Welcome to Debt Advice Trust Blog

You have left this world and stepped through the golden gate in the sky, your family are grieving your loss and after stumping up a on your funeral, they receive a call from your creditors asking for the thousands you have accumulated over the years.

No, debt doesn’t follow you to the grave; your poor next of kin is burdened with the debt. It is all too common for people to accumulate debt with little or no thought for the future. A great number of people believe that when you die, your debts will be written off. This is, not the case. In fact, the death of the debtor has little effect on the debt itself.

Being confronted by debt after losing a partner is particularly difficult to cope with because on top of their financial problems they are suffering from emotional trauma.

If you are in debt now start looking how to rectify the problem, before you pass it on to someone else. Maybe look at an IVA. IVA stands for Individual Voluntary Arrangement. It is one of the most popular Debt solutions being used in the UK. The benefits of an IVA when compared to Bankruptcy are many, but you should talk to a trained expert to find out which debt solution is best for you.

Just when you thought the cost of your energy bills couldn’t get any higher; Debt looms on the horizon as the cost of gas threatens to rise.

A demand for over £12 billion has been requested for upgrades or improvements to our gas supply, from the National Grid who control half of the country’s gas mains and three other companies who own the rest.

Ofgem are currently replacing all medium-pressure, ductile iron gas mains which are within 30 metres of people’s homes, as they are more likely to fracture and corrode thus, causing major accidents and in some cases, even death. This is a massive project comprising of 78,000 km of cast-iron and 13,000 km of low-pressure ductile iron mains. Add to this the labour charges and the country has a massive debt on its hands.

We already donate 20% of our gas bills to these companies which works out at around £100 per year, but the increasing cost of replacing and maintaining the pipes have increased, thus pushing customers into even further debt to keep warm this winter.

Householders in the UK could be left with a debt in the region of £1.3 billion thus adding an additional £50 to each householder’s gas bill within the next five years.

Gas companies such as British Gas have already come under public criticism for their inflated prices. Companies are finding it difficult to compete against each other, as customers try to combat debt by
switching to suppliers who offer the most economical plan.

The Alliance and Leicester Premier 21 Account seems like a good package on the surface but are there hidden flaws, which could force young people into Debt?

The account is aimed at 16 -21 year-olds who are in employment. It is designed to generate high interest to help young people appreciate the value of having a good sum of money in their account.

It is unlikely that many young people will delve into the finer details of the terms and conditions of an account. Most will see an offer and spontaneously sign up then and there. Banks take advantage of the compulsiveness of young people and entice them into their world of clauses and hidden pitfalls.

One thing the bank does not advertise is the fact that a minimum payment of £250 must be paid into the account each month or charges of £5.00 will be instantly added. One other penalty is the £3 per day charge for going overdrawn. This would take a huge chunk out of a young person’s wages, which could be one of the causes of debt. Even if the overdraft has been authorised, there is still a charge of £3 per month for using the facility.

When challenged with these issues, Alliance and Leicester defended this account claiming that they are one of a handful of banks that are supporting young workers rather than students.

Young people should look for accounts that offer high interest rates and enquire if any bank charges will be prevalent with use.

Total UK personal debt at the end of December 2007 stood at £1,409bn. The average Joe in the UK now sees over half (53%) of their monthly income swallowed by debt repayments. Repossession leapt 30 per cent in the first six months of this year compared with the first half of last year. County court judgments rose 32. 5 per cent and personal insolvencies in England and Wales 33 per cent to more than 62,000 last year.

A spokesperson for MoneySavingExpert.com has advised the public to use balance transfer deals, giving them an interest-free year to pay off credit card debts This is all fine a dandy if you are just in debt with credit cards, but if you are any thing like me and owe money to:

1. Credit Card companies
2. Loans
3. Utilities
4. Catalogues
5. Mortgage

Then a debt consolidation loan may be the answer. A Consolidation Loan can help reduce your repayments and make your overall debts more manageable. But it will also extend your repayment period.

Below are quotes from people who found light at the end of the tunnel with a debt consolidation loan:

“My debt by this point had ballooned to around £25000 including the car financing and I was starting to find things difficult getting ends to meet so I arranged a consolidation loan with which eased some of the pressure”

“Things just started to get out of hand. I owed money for five credit cards, unpaid utilities, vets bills; the list goes on and on. I got a Debt consolidation loan and my monthly outgoings were literally cut in half”

As interest rises, it leaves income behind and householders can expect to gain £100 billion worth of debt simply from interest charges.

Figures are estimated to top the £100 billion mark, which will be the highest figure ever recorded for interest payments. Families are currently losing £1 in every £8 in interest alone for the use of goods and services.

Mortgage payers will contribute to around £72 billion pounds in interest charges and £28 billion will be soaked up in interest from loans, overdrafts and credit card debt.

There are around 25 million families in the UK, which equates to an estimated £4,000 paid out per household, in interest related debt.

The debt mountain in England is the highest in the developed world and these figures explain why so many families are declaring bankruptcy or requiring the assistance of an IVA. The age bracket of those experiencing the highest levels of debt is between the ages of 30 and 45.

However, people continue to live the ‘high life’ on credit whilst becoming a slave to their wages which, in most cases, is swallowed up in debt before the money even reaches their bank account. If things get too much, there is always another credit agreement begging to be signed which pushes the financial constraints of an individual to the limits.

The figures above should cause people to sit up, take notice and seek debt advice so as they can work to a budget which will allow them to stay afloat, when the rest of the nation is sinking into debt

There’s only a few hours left until the end of the year – have you made your New Years resolutions yet? If you spent the most of 2007 worrying about your debt problems, commit to making 2008 the year you get rid of debt!

Resolution 1:
Get debt advice. Talk to a debt counsellor about your finances and see what options you have. Why do you need advice? There are many debt solutions, but the one best for you will depend on your personal situation. A debt counsellor can give you advice based on all the information you give them about your income, expenses, lifestyle and debt.

Resolution 2:
Decide how you are going to get out debt and take action! Whether that be by contacting banks and lenders for a consolidated loan, looking for a debt management plan, talking to an Insolvency Practitioner about an IVA, or visiting your local court for bankruptcy forms.

Resolution 3:
Make a budget (and stick to it!). Don’t let the same debt traps follow you into 2008. Plan out all your incoming payments and expenses and budget your finances. Once you have all your expenses written down, it’s easier to see where all your money is going and where you can make changes – for example, moving into a house with lower rent. Read our advice on increasing your income and reducing your debt for some further advice.

Resolution 4:

When it comes to IVA, many people question the responsibility of a spouse with regard to their partner’s debt.

Unless you have agreed to become a guarantor for someone or you jointly own a debt, you are not financially responsible for their finances.

However, with an Individual Voluntary Arrangement, the matter becomes a little more complicated as creditors will find it hard to believe that a partner has not benefited from any of the debt that you accrued. As a result, they will request full details of your household expenditure rather than a record of your sole expenditure.

An IVA is more likely to be granted if both partners agree to make monthly payments. If your spouse has moved away from the family home, he/she will not be required to make payments to your IVA but if your partner returns at a later date, the IVA will have to be adjusted to account for the change in your financial circumstances.

Many people help out their spouse when they are in debt but in a lot of cases this act of kindness is reciprocated by a continued accumulation of bills. An IVA can be a firm but fair way to help a spouse take responsibility for bad spending habits and put them back on the road to financial stability.

A couple do not have to be married to apply for a joint IVA. Some find it easier to share an agreement as it interlocks both of their debts into one affordable sum. This way, both partners take the responsibility for payments.

While Santa is preparing for his annual stint of popping down the chimneys, now is a good time to start reducing your debt levels as Christmas is coming full steam ahead.

Start working out a healthy budget plan and put money aside for the gifts that your children have in mind. It is also a good idea to set aside a separate fund for your food and drink indulgences over the holiday season. This will prevent you from seeing in the New Year with a mountain of debt problems.

Out of desperation, many people open store cards when the Christmas spirit starts to kick in. Anxious shoppers become immersed in a buying frenzy and somehow think that Santa will bail them out when things get tough.

One good way to save money is to start buying gifts now, rather than wait until closer to the day. This way you can start paying off and managing your debt before Christmas day has even arrived.

If you are shopping online, check that you do not pay over the odds for postage and packing. A multitude of transactions with individual postage costs can make even the smallest of purchases an expensive commodity.

Another way to curb debt is to ensure that you are up to date with all of your bills. Ask your bank if you can have an interest free overdraft for two months from December to January. This will allow you to clear any exuberant debt accrued over the festive season and allow you to remain credit worthy in the New Year.

It is estimated that one in six people could soon find themselves on a debt blacklist as creditors become tougher and refuse mortgages, credit cards and loans.

During 2006, over £7 million was refused by typical lenders but this figure is forecast to rocket to 8.6 million and possibly beyond by the year 2011. Thousands of Britons are already feeling the pinch as they struggle to survive financially from day to day.

Since 2006, house repossessions have risen by over 30% along with a huge increase in county court judgements and defaults. This has urged many building societies, banks and other lenders to tighten their screening process to rule out risky applicants that have the potential to become bankrupt.

This is a stark contrast to the frivolous way that finance gurus used to offer money to anyone and everyone in the past. There were very few credit checks and money was offered with little reassurance of a customer’s ability to pay. In some ways, this may be a responsible move away from the easily accessible debt traps for first time borrowers, but for people experienced in getting loans and credit cards it could make things a lot harder should they have a couple of tarnishes on their credit record. For people already close to a debt solution

Many British lenders have now removed their sub-prime mortgages. Self-certification mortgages are also being cut and many loans will increase by 2.5 percentage points. This could add an extra £150 per month to a £100,000 mortgage.

The way that we handle debt and deal with our finances is inherited from our parents.

The most valued piece of debt advice parents give, is to avoid debt at all costs but how much have our parents influenced our spending habits?

When interviewed, over half of Brits admitted that they have spending habits similar to their parents. Many parents pass on good debt advice such as to always check credit card and bank statements, to save regularly, always read the small print on any documents before signing and avoid borrowing money from friends or work colleagues.

Although these financial pearls of wisdom were firmly engrained, two in ten Brits admitted that they never had any savings, were constantly borrowing from friends and were on the verge of major debt problems.

Parents are new to credit card dependency and although their advice is sensible, young people are growing up in a world where credit is accepted as a normal part of life.

Although parental advice made perfect sense, nearly half of those interviewed admitted that they learnt about debt the hard way and their credit file has suffered. However, they have come to learn the importance of keeping a track of bills and paying them on time, of always checking their bank balances and credit card statements and checking the small print on credit card applications to avoid a debt nightmare.

This shows that negative experiences can have a positive effect on the way that we develop our spending habits.