Archive for February, 2011

Avoid becoming a debt statistic this year

Friday, February 18th, 2011

There have been some very gloomy predictions when it comes to personal debt levels and problems for 2011 recently. Many industry experts are predicting that the number of people becoming insolvent will increase sharply this year, with a number of factors being blamed for the ongoing financial issues that consumers and households are set to face.

With money already tight in many households consumers have had to cope with soaring living costs, and hike in VAT, which came into force at the start of this year, government cutbacks affecting benefits and other costs, and continued uncertainty about jobs. On top of all this many people are still struggling to cope with the debt that they accrued over the Christmas and New Year period, which has placed even greater strain on their finances.

With many people expected to be tipped over the financial edge this year consumers should take whatever action they can to avoid becoming a debt statistic in this challenging climate. Consumers who are struggling with debt are being advised to seek advice now, particularly given the fact that over the coming months interest rates may increased, resulting in many households having to cope with increased mortgage payments.

Several weeks ago there were dire concerns over whether enough debt advice resources would be available to consumers due to government cutbacks. However, the government has now found the money to fund these services for an additional year, buying consumers more time within which to try and sort out their debt problems and issues. Anyone that is experiencing problems, or is likely to do so in the near future, should take advantage of these services whilst they are available, as the ongoing cutbacks could mean that resources could be pulled at any time.

The CCCS recently announced that its online debt counselling tool was proving very popular, and that there had been a surge in use of this online resource since the start of this year. Consumers have a number of ways in which they can get the help that they need in terms of debt advice, but they should take action as soon as possible in order to avoid spiralling debt problems that quickly go out of control.

The Citizen’s Advice Bureau and various debt charities can help to point those with debt issues in the right direction, and can look at a number of different options to address the issue as quickly as possible.

Tags: issue, debt levels, debt counselling, use, control, buying, number

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Increase in demand for debt in January

Friday, February 18th, 2011

According to recent report there was an increase in demand for debt advice online during the month of January, as consumers continued to struggle with their finances. New research has shown that there was a surge in the number of people getting online to seek advice about their debt problems in the month of January, with many struggling with the financial hangover from Christmas and the New Year.

The Consumer Credit Counselling Service offers an online debt counselling tool, and officials from the charity said that there was a sharp rise in the number of people that were using the tool. In total 8591 people are said to have used this counselling tool, called CCCS Debt Remedy, in January of this year, which was twice the number that used it in the previous month and a higher number than any month of the previous year.

In total last year 65,825 people used this counselling tool to get help with their debt problems. The CCCS believes that based on the figure for January there will be a sharp increase in the number of borrowers looking to online debt assistance over the course of this year. In fact, the charity believes that there could be a dramatic rise in those seeking help with their debts given the soaring cost of living, the VAT hike, and uncertainty over job security.

Delroy Corinaldi, CCCS External Affairs Director, said: “The next year will be very difficult for many people and I am concerned that those struggling with debt will end up being charged for debt advice because they are unaware that free advice and support is available. I hope that the availability of this free service which can be used at any time online will help prevent people paying for debt advice unnecessarily.”

Tags: sharp rise, cccs, month, tool, New Year's Day, New Year, debt advice

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Debts could rise due to increased unemployment

Thursday, February 17th, 2011

Over the past couple of years the situation regarding personal debt in the UK has become increasingly bad, with more and more people finding themselves plunged into debt as a result of a number of factors. The global financial crisis, restrictions in the financial markets, job losses, and the recession have all been blamed for the problems that many people have been facing when it comes to their personal debt levels.

According to industry experts personal debt levels and the number of people struggling to stay afloat financially could get worse over the course of this year, and this is due to the surge in unemployment levels amongst other things. In the last three months to the end of December unemployment is said to have rocketed by 44,000, taking the number of unemployed to nearly 2.5 million.

The coalition government has acknowledged the rise in unemployment, which is hitting younger people particularly hard, but has said that the situation is getting better. Employment Minister Chris Grayling said: “We’ve got a long way to go and I want to see these figures start to come down, but certainly the evidence is over the past month things have settled down and we are not seeing the increases we saw earlier in the last quarter.”

It is thought that a number of other factors will also exacerbate the debt problem. For example, the base interest rate is set to increased over the course of the year in order to keep a lid on inflation, and it is thought that once this happens and homeowners‘ repayments increase many will face increased debt issues and repossession numbers could increase again having fallen over the course of last year according to the Council of Mortgage Lenders.

Tags: example, homeowners, coalition government, global financial crisis, Jobseeker's Allowance, December, United Kingdom

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Home repossessions fell last year

Thursday, February 17th, 2011

The number of home repossession seen in the UK last year is said to have fallen according to figures from the Council of Mortgage Lenders, which were released recently. Over recent years repossession numbers have been rocketing, with many unable to keep up with their mortgage repayments and finding themselves at the receiving end of repossession action taken by banks and lenders.

In 2008 the former Labour government slashed the base interest rate to just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England. It has now been at this rock bottom level for nearly two years, and there is no doubt that many homeowners have been spared repossession as a result of the increased affordability that the reduced base rate has brought with it.

This has been reflected in the figures released by the CML, which showed that home repossessions fell by around 24 percent last year, and there was also a 13 percent drop in the number of homeowners that had arrears of 2.5 percent or more. For many, the drop in the base rate was their saving grace, and enabled them to keep up with repayments on their mortgages and keep a hold of their homes.

However, despite the encouraging figures there are fears that repossession numbers could rise again as a result of interest rate increases, which are expected over the course of this year.

Michael Coogan from the CML said: “As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available. We will be monitoring developments closely, but at present we continue to expect the number of arrears and repossessions to be in line with our forecasts of 40,000 repossessions and 180,000 arrears cases as at the end of 2011.”

 

Tags: number, Mortgage Lenders, grace, rise, support, council of mortgage lenders, year

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More and more people retiring with debt

Wednesday, February 16th, 2011

A rising number of consumers in the UK are said to be retiring with debts still hanging around their necks. In the past most people had repaid their debts by the time retirement came around, enabling them to relax and enjoy a pleasant retirement with adequate funding. However, times are hard for all age groups at the moment and many that are coming up to retirement still have many debts to pay off.

It is claimed that a rising number of people coming up to pension age will have to look at continuing with work past their retirement age in order to have adequate funds to pay for living costs and pay debts. Many may have to work a couple of years past retirements by some may have to extend their working, albeit on a part time basis, by up to ten years.

A survey that was carried out recently by the Prudential showed that only 12 percent of people polled were happy to retire on time because they had an adequate pension in place to fund their lifestyle and enable them to keep up with financial commitments.

An official from the Prudential said: “This year will see the phasing out of the default retirement age, making it easier for those wishing to stay on at work. Additional retirement income is also becoming more important as the security of a defined benefit pension scheme disappears for many people.”

He also said that it was important for consumers to take the time to see a financial advisor and set up a good pension sooner rather than later to ensure that they would not have to work past retirement.

He added: “Seeking advice from a financial adviser should be a prerequisite to ensuring you achieve the level of pension income you want and need.”

Tags: adequate funding, Labor, advice, adequate, happy, time basis, place

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Don’t be left high and dry with pensions

Wednesday, February 16th, 2011

In the past having high levels of debt is something that has commonly been associated with younger people. However, it has emerged that more and more older people are now struggling with personal debt levels, making it difficult for many to be able to enjoy their retirement. For those that still have a fair amount of debt when retirement comes around there is no other option other than to continue working, as otherwise they will find it impossible to make repayments on their debts.

However, those with a decent pension pot may find that they can still afford to retire and can use part of their pension money to repay any debt that they have outstanding at the time that they retire. In order to do this, however, consumers need to ensure that they have an adequate pension that will allow them to make these debt repayments and leave them enough to enjoy a pleasant and comfortable retirements rather than leaving them struggling to make ends meet.

A huge number of people in their 30s and 40s have little or nothing by way of a pension pot, and whilst retirement may seem like it is still a very long way off it can come around far more quickly than many expect. This leaves many people in the difficult situation of having to determine whether or not they can actually afford to retire on the pension that they will receive, which is particularly hard if you still have outstanding debt. For many the only option is to continue working in order to be able to afford living costs.

A survey was recently carried out by the Prudential showing that more and more people that were coming up to retirement age were considering staying on at work for up to ten years in order to earn more money and increase their pension pot. However, some forward planning means that future generations that are coming up to retirement in years to come may not have to face this difficult decision. Prudential officials have said that consumers should start planning their pension early and should seek financial advice from experts to ensure that they get the right pension for their needs.

An official from Prudential said: “This year will see the phasing out of the default retirement age, making it easier for those wishing to stay on at work. Additional retirement income is also becoming more important as the security of a defined benefit pension scheme disappears for many people.” He added: “Seeking advice from a financial adviser should be a prerequisite to ensuring you achieve the level of pension income you want and need.”

Tags: decent pension, pensions, age, time, default, official, difficult situation

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Government invests more money in debt advice

Tuesday, February 15th, 2011

It was recently announced that the Citizen’s Advice Bureau was set to lose a large number of its face to face debt advisors as a result of government funding cuts, which would have had a serious effect on the ability of the charity to help the many people that approach it for debt advice each year. Demand for this sort of advice has soared over the past couple of years due to the financial crisis and recession, and there were concerns that the loss of services could have a profound effect on the ability of consumers to get the advice that they needed.

However, it has now been announced that the government has found an additional £27 million that it can plough into face to face debt advice for consumers, which means that the sector can benefit from funding for another year during which more people with debt related problems can receive the help that they need.

Many people have had to seek debt advice because of their financial issues over the past couple of years, and there are many more than will be looking for help this year as a result of soaring living costs, VAT increases, job losses, and possible interest rate hikes, which may come later this year according to some industry experts.

Secretary of State for Business Vince Cable stated: “It´s vitally important that everyone has access to free debt advice, and I am pleased to announce that the Department for Business will provide the £27 million necessary to maintain the programme of face-to-face debt advice. While the Government has maintained funding for this programme, it provides only a small part of the revenue necessary to keep the Citizens Advice network fully functioning. I would like to take this opportunity to call on the other funding streams, such as from local authorities, to help provide whatever support they can to keep this excellent service going.”

Tags: Vince Cable, advice bureau, demand, loss, Citizens Advice network, everyone, Citizen's Advice Bureau

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Debt problems could hit homeowners

Monday, February 14th, 2011

Concerns are rising that many homeowners in the UK could be hit with big debt related problems later this year as a result of base interest rate increases, which many believe will occur in the spring. Whilst the base rate has been at its record low of just 0.5 percent for twenty two months now many believe that it could rise in April or May, as the Monetary Policy Committee tries to keep a lid on inflation.

An increase in interest rates could send the repayments of some homeowners soaring by hundreds of pounds a month, and in the current financial climate this could lead to serious financial issues that tip some people over the financial edge. For those on fixed rate mortgages the interest rate increases won’t have any effect at present, but those on variable rate loans will see a difference in the amount that they have to pay each month.

For those who do have to make higher repayments on the mortgage following interest rate increases it could compromise on their ability to meet other financial commitments, which will lead many to seek debt related advice from financial experts in the field. The demand for debt advice is already sky high due to the financial problems caused by the credit crunch and the recession, and this could push numbers even higher.

One official said: “With all of the problems that are hitting consumers at the moment it is little wonder that more and more are looking for advice from financial experts. The high cost of living, VAT hikes, job losses, and government cutbacks are already playing havoc with consumer finances. An interest rate increase could be the final nail in the coffin for some people.”

Tags: VAT, ability, low, demand, higher repayments, due, debt

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Interest rates remain on hold

Thursday, February 10th, 2011

Many mortgage holders will be breathing a sigh of relief after the Bank of England announced that the base interest rate would remain at its all time low of just 0.5 percent for yet another month. It is nearly two years ago now since the base rate was slashed to the lowest level in the history of the Bank of England, and despite calls for rate increases in order to curb inflation the decision has been made to keep rates on hold for now.

For mortgage holders with variable rate mortgage loans this means that they do not have to worry about rocketing monthly repayments at a time that is already financially difficult for many. This is the 22nd month where the base rate has been on hold at this rock bottom low, and comes despite the fact that the last meeting in January saw a couple of Monetary Policy Committee members voting for a rate increase to try and bring the spiralling rate of inflation under control.

Many had thought that the base rate could be increased this month because of the increasing speculation that inflation could hit a massive 5 percent this year, which is way above the 2 percent target set by the government. However, the MPC has clearly decided that concerns over the economy outweigh concerns over inflation, hence the decision to keep the base rate at 0.5 percent.

However, one economist said that the move has come as no surprise. He said: ‘Wage settlements are the key – with no sign of any second-round [inflation] effects, there is no reason for the MPC to raise rates. We calculate that if you strip the VAT effects out of core inflation, you are left with an underlying rate of inflation that is close to 1%. Though the pressure [on the MPC to raise rates] will become increasingly fierce, we expect the MPC to be able to hold firm for the whole year.’

Tags: committee members, underlying rate of inflation, Inflation, percent, rock bottom, worry, move

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Interest rates remain on hold

Thursday, February 10th, 2011

Many mortgage holders will be breathing a sigh of relief after the Bank of England announced that the base interest rate would remain at its all time low of just 0.5 percent for yet another month. It is nearly two years ago now since the base rate was slashed to the lowest level in the history of the Bank of England, and despite calls for rate increases in order to curb inflation the decision has been made to keep rates on hold for now.

For mortgage holders with variable rate mortgage loans this means that they do not have to worry about rocketing monthly repayments at a time that is already financially difficult for many. This is the 22nd month where the base rate has been on hold at this rock bottom low, and comes despite the fact that the last meeting in January saw a couple of Monetary Policy Committee members voting for a rate increase to try and bring the spiralling rate of inflation under control.

Many had thought that the base rate could be increased this month because of the increasing speculation that inflation could hit a massive 5 percent this year, which is way above the 2 percent target set by the government. However, the MPC has clearly decided that concerns over the economy outweigh concerns over inflation, hence the decision to keep the base rate at 0.5 percent.

However, one economist said that the move has come as no surprise. He said: ‘Wage settlements are the key – with no sign of any second-round [inflation] effects, there is no reason for the MPC to raise rates. We calculate that if you strip the VAT effects out of core inflation, you are left with an underlying rate of inflation that is close to 1%. Though the pressure [on the MPC to raise rates] will become increasingly fierce, we expect the MPC to be able to hold firm for the whole year.’ 

Tags: rate increase, spiralling rate, Inflation, bank of england, sigh, base interest rate

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Personal insolvencies set to increase

Thursday, February 10th, 2011

The level of personal debt in the UK has become an increasing concern, especially given the difficult financial and economic climate that so many people are facing at the moment. Increased living costs, a rise in VAT, higher risk of job losses, and government welfare cuts have left many people struggling with their everyday living costs.

The Insolvency Service recently released figures showing that although there was a drop in personal insolvency levels in the final three months of last year the number of insolvencies over the course of the year rocketed to record levels last year. The bad news is that officials believe that the number of insolvencies could rocket even higher over the course of this year.

Figures have shown that a huge number of people are now finding it difficult to make their money stretch to the end of the month when they next get paid, with many running short around two thirds into the month. This means that for one third of the period many people are relying on credit to get them through, and this is resulting in credit card balances, overdrafts, and loan debt spiralling out of control.

It has even been claimed by the Citizen’s Advice Bureau that problems with money have resulted in the increased number of cases of depression and mental illness.

Figures show that there were over 135,000 personal insolvencies last year, and this could increase to in excess of 150,000 this year.

One industry official said: “Unfortunately, it’s only going to get tougher as the government’s austerity measures are only just beginning to be felt in people’s wallets. I doubt that when the coalition government came to power last May, it envisaged that its austerity measures would result in such a startling increase in the cost of living. These spiralling costs, coupled with worldwide commodity shortage and conflicts in the Middle East pushing up oil prices, means that the future doesn’t feel that bright! We have at least begun pay back our debts, some £24 billion in the last 12 months but again this is marred when you consider that banks have written off nearly £10 billion of our debt over the same period.”

Tags: Money, personal insolvencies, Insolvency Service, Service, control, loan

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