Archive for November, 2010

Is a debt management plan a good idea?

Tuesday, November 30th, 2010

It is not unusual these days for people to be in high levels of debt where they are struggling to meet repayments and they cannot make ends meet financially. There used to be a huge stigma attached to being in high levels of debt, but this is now such a common situation that people are now talking about their debts openly.

The number of possible solutions to help those that are experiencing difficulties in repaying their high levels of debt has also increased, and these days there are a number of options available to those that need help, advice, and assistance in order to get their finances on track and make their debts more manageable.

Debt management plans are one such solution and these plans could prove really helpful for those that have a range of unsecured debts that they are struggling to repay with a number of different creditors. There are a number of debt management companies in operation but you need to make sure that you do not go through a company that charges you for advice and to operate your plan, as otherwise you will end up even worse off financially in the long run.

You will find a number of charities and companies that do not charge a fee for debt management advice and assistance, such as Payplan, and these are the companies that you should go through if you are considering a debt management plan. These companies will go through your income and expenditure and will let you know whether you qualify for a debt management plan and how they can help you.

With a debt management plan your debt management company will work out how much you can afford to pay towards your debts each month, and you will then make this one single payment tom your debt management company each month. The debt management company then distributes the money amongst your creditors, paying them on a pro rata basis depending on the balance of your debt.

A debt management plan has its pros and cons. Obviously the main benefit is that you can cut your repayments dramatically each month, which will enable you to make your finances stretch further and pay your living costs, rent, or mortgage more easily. On the other hand you will be paying your debts for a lot longer than you normally would, so you will not be free of debt for a long period of time.

Tags: different creditors, credit, helpful, debt consolidation, debt management, Stigma

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Brits still prepared to get into debt

Tuesday, November 30th, 2010

It has been reported following a recent study that Brits are still prepared to spend money and get into debt despite the fact that many are concerned about the state of the economy, government cutbacks, and the security of their own jobs. Officials have said that many Brits are failing to react to the current climate in terms of adjusting their financial habits.

When it comes to saving, spending, borrowing, and repaying money many Brits have not made any changes to their finances, and are continuing as they were prior to the global financial crisis and the recession. The study was carried out by High Street banking giant HSBC, and officials said that consumers were worried about the current climate but were not making financial changes to reflect this.

The study found that a massive 76 percent of consumers were concerned about the direction in which the UK’s economy was heading, and the same number of people were concerned about their own financial situations and prospects. However, 68 percent of people had not made any changes to their finances and how they handled their money.

In fact the survey also showed that although around 19 percent of consumers had cut their spending because of the economic climate a further 15 percent had actually increased their spending. Around 26 percent of people were willing to borrow money just as much as they had been before the global financial crisis. A further 5 percent were prepared to go into even more debt.

An official from HSBC responded to the findings from the survey, stating: “This suggests people either have their heads in the sand and do not realise the need to change, or that they have simply decide to stoically ride out the recession by refusing to alter their ways.”

Tags: Banking, giant, state, UK, recession

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FSA mortgage plan delay buys consumers more time

Tuesday, November 30th, 2010

It has been reported that many would be buyers who thought that they might be shut out of the mortgage market due to proposals that were put forward by the UK’s financial regulator, the Financial Services Authority, may be thrown a lifeline because of delays in approving the proposals.

For many people, including first time buyers, those on lower incomes, and self employed people, the proposals may have left them out in the cold when it came to getting a mortgage because of the FSA’s determination to crack down on lax lending amongst banks and make lending criteria far more stringent.

The plans put forward by the FSA included making far more detailed checks on applicants, and working out their chances of affordability over the term of the mortgage, factoring in the chances of base interest rate rises. This would mean that many people would be deemed as being unsuitable because of their finances, and would therefore struggle to get a mortgage.

The plans by the FSA caused an outcry from the mortgage industry, with the Council of Mortgage Lenders stating that the new proposals were unfair and unnecessary, adding that they would result in many people being left high and dry when it came to getting onto the property ladder. It has now emerged that the FSA’s own Consumer Panel has stated that a more indepth review of the proposals is required, which has resulted in the implementation of these proposals being delayed.

Final proposals will now be released next summer, and this has bought extra time for the people that may have been worried about exclusion as a result of the plans.

Adam Phillips from the Consumer Panel said: ‘We welcome the FSA’s decision to take more time in assessing the full impact of the MMR. It is essential that the regulator assesses the possible unintended consequences and side-effects of its proposals for the rest of the market.’

Tags: proposals, self, implementation, Commercial mortgage, rest, Consumer Panel, council of mortgage lenders

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Make this the last year you get into debt for Christmas

Monday, November 29th, 2010

Every year many of us have every intention of saving money to pay for Christmas gifts so that we don’t have to use credit cards, take out loans, or rely on overdrafts to make our purchases for the festive season. However, for one reason or another we end up failing miserably to save the money that we need, and before we know it we have run up a huge bill on our credit card or taken out a loan that we cannot afford, leaving us paying off the debt for the rest of the year.

One of the reasons many of us end up in this situation is because we do not prepare ourselves for the festive season even though we know that it is going to end up costing us lots of money. There are a number of ways in which you can eliminate the problem of Christmas suddenly coming around and finding that you cannot afford gifts without getting into huge amounts of debt.

One way in which you can do this is simply by being sensible with your finances for the rest of the year. You know that Christmas is going to be coming around at the end of the year, so look at your budget and see how much you can afford to put side in a separate account each month towards the cost of the coming Christmas. If you start in January and put aside just £50 a month you will have £600 by December, which will pay a very good portion if not all of your Christmas present bill.

You can also look at the various Christmas clubs that are around, into which you can pay money each month, and when Christmas comes around you can choose from a wide range of gifts and vouchers to give as gifts. Again, this can take the hassle out of worrying about where the money is going to come from for Christmas presents when the festive season comes around.

Another way in which you can save money on the cost of Christmas is to buy your presents in January ready for the coming December. After Christmas the cost of some fabulous gifts sets and ideal presents is slashed by 50 percent or even 75 percent, which means that you can buy all your gifts for the following year for a fraction of the retail price, and you can be prepared and paid up for Christmas well in advance.

Tags: credit cards, Another way, loans, overdrafts, month, debt

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OFT deals with rogue debt advisors

Monday, November 29th, 2010

The OFT is said to be cracking down on so called rogue debt advisors, and according to reports at least five of the companies that are said to be involved in this face having their operating licences revoked by the Office of Fair Trading. The OFT has been cracking down on companies that are said to be involved in misleading advertising, hidden costs, and offering poor advice to the many desperate consumers that are anxious to sort their financial problems out.

It is thought that the OFT is also set to crack down on firms that cold call consumers to try and get them to take out a debt management plan or similar financial service, and then sell their details on as leads to debt advice companies. The watchdog is said to be planning a blitz on such firms in the New Year, and plans to come down hard on firms that are seen to be rogue traders in the financial services industry. Debt advice companies that take leads from cold calling firms based abroad will also be at the receiving end of the OFT’s wrath if they are caught out.

According to reports there are eight hundred firms in the UK that have licences to offer debt advice, and earlier this year the OFT wrote to 129 of them to express concern over their working practices. In 50 percent of these cases the problems outlined by the OFT were said to be minor ones. However, in a small percentage of the cases the issues outlined were said to be extremely serious.

Some of the problems that have been highlighted include failure of companies to review customer files, employment of untrained advisors who cannot offer sound advice and information, and advising customers that a service is free when it is not.

Tags: company, industry, offer, New Year, advice, watchdog, similar financial service

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Many seeking debt advice go online

Wednesday, November 17th, 2010

It has been revealed in a recent report that a rising number of people that are struggling with their finances and finding it difficult to cope with debt are turning to the Internet to get advice. Personal debt has become a huge problem over recent years, and there are now a number of debt advice charities and groups that consumers in debt can go to for advice and assistance.

However, the rising number of people with debt worries has seen demand for these services rocket, and the waiting times have become increasingly longer for those that need help. However, for those with access to the internet invaluable advice is often at their fingertips, and more people now seem to be realising that they can find the answer to their problems on the Internet.

A recent survey has suggested that the Internet has become the most popular source of information for those that have personal debt problems. The survey was carried out and released by Trust-Deed.co.uk, and suggests that many people go online to learn more about solutions to their debt problems.

The survey results said that 42 percent of respondents said that they had first heard of trusts deeds via the Internet, with 22 percent stating that they had been told about these solutions from a debt advisor, and 19 percent hearing about them from friends or family. Just 10 percent had heard about them from media sources such as radio, television, and print.

One debt expert said: “People with a debt problem are often embarrassed and afraid. The internet allows them to get access to information and support while remaining anonymous. People can research their options on the web and get advice through debt forums without actually have to admit to anyone that they have a debt problem. This is a very important first step.”

Tags: radio television, Government debt, debt advice charities, recent report, loan, rocket, debt expert

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More than half of families struggling with debt

Saturday, November 13th, 2010

It has been revealed in a recent report that more than half of UK families are now struggling to repay their debts, and this could get worse as living costs continue to increase. The research results have been released on the back of warnings from the Bank of England that the cost of living is set to increase. This will put even greater strain on households that are already struggling with their finances.

Mervyn King, the governor of the central bank, said that the increase in living costs was down to a number of factors, including soaring commodity prices, rising power bills, and the up and coming VAT hike that will see VAT increase to 20 percent at the start of next year. The Bank of England also revealed that more than 50 percent of families in the UK were already struggling to keep up with debt repayments, and these rising costs could make the situation even worse.

Around 51 percent of households in the UK are now said to be struggling with their debts and finances, and this is said to be the highest on record with the Bank of England, which started keeping records fifteen year ago. The central bank warned that inflation is likely to rise and remain high for longer than had been predicted just a few month ago. King said that businesses were having to pass on soaring import costs to customers, which would put further pressure on inflation.

Inflation currently stands at 3.1 percent, and this is considerably higher than the 2 percent target set by the government. The Bank of England now believes that inflation will not all back to its target level of 2 percent until at least 2012.

Tags: bank of england, Mervyn King, governor, UK, central bank

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Arrears and repossessions fall in the UK

Friday, November 12th, 2010

Over the past few years the global financial crisis and the recession has resulted in soaring arrears levels amongst cash strapped homeowners in the UK, and with so many people falling into serious arrears with their mortgage repayments this naturally led to a steep rise in the number of repossessions, with many homeowners losing their properties due to problems with making repayments on their mortgage loans.

However, the Council of Mortgage Lenders has now released fresh data showing that both the level of arrears amongst homeowners in the UK and the number of repossessions is falling. The CML has put the fall in arrears levels and repossessions down to a number of factors, and has said that the number of home repossessions has been falling over the last few quarters.

According to the figures from the CML         around 8900 properties were repossessed by banks in the third quarter of this year, which reflected a 5 percent drop compared to the previous quarter, which saw 9400 properties being repossessed. The drop in arrears and repossession levels also marked the fourth quarterly decline.

The figures also showed that in the three months to the end of September the level of mortgage arrears also fell, with 176,000 mortgages having arrears of 2.5 percent or more, which was a fall from 178,200 for the three months to the end of June.

Despite the fall in home repossessions one industry official said that there had been an increase in the number of possession orders being sought, and this could mean that the trend seen over the past four quarters in terms of declining repossession numbers could go into reverse. Low interest rates and increased responsibility from lenders is thought to have contributed to the current drop in arrears and repossessions.

Tags: percent, repossession levels, problems, UK, CML, Arrears

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Debt problems could get worse in UK

Thursday, November 11th, 2010

It was recently reported that there had been a drop in insolvency levels in the UK, with levels dropping again following the record level of insolvencies that was seen last year. However, whilst the news will have been welcomed in many industry sectors there are concerns that it could just be a temporary reprieve, and that the situation could quickly get out of control again.

One UK debt charity has stated that personal debt levels in the UK are set to increase, and whilst the recent figures have shown a drop in insolvency levels this is a situation that could go into reverse as a result of rising unemployment. Officials from the Debt Advice Foundation have said that it is likely that personal debt levels and insolvency numbers will rise again as more and more people in the public sector start losing their jobs.

The prediction follows recent announcements from the coalition government with regards to the security of jobs within the public sector. As part of the cutbacks planned by the government it is thought that around half a million people in the public sector will lose their jobs by 2014. The debt charity described the recent insolvency figures as ‘the calm before the storm’ and said that the government’s Spending Review could see the number of insolvencies soar by 20 percent.

David Rodger from the Debt Advice Foundation said: “Although 2010 has seen a reduction in the number of people becoming insolvent, the prospect of half a million public sector jobs being cut with little hope of the private sector picking up the slack, unfortunately means that the worst could be yet to come.” He added: “Although insolvency volumes are the product of a number of contributory factors, unemployment, particularly new unemployment, is a key determinant. If the predicted spending cuts go ahead we could see insolvencies rise to in excess of 40,000 per quarter, which is 20% higher than present levels.”

Tags: level, Public sector, Debt Advice Foundation, personal debt, Foundation, reprieve

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Nearly 10 percent of pensioners still have a mortgage

Saturday, November 6th, 2010

Recently released figures have shown that close to 10 percent of pensioners in the UK still have mortgage related debt that they need to pay off. This is a far cry from the relaxed retirement that many pensioners may have once been expecting. The mortgage debt means that instead of enjoying their golden years many of these pensioners are having to continue working.

In some cases the pensioners still owe huge amounts on their mortgages, and have to look at remortgaging. The research was carried out by the over 50s specialist Saga, which provides a range of services aimed at this age group. Around six thousand people were polled as part of the survey, and the results revealed that 8.6 percent of those aged sixty five and over still had a mortgage.

Another report that was released recently indicated that this was a problem that would only get worse. The report was released by Policis, and showed that a massive 53 percent of people aged fifty or over with a mortgage had a loan that they would still be paying past their 65th birthday.

Figures from the Office for National Statistics have shown that there are 866,000 pensioners in Britain that are still working. There has also been an increase in the number of women aged 65 or over that are becoming insolvent, with the figure increasing by 42 percent. A rising number of older people have also said that they intend to borrow into their retirement to fund their plans for the future.

The director general of Saga, Ros Altmann, said: ‘There are a lot of people who are going to have to keep on working just to pay their debts. They have no choice.’ Speaking about the number of pensioners that have jobs he added: ‘It is an indictment of the way our savings culture has almost fallen apart.’

Tags: debt, specialist saga, indictment, increase, culture

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Should those in debt protect their income?

Saturday, November 6th, 2010

Most people hate the uncertainty that they feel about their futures, and there are many things that we simply cannot take for granted, such as our health, our relationships, and our jobs. Uncertainty about the latter has been particularly affected in the last few years due to the financial climate, and many people would seriously struggle if they were unable to work due to sickness, injury, or redundancy.

When you think about how much you rely on your income to pay bills, settle debts, put food on the table, and put a roof over your head, you realise just how difficult things would be if you suddenly lost that income. Every year many people find themselves suddenly unable to work due to sickness, injury, or redundancy, and the loss of that income can cause serious problems.

In today’s climate in particular losing an income can be very difficult because not only do people have bills and mortgage or rent to deal with but also debts that they might have accrued over recent years. This would put those losing their income in a particularly difficult position, as it means that they would not be able to deal with their debts as well as not being able to deal with their living costs.

One thing that workers can do protect themselves and ensure that they can continue to meet their financial commitments and pay their living costs is to take out income protection insurance, and this is available from a number of providers. With income protection cover you can protect yourself against losing your income through sickness, injury, or redundancy, and for a specified period you will continue to receive the sum of money that you have covered yourself for if you lose your job or you are unable to work.

You will generally find that with income protection cover you can cover up to 75 percent of your monthly income, although this does vary from one provider to another. The time over which you can receive benefits will also vary, and choices often include six months, a year, two years, and five years. Again, the choices will vary based on the provider.

The cost of cover will vary based on the provider you go through, the level of cover that you choose, and the period over which you want to receive the benefit if you have to make a claim.

Tags: income protection cover, relationships, debt, cost, level, roof, insurance

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Fears over cut in York debt advice

Saturday, November 6th, 2010

Over the past year the level of personal debt in York, as in many other places, has soared, as a rising number of households struggle with their finances and end up replying on credit to pay for everyday purchases and pay bills. This has resulted in an increase in the number of people that have debt that they are struggling to repay, and many have ended up seeking advice about how to best deal with their debts.

However, concern has now arisen over the possibility of many people struggling to even get advice on how they can try and address their debt issues following news that the debt advice service at the York Citizen’s Advice Bureau faces being axed. Between the start of April and the start of October this year the debt advice service at the York CAB is said to have received enquiries for help from 2876 people, and this compared to 2027 people looking for help during the same period a year earlier.

Over the six month period the total amount of debt that was addressed by the York CAB came to more than £10 million. The waiting time for people to get the advice and help that they need has also increased as a result of the higher demand for debt advice, and has increased to around five weeks, whereas a few years ago it was just ten days. There are now concerns that the decision to cut the service could seriously affect the lives and health of those facing financial difficulty.

One official said: “What the debt team at the CAB has found, and this is backed up psychological research, is that debt is bad for your mental health. One-in-two adults in debt have some form of mental health condition. Whether the debt problem causes the health problem, or the other way round, is often difficult to determine, but we know that as well as helping clients with their debts, we see a marked improvement in their mood, ability to cope and plan for the future.”

Tags: news, increase, amount, help, form

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Is a fixed rate mortgage a good idea?

Monday, November 1st, 2010

When it comes to getting a mortgage it is important for homeowners to decide which is the best choice for them based on their finances and their financial security. A fixed rate mortgage is a popular choice amongst many people, and one of the main reasons why people choose these mortgages is because of the increased financial stability that they offer.

With a fixed rate mortgage borrowers are able to fix their rate for a specified period of time such as two, three, or five years. For the duration of that time the interest rate on the loan remains static no matter what happens with the base interest rate set by the Bank of England. Whilst this is not so good if the base rate is falling, because those with fixed rate could end up paying more than those on variable rates, it can be very reassuring when the base rate is on the rise, as it enables the homeowner to avoid spiralling mortgage repayments.

A fixed rate mortgage is ideal for those that want financial stability in their lives, which is something that it particularly important these days in the current financial climate. With fixed rate mortgages the repayments on the mortgage will not change for the period over which the rate is fixed, so households can budget far more effectively without the worry of changes and fluctuation.

The current base interest rate is now at its lowest in the history of the Bank of England, standing at just 0.5 percent, which is where it has been for well over a year and a half. As a result of this many people that have taken out mortgages have opted for variable rates because of the low rate deals available. However, there is now speculation that the base rate will have to increase soon in order to keep a lid on inflation, and this means that those on variable rate mortgages will see their repayments increase.

With this in mind anyone that is looking to take a mortgage out now may benefit from opting for a fixed rate mortgage, as this will offer protection against sudden repayment increases that could stem from the base rate rising. Some of the banks are currently offering some great deals on fixed rate mortgages, making them seem even more appealing for those that want to have the financial stability of static repayments.

 

Tags: specified period, getting a mortgage, rate mortgage borrowers, budget, stability, Bank

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