoyed for so long has consequences. Personal debt is now at record levels and still rising.

Average household debt in the UK now stands at £9,180 (excluding mortgages). This figure increases to £21,355 if the average is based on the number of households who actually have some form of unsecured loan. If you then factor in mortgages, the average rises to £58,290. Across the board, the mean average owed by every UK adult is £30,190 (including mortgages). This is 132% of average earnings. So it’s quite clear that expenditure is far exceeding average income.

But before you turn off every electrical socket in the house and barricade the doors, there are ways that you can help yourself to break this cycle of debt.  And it’s very simple – seek professional advice.

Just talking to someone who understands the ‘matrix’ behind financial aspects can help you to make big changes in your life and, as a result, save a significant amount of money. Debt advice can give you a financial ‘health check’ to see where your finances could be improved. There are plenty of price comparison sites online that can help you reduce outgoings such as utility bills, broadband or phone bills, but if you’re still struggling to make ends meet, a debt advice specialist can look at other aspects of your life and help you put together a plan of action to reduce the gap between your income and your outgoings.

Whatever you do, burying your head in the sand and hoping that the problem will just ‘go away’ isn’t going to help. The first step in getting your finances back in order is to talk to an expert.

Tags: ,
Posted in Debt advice, Personal debt | 6 Comments »

Debt Questions – What are the drawbacks of bankruptcy?

Tuesday, October 20th, 2009

In just one day, 362 people in the UK will be declared insolvent or bankrupt. KPMG estimate this will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes and many others seeking help from debt management services.

Frightening statistics. And if you don’t believe the recession is as bad as the headlines have been making out, consider that if the number does increase to 411 per day declaring insolvency or bankrupt, that will mean an incredible 150,000 people could be declared bankrupt by the end of the year. That’s the size of a medium sized town. Bankruptcy seems to be presented as an easy option to take if you get into difficulty financially. The attraction of not having to pay creditors may be tempting many to sign on the dotted line and bankruptcy doesn’t seem to have the social stigma that it once attracted.

But there are significant drawbacks of declaring yourself bankrupt. Your credit rating will be seriously damaged. Of course, if your financial circumstances are severe enough, you may not really care that much about your credit rating, but it can have lasting consequences even years afterwards. Your financial history may also impact your chances of applying for certain jobs, particularly in the banking and finance sector. Let’s be honest – would you take financial advice from someone who’s been declared bankrupt?

Finally, it can seriously damage the finances of those you owe money to. So not only is your financial situation affecting you – like ripples on a pond it spreads out into the wider community. Obviously, the best option is not to get into such a financial pickle that you have to consider bankruptcy in the first place. But if you are in trouble, and before you reach for the insolvency paperwork, talk to a professional debt advisor who may be able to show you an alternative that keeps you in business, trading and financially viable.

Tags: ,
Posted in Bankruptcy, Debt advice | 1 Comment »

Will my credit card company allow me to write off my debt?

Friday, October 16th, 2009

The short answer to this question, an issue that causes many people a great deal of stress and anxiety is “no” – it’s extremely unlikely. Credit card companies are not inclined to write off people’s debt.

One option available if you have debts on multiple high interest credit cards is to consolidate them on to one at the most competitive rate, even 0% if possible. This is perfectly achievable as a way of staunching the high interest payments.

A more serious option, and one that can be used as a more comprehensive debt management solution especially if you are in serious amount of debt and owe more than £15,000, is an IVA. An Individual Voluntary Arrangement is a legally binding agreement through which you are able to clear all your debts over a period of time (usually sixty months).

Your IVA provider will discuss with you how much you can afford in monthly repayments. The provider will then negotiate with your creditors to get them to write off part of your debts leaving an amount for you to pay off at the rate of the agreed monthly repayments.

Your creditors, including the credit card companies will of course have to first agree with your provider to write off the rest of your debts. As long as your provider presents a realistic repayment schedule it is likely that they will agree.

More serious still is bankruptcy, though this is regarded as a last option as there are a number of implications. You may lose your home, credit may be hard to come by in the future and you will even find yourself ineligible for some occupations.

The best advice as ever with debt matters is to seek independent and impartial advice, ideally from a non-profit debt resolution company who can offer you input specific to your individual circumstances.

Tags: , , ,
Posted in Bankruptcy, Debt advice, Debt management | 7 Comments »

Five Easy Steps to Clear Debt.

Wednesday, October 14th, 2009
  1. The first step is to recognise that you are in trouble; you have completed that as you are reading this blog. You are on your way to clear debt.
  2. Cut up your credit cards and store cards. This can be the hardest step for the majority of people as these cards are viewed as their safety net, but always remember this is probably what has got you in debt in the first place, be brave.
  3. Cut down on spending, work out what you need per day as a necessity, set yourself a daily budget and stick to it. Cut down on eating out, buying clothes etc. Avoid places that may encourage you to slip up.
  4. Inform your nearest and dearest of your situation, a problem shared is a problem halved, they should encourage you to keep on track, you are less likely to go back to your old ways if you are feeling watched.
  5. If you are in serious debt problems, you should get Debt Help; there are debt charities with professional advisers who can point you in the right direction to becoming debt free. There are different options available for you such as a debt consolidation loan, an IVA or maybe just support.

Tags: , , , ,
Posted in Debt advice, Debt management | 2 Comments »

« Older Entries