One Advice | Bankruptcy, IVA & Debt News

You hear everywhere that debt is bad, credit card debt, store card debt, mortgage debt, overdrafts, consolidation loans etc… But you know sometimes it makes sense to get into debt.

Good Debt

“What is Good Debt?” It is almost impossible to live a debt free existence as there are essentials which can really only be purchased with debt. As long as you do not borrow outside of your means, this can be classified as ‘good debt’ and includes:

Mortgage Debt – House prices may be falling, but not enough for most of us to afford to pay for our home up front. This means that most of us will need to get a mortgage.

Make sure that the mortgage debt is within your means, you don’t want your mortgage payments to be too unrealistic or else you are at risk of repossession. Consider taking the time to save up for a house deposit and work out realistically how much of a mortgage you can afford.

Student Loan Debt – Whether this debt is for yourself or for your children, the truth is that the cost of higher education is not cheap meaning that many of us will get into debt to afford a University course.
Ensure that you can afford to borrow and contact your College or University to see if you are eligible for any form of financial help, such as grants or having your tuition fees paid for.

Bad Debt

“What is Bad Debt?” Although the above shows a couple of examples where debt can be good, for the most part debt is bad, including:

Overdraft Debt – Some people forget to include their overdraft as a debt as it is linked to their current account. Although some overdrafts don’t add any additional interests on, others do and there are charges which are added on if you go over this limit.

Credit Card Debt – Perhaps one of the easiest ways to get into debt without even realising it is through credit card debt! Putting things on your credit card and forgetting about it is one of debt’s most deadly sins (although not as bad as the interest rate on store cards, more on that later). It is far too easy to spend more that you can afford when you pay by credit card. According to statistics published by APACS, the average UK has more credit cards than people.

Store Card Debt – Store cards are like credit cards except you can only use them in certain stores. The interest rate of store cards is typically higher than credit cards or personal loans, and this type of debt should be used with caution.

Getting Bad Debt Help

Even if you have bad debt from all the sources mentioned above, it is not too late to debt help. There are a number of debt solutions on the market which could help you reduce the monthly amount that you need to pay to creditors. Examples of these debt solutions include debt management plans and IVAs.

Please contact us today for further information about how you can get bad debt help.

As the financial climate means that more of us are struggling for money, a growing number of parents find that they still have to give ‘pocket money’ to their older children who have left the family nest.

According to an Engage Mutual survey, more than two-fifths of British parents have helped to finance a home purchase for children over the age of 25.

Almost a quarter of parents (23%), have given their children help to fund higher education or repay student debts. And if that is not enough, some parents also plan on helping their children’s financial future in the long term, as many are making regular payments into a savings account.

Nick Breton, spokesman for Engage Mutual, commented: “British parents are providing more financial support to their adult children who are finding it increasingly difficult to stand on their own financial feet.”

Men are less worried about the credit crunch and their personal finances, according to research by moneywise.co.uk. Apparently only a quarter of all men feel “concerned and uncertain” about their money, a stark contrast to the 43% of UK females who feel this way.

Men are also more confident about their long term financial future as just under 60% of men said that they were confident that their finances would see them through their retirement, compared with 26% of women.

Spokesperson from the website, Rachel Lacey, said: “As figures on economic growth and unemployment show that we are now heading into a recession it seems that women are taking this more seriously than men.”

The number of repossessions increasing, house prices falling, unemployment rising and the building constructions coming to an almost complete stand still – UK homeowners are going to find that keeping a roof over their head becomes much harder to achieve.

A report from The Times believes that the downward spiral from the housing market will lead to an increase in the number of people who have to rent, instead of own, a property.

By the end of 2008, it is predicted that at least 45,000 homes will have been repossessed. This is a rise of 70% from the previous year and the number of those suffering from mortgage arrears has increased by 22%.
First-time buyers are finding it increasingly difficult to take their first step on the housing ladder, as banks are reluctant to give out mortgages to anyone without a high deposit and an unblemished credit rating.

Four million people are waiting to be housed by local authorities, with this figure expected to rise by a further million in 2009. The waiting list shows no sign of decreasing as, according to the report by The Times, the Government has failed in building enough council or social homes over the past 11 years.

These figures are not set to look any rosier in the coming year. Social-housing construction is almost at a standstill and about £500 million worth of new home schemes were rejected in November 2008 alone.

Charities supporting the homeless are urging the government to address this problem or risk the number of homeless people rising to new levels, and housing experts believe that there the lack of housing could lead to the comeback of 1960s high-rise buildings to accommodate the needs of the British public.

Having multiple debts across multiple interest rates may make it very difficult for you to manage your finances in a well-ordered fashion, and you find yourself asking questions such as:

Which creditor should I pay first?
How come my debt repayments only cover my interest charges?
Have I repaid all my creditor commitments this month?
What about if I cannot afford the charges for missed payments?
Will I ever be debt free?

If you feel as though you are in a financial whirlwind, you don’t need to panic. There are ways that you could consolidate your debts so you reduce your monthly outgoings and only have to make one debt payment each month.

This type of debt plan for quick and easy consolidation could come in the form of a debt consolidation loan. The loan, normally secured against your home, should allow you a lower interest rate and you use it to pay off all your smaller creditors.

Debt Plan for Quick and Easy Consolidation:

Consolidating your debt can help you on the road to gaining control over your finances. Ensure that your debt consolidation loan works for you by following our consolidation help:

1: Know your debt levels.
Make a list your current debts and work out how much you of a loan you need to debt.

Many people find it easier to use the debt consolidation loan to clear all of their debts so that they don’t have continuing worry about multiple creditor payments. But maybe you won’t get accepted for the full debt amount? If not then clear off the debts with the highest balance and the highest interest rates first. Low level debts should be easier for you to pay off.

2: Know your spending habits.
Knowing your spending habits could be the most important factor in making the debt consolidation loan work for you. You have to resist the temptation to run up further debt on the credit cards, store cards or overdraft that you consolidated.

Becoming debt free is not easy and it is very unlikely to happen over night. So it is essential that you are committed to your future being free from debt, and this means that you may need to cut back on your spending habits to achieve this.

3: You don’t have to get into more debt to consolidate debt.
Getting accepted for a loan if you have missed payments to your creditors is not easy, and you may find that your debt consolidation loan has been turned down by multiple lenders– but this does not mean that you have to give up on the thought of consolidating your debt!

There are ways to consolidate debt without the need for a loan if you are struggling with your debts. This is known as a debt management plan and it is an informal agreement with your creditors which allows you to reduce your monthly payments. Although it will probably take you longer to clear your total debt, knowing that your debt repayments are affordable to you on a monthly basis can relieve any stress and worry you have about your debts being unaffordable.

It seems that an increasing number of Brits are willing to tell porkies about the state of their finances, as a study by Axa reveals that 44% of those aged  25 to 44 have lied about money.

Overall we are more likely to mislead a partner, family member of friends about our finances, as has been admitted by one in three people. It seems that as money gets tighter during the credit crunch, we are more likely to be ‘economical’ with the truth about our debts. The over 55s are more likely to be truthful about their financial situation, with less than 25% admitting to any lies.

Axa have posted some of the most revealing confessions on their website, including:

• “I spent £70 on a pot of face cream and decanted it into an Oil of Olay bottle!”
• “I lied to my partner about my earnings because he wanted to live off my income.”

Alison Green of Axa commented: “In the current financial turmoil, people may be tempted to conceal the truth about their financial situation, but they are only deceiving themselves.”

If you find that you need to lie about your finances then maybe it is time to get some form of financial help. The One Advice team are on hand to offer you free debt advice. We have access to a number of debt solutions, including debt management plans, bankruptcy, IVAs and repossession help.

Now has come the time to confess your financial sins, which I am sure that we are all guilty of from time to time. Use the comments section below for your confessions…

Although you may think that you are good at hiding money worries away from your children, it seems that they  may instinctively know when you have debt management problems.

According to research by American Express, 90% of children said that their parents seem”stressed”. One in four further believe that the reason for their parents stress is due to household finances.

The stress which these children are witnessing is changing their outlook on life, as 87% of children would live their lives differently when they grow up. 20% of those polled would want to work in a less stressful and hardworking environment than their parents.

Chris Rolland, head of American Express Insurance Services, said: “Families are under an increasing financial burden and it seems that kids are wising up to the pressures their parents are facing.”

Women need to become more financially savvy about saving for their future, according to research by Friends Provident. Apparently 30% of British females aged between 25 and 45 do not have a financial plan in place for their future.

This could mean that many experience financial problems later on in life, such as bankruptcy, high levels or debt or even repossession of their home. Almost 70% do not have a personal pension plan in place and more than half admit to saving less than £500 per year.

Spokesperson for Provident’s Christine O’Grady said: “As people live for longer, it is critical they prioritise retirement planning to ensure they have a stable financial future”.

During the closing months of 2008, the Financial Services Authority (FSA) released a new financial guide which is to be distributed to expectant mothers across the UK. The aim is for new parents to take better control over their finances and debt management issues.

The FSA report that bringing up a child to the age of 18 can cost over £150,000, reflecting how essential it is for parents to take control of their finances for both the financial future of their child and their own well-being. The FSA hope that this guide will help as it overs many areas that parents will need to know about, including the childcare costs, maternity rights, savings, budgeting and state benefits.

FSA director of financial capability Chris Pond said: “The Parent’s Guide to Money helps expectant parents plan their finances at an important stage in life when they face big changes.”

Are you one of the millions of UK adults who are getting into credit card debt just to cover the everyday cost of living? According to research by the Post Office, ten million adults intend to do so during the first part of the year alone!

As the credit crunch hits home and people are feeling the pinch, credit card debt is likely to be on the rise throughout 2009. This research also shows that 2.6 million people intend to spend more on their credit cards than last year.

Using credit cards for everyday purposes is not a problem as long as the debt is repaid in full, yet 45% of card holders do not plan to pay off their credit card bills each month. Worst of all, unemployment levels in the UK is expected to rise meaning that for some people credit card debt could lead to repossession.

Az Alibhai, Post Office head of lending, said: “However, what is worrying, is the trend for people to continue to rely on their cards for basic day-to-day purchases, which could be expensive if you only pay off the minimum amount on your credit card each month and have a high rate of interest.”

When it comes to saving money in places where we would usually splurged in pre-credit crunch times, it seems that Brits have come up trumps. According to a poll by Norwich Union, many of us have turned to ’stealth saving’ to help keep our debts under control and keep up with living costs. These stealth money saving tactics include:

• 67% are using money off coupons
• 30% are re-using unwanted gifts
• 23% have stopped tipping
• 15% are dodging buying round in the pubs and are lending cigarettes
• 12% are taking items from hotel rooms.

It seems as though these money saving schemes are really helping us during the time of the credit crunch, as four out of five expect to pocket on average £150 this year by ‘Stealth Saving’.

Although we are saving in our everyday lives, the credit crunch is beating us when it comes to the amount that we are putting into our saving accounts. 30% of us have had to reduce the amount that we save and 18% have had cut back on the amount that is paid off credit card debt.

Brian Bussell of Norwich Union, comments: “The new stealth savers have certainly found a few cheeky ways to save a penny or two, but risking your financial future is no laughing matter.” He warned that cutting back on debt repayments could cause financial problems to spiral.”

So how are you going about beating the credit crunch? Are you a stealth saver and do you have ideas that you want to share? Or perhaps you feel guilty for being responsible for one of the nine million items which have been taken from hotel rooms? Whatever your say, please leave your comments below.

Declaring bankruptcy will have a result upon your personal belongings, as you will no longer have control over your assets. In bankruptcy you are required to fore-fit all financial control and you must disclose your assets to the Official Receiver/Trustee who will then decide whether or not you can keep them.

Below are some of the frequently asked questions we get asked about bankruptcy assets. But take these as a guide only, as nothing beats getting professional advice from a bankruptcy expert. We have a dedicated bankruptcy team who can answer any questions that you may have about your assets in bankruptcy.

Call One Advice today on {Phone Number} or fill out the Quick Enquiry Form to the right for a callback from one of our team.

Questions About Bankruptcy Assets

What Happens to my Assets when I Declare Bankruptcy?

After you declare yourself bankrupt, you will only be allowed to keep assets which are required to maintain a basic standard of living. Below gives you a sample list of these bankruptcy assets, but remember that these could also be sold if their individual value is worth more than the cost of a suitable replacement:

• Items you need for your employment – such a tools of the trade or books. You will only be allowed to keep your car in bankruptcy if you need your car for business reasons or for travelling to and from work.
• Basic items in the home – such as bedding, furniture and necessary electrical equipments such as your fridge or washing machine.

The funds which are raised from the selling of the assets will be used to pay the fees, costs and expenses of the bankruptcy and your creditors.

There is also a risk to your future assets during your bankruptcy order. For example, if you inherit a windfall during your bankruptcy then this will have to be paid towards your creditors.

Will my Bankruptcy Affect my Partner’s Assets?

They will not be affected as long as your and your partner’s financial affairs are totally seperate. So assets which are in your partner’s name should not be taken into account through your own bankruptcy. (more…)

The amount of credit card debt could be on the rise, as Abbey reveal new statistics showing that two thirds of us who had planned to get accepted for a 0% introductory rate credit card to transfer credit card debt, failed to do so this January.

The report goes on to reveal that only a third of Brits managed to switch to this type of deal to tackle their Christmas debt. For more than half of us, the average amount of Christmas debt put on credit cards was £362, yet 45% have cleared less than a third of this debt.

Abbey’s head of credit cards, Callum Gibson, commented: “New Year’s resolutions have a habit of falling by the wayside by the start of February but it’s not too late for people to follow up on plans to better manage their finances in 2009.”