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Fri 1st Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting, Missed payments at 10:35 am by admin
TDX Group, the organisation behind the Group Debt Index, claim that there has been a significant rise in the number of debt management plans taken out in recent months.
The Group claim that debt management, such as Individual Voluntary Agreements (IVAs) will rise by a further £5 million by Christmas, growing steadily by year end.
Mark Onyett, chief executive of the TDX Group said: “We’re already seeing far higher numbers of consumers struggling with personal debts and the pressure is set to intensify over the coming months.”
The research showed that an increasing number of people with financial problems are finding it difficult to make repayments on loan and credit card debts.
This accords with research showing the house repossessions are steadily climbing and a rise in people approaching debt charities for advice.
Since the start of the credit crunch many people have tightened their belts, but it simply isn’t enough.
Whilst most families are wise enough not to extend their credit with further personal loans, the increases in the cost of living has pushed many families deeply into debt.
Unfortunately, this Christmas could see many families hard pushed to pay their bills, let alone have the festive season of their dreams.
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Tue 15th Jul, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, Credit Card, Consumer debt, IVAs, Unsecured loans, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments at 12:44 pm by admin
The high levels of debt that Britons have built up over the past few years are finally coming back to haunt many households. The impact of the credit crunch is starting to take its toll on borrowers according to experts and it is expected that things are going to get much worse as the year progresses.
The accountancy firm KPMG has said that it is predicting that over 130,000 people are going to be declared bankrupt or enter into individual voluntary arrangements with their lenders. This will be up from the 109,615 who did the same last year.
When people enter into individual voluntary arrangements (IVA) they are allowed to restructure debts such as personal loans, credit cards and hire purchase so that their debts can become more manageable. Monthly repayments are made for a fixed period of time with the remainder of the debt being written off at the end of the period.
It is estimated that as many as 2,500 people have debt in excess of £100,000. In 2007 the average amount owed by individuals entering into IVAs was £50,300.
KPMG found that the average repayment for a loan on an IVA was 38% of debt. The average debtor repaid £19,000 of their debt and as a result £1.3bn had to be written off by creditors.
The high average level of debt indicates just how bad lending has been in the past few years. Most debtors owe so much that they have no realistic way of actually repaying their debt.
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Wed 4th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Unsecured loans, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments at 12:46 pm by admin
It has been revealed that a rogue debt advisor company, unregulated by any watchdog, has begun to mail out leaflets to people in financial difficulty advising them to default on their loans. The company then offers to step in and help them to become bankrupt.
The company which is called the IVA Council (IVAC) is claiming that thousands of people in debt are each year being poorly advised on how to clear their debt. The IVAC also claims that thousand of indebted customers are being herded into formal debt agreements called Individual Voluntary Agreements (IVA) by creditors.
The company argues that these people should not end up living in poverty desperately trying to clear their debts but instead opt for bankruptcy. The debts could be on mortgages, personal loans, credit cards or utility bills, but the advice is the same each time: default.
The IVAC has mailed thousands of customers of debt advice services across the whole banking sector. The IVAC managed to get these details by buying them off the government-backed agency the Insolvency Service. This has prompted calls for the database to be made less readily available to the public.
Some recipients of these letters from the IVAC have complained that some sensitive information is clearly available in the display in the letter envelope.
IVAC has also set up a website that appears to be an almost exact copy of the Insolvency Service’s website. The company is also allegedly using an old logo of the Department of Trade and Industry (DTI) despite the fact that the DTI changed its name to the Department for Business Enterprise and Regulatory Reform last year.
The truth is that no one can escape their responsibilities and IVAs and bankruptcy are very serious measures that impact upon future credit for many years. They rarely mean that debts can be avoided. Instead the debtor is expected to repay loans and bills at an agreed rate, whilst living on the very same reduced income that this rogue company claims to help avoid.
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Mon 17th Mar, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments, Overdrafts at 11:53 am by admin
If you find you are having difficulty in repaying your debt one option that is always open to you is to seek an individual voluntary agreement (IVA) from a specialist lender.
Under the terms of an IVA, if you own greater than £15,000 you can try and reach an agreement with your lender in which you only pay back a percentage of the loan or all of it, but the interest charges are frozen.
In the first 3 months of 2007, 11,300 Britons entered into such agreements with their lenders. That is a 50% rise one the same period in 2006 and goes to show how difficult many households are now finding it to deal with debts held in personal loans and credit cards.
However the problem is that now many lenders are taking an increasingly tough line on accepting IVAs. It used to be the case that many lenders would accept repayment on 25% of the loan or debt, however now that figure has gone up drastically and it is becoming increasingly difficult for many borrowers with severe debt problems to even repay their IVAs.
For example HSBC will now only accept an IVA if the borrower agrees to pay back a minimum of 40% of the loan while the student loan company will not allow their debt to be subject to any form of IVA or bankruptcy.
Northern Rock should use its own example when considering individuals in debt crisis. The crisis-hit bank rejects IVAs as standard practice. This is now becoming common practice from many lenders.
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Wed 8th Aug, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Consumer debt, Homeowners, IVAs, Financial products, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments at 12:38 pm by admin
Financial suicide is becoming a real risk for many homeowners as the interest rates continue to increase. Millions of homeowners will be hit hard after interest rates breach the 6% point anticipated by economists.
Soaring property prices have stretched people’s ability to step onto the property ladder. The added burden of increased interest rates and banks withdrawing affordable fixed rate products has made many people stop trying until the housing boom ends.
Ian Kernohan, economist at RLAM, said: “How far are the MPC prepared to go, bearing in mind the lags involved between raising rates and their effect on the economy? I expect one more rise will be enough and the risks to growth and interest rates next year remain to the downside.”
Twenty Five percent of UK mortgagers remain on their lenders’ Standard Variable Rate (SVR) while others have uncompetitive deals, according to Charcol.co.uk. Homeowners who took out a fixed rate a few years ago are also likely to be hit with unmanageable monthly loan repayments when they are forced to remortgage at the new higher rates.
Financial suicide can come quickly. For many, it will come when the interest rate increases above 6% and they continue to purchase a home, or try to apply for another secured loan, reducing their ability to make repayments.
Others are committing financial suicide by applying for IVAs.
Most suicide is committed when people try financial products they are unfamiliar with, or they follow the advice of a friend or colleague at work. This leaves them vulnerable and paying for financial services they do not need, forcing them into insolvency.
The most common way of committing financial suicide is accepting the first product offered. Shopping around can decrease the cost of a loan or mortgage by £100 or more a month.
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Wed 13th Jun, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, mortgages, Consumer debt, IVAs, Spending, Financial news, Borrowing, Insolvency, Personal debt, Bankruptcy, Debt management, Missed payments at 12:09 pm by admin
Credit Awareness week is the brain child of Credit Today magazine, Experian, the British Bankers Association, and the Consumer Credit Counselling Service. It has been brought about to highlight the fact that half of all adult Britons admit that they have made serious financial mistakes and have little or no financial control.
CreditExpert.co.uk reports that 80% of consumers regularly overspend without concern, and eventually, millions will face bankruptcy. Many people even understand that this is the direction they are heading, but do not take preventative measures.
Financial mistakes such as cheap consolidation loans with long payback periods that are thousands of pounds higher than needed, so you can take a vacation, or splurge a little, are at the heart of the problem.
Terms like “therapy spending” are some buzzwords these consumers use to justify their spending habits.
At least 5% of consumers are thinking about escape through individual voluntary agreement (IVA) or petitioning for bankruptcy.
Do it yourself debt management can compound the problem. One in 10 have used a credit card to pay off debt on another card. At least 10% of the people polled have missed repayments on credit cards, loans or mortgages.
Jim Hodgkins, managing director of CreditExpert.co.uk, said: “The number of people who admit to making basic financial mistakes and even considering quick fix solutions like taking out an IVA is worrying.
“What this research seems to expose is a serious lack of understanding of the long-term consequences of these actions and how it can affect your credit rating and ultimately impact on your financial future.”
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Tue 12th Jun, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, interest rates, mortgages, Consumer debt, IVAs, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management at 10:11 am by admin
The experts predicted that insolvencies would rise to 30,000 in the first three months of 2007.
Britain’s consumer debt crisis statistics showed a near 50 per cent increase in the number of people taking out Individual Voluntary Arrangements (IVAs) in the first three months of 2007.
The total number of IVAs rose 47.6 per cent to 13,233 compared to 9,000 in the same period last year. Bankruptcies increased 10 per cent to 16,842. In Scotland, the number of individual insolvencies rose 12 per cent.
Politicians attacked Gordon Brown’s record and claimed that figures “tell us a lot about Gordon Brown’s poor management of Britain’s finances. An economy built on debt is not an economy built to last.”
The Liberal Democrat’s treasury spokesman, Vince Cable, added: “These figures equate to more than 300 people being declared insolvent every day - a truly astonishing number. But these are not freak figures. Sadly, they are likely to get even worse, especially with families feeling a further pinch on their budgets when interest rates almost certainly rise.”
Economists have predicted that repossessions will start to increase dramatically in the next few months, especially if the Bank of England continues to increase interest rates to the pessimistic 7% some economists claim. Already lenders are seeing a drop in the number of people applying for loans and other credit.
The increases in interest rates, and the finance companies elimination of affordable fixed rate plans, will make it more difficult for many consumers to repay their mortgages and secured loans.
Economists believe that the insolvencies will continue to rise, and might breach the 150,000 mark by the end of 2007.
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Thu 7th Jun, 2007
Posted in Bad Credit, Consumer Credit, Banking, UK Finance, Consumer debt, IVAs, Financial news, Borrowing, Insolvency, Personal debt, Bankruptcy, Debt management at 12:16 pm by admin
A guide published with help from the Insolvency Service explains what an IVA is and the processes involved in setting one up. It also explores the long-term impact IVAs have on a consumer’s credit report.
Jill Stevens, Director of Consumer Affairs at Experian, said: “An IVA appears on your credit report for at least six years, so even after your IVA ends, typically after five years, you might continue to experience difficulties getting credit and other financial services because you entered into an IVA in the past. If you are granted credit, the chances are that the lender will see you as a very high-risk customer and will charge you a higher rate of interest as a result.
“While an IVA may be the best option for some people, it should only ever be considered after receiving impartial advice from a responsible organisation such as Citizens Advice, the Consumer Credit Counselling Service, National Debtline or the Insolvency Service.”
Joanna Elson, Chief Executive of the Money Advice Trust, commented: “IVAs are only appropriate for a small proportion of people and this route should only be entered into after receiving best advice from a reputable source. It is vital that people are fully advised on the costs and implications of entering into an IVA, particularly if there could be a risk to their mortgaged property.”
Martin Hagerty, Head of Retail Credit at HSBC Bank plc, commented: “HSBC has harboured concerns for some time about the level of potentially misleading advertising, encouraging borrowers to enter an IVA, when it may not be in their best interests. We fully support this Experian initiative and echo the advice for those with financial worries to take impartial advice or speak openly with their lenders as a first step. An IVA may work for some but can also have serious long-term implications for an individual’s credit rating.”
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Tue 29th May, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, mortgages, Consumer debt, IVAs, Financial news, Borrowing, Personal debt, Debt management at 11:22 am by admin
The number of county court judgments against debtors increased from 802,886 in 2005 to 1,022,166 in 2006, up 27 per cent. Recent figures reveal that individual debt rose to an incredible £1,310 billion in 2006 from £116 billion in 2005.
Court contractors who sell debtor’s information, and financial institutions who sell off bad debts compound this problem. Unfortunately, bad debt consolidation management has become a multi-billion pound industry.
EuroDebt, a questionable debt collection company, has a turnover of £13million. This company was subject of a BBC TV investigation, which filmed its agents charging customers thousands of pounds and implying they could get their debts reduced or even written off.
A reporter for the Inside Out programme posed as a client with debts of £17,000. A EuroDebt agent suggested he use his credit card to pay the company’s handling fee of £1,595, something independent debt counsellors consider “appalling and unethical”.
EuroDebt director Kevin Still said: “Under no circumstances would we recommend that anyone take out any additional credit.
“But it wouldn’t be unusual [to ask for postdated cheques] if somebody couldn’t afford to pay the instruction fee in one go, and we do allow a reasonable amount of flexibility in how they go about paying their plans.”
A spokesman for Information Commissioner Richard Thomas, who enforces data protection laws, said: “We will study The Mail on Sunday’s report carefully to consider if there is a case for tighter controls on those who have access to this data.”
Until recently the media only focused on the IVA industry as a whole. Now, they are targeting any company that victimises people who have borrowed too much on personal loans or mortgages.
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Thu 26th Apr, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Consumer debt, IVAs, Financial news, Borrowing, Insolvency, Personal debt, Bankruptcy, Debt management at 9:28 am by admin
At one time debt management was limited to cutting up your cards, having your wages garnished, or receiving a slap on the wrist from the bank as they helped the borrower sort out his finances and repay the loan.
Then the UK adopted the IVA and ‘walk away from your debt’ attitude. The problem became so severe that the government had to prevent university graduates from petitioning for bankruptcy after school so they could ‘walk away from their debts.’
The Banks, and the government, are now battling the same problem with consumers who believe the myth that an IVA company will let them walk away from 50%, 80%, and even 95% of their debt – without consequences.
Debt is starting to cause serious social and economic problems in the UK, forcing the financial community into action. Debt is not only damaging people’s ability to build wealth and repay their current loans. It is damaging their health, relationships, and family life.
Debt Help companies like Credit Action have seen unmanageable increases in the number of cases they deal with. Debtmaters receive 11,000 calls a month.
The debt management sector are now taking a pro-active stance against debt.
Debtmatters’ financial solutions expert Michael Shirley states: “We find that even when people are able to admit they have a serious problem and contact us for help, they still may not have discussed their financial situation with their partners.”
It is becoming more difficult for adults to find financial institutions that will help them hide their loan information. The government has added their own debt help lines, and educational websites, but don’t expect a simple ‘tsk tsk’ as they help you get your debt under control enough to hide the problem.
The new method of debt management is to re-educate the borrower, make them more financially savvy, and work to both eliminate their debt and prevent future debt.
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