One Advice | Bankruptcy, IVA & Debt News

According to a new report by the Telegraph, more Brits could be heading towards bankruptcy as the average household now owes an average of £60,000 worth of debt. This, combined with the credit crunch, stricter lending criteria and high inflation, means that Brits are suffering from the years of cheap and sometime reckless borrowing.

There are 25 million households in the UK, each of which have an average debt of almost £58,500. The outstanding total for UK consumer debt, which includes both secured and unsecured debt, has increased to £1,444 billion.

This figure has seen a 7.3% increase over the past year, so it is no wonder that more households are having bankruptcy questions, and wondering if it could be the solution for rising debt levels. Whilst it would be uncommon for many of us not to have some form of debt, as your mortgage is classed as a debt, it is when these personal debt levels start increasing that people need to re-evaluate their finances.

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The best way to find our which debt solution is most suitable for you is to get in touch with the One Advice team. We would only offer ethical advice and strive to find a solution which is right for your financial situation.

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Many of us understand the importance of saving money, as having an emergency fund allows us a little bit of financial flexibility if the worst was to come to the worst, such as losing your job or having a drop of income.

However, Internet bank Egg have released statistics which show that one in seven of us have no savings at present and are unwilling to save in the coming months, partly due to rate cuts from the Bank of England and our income already being stretched by living costs. It seems that those of us who do save do not have too much of an understanding about our accounts, as 24 million Britons are unsure about their savings rate of return.

Dean Proctor, head of savings and investments at Egg, said: “Everyone knows the importance of saving, especially in these unprecedented times when it is essential to have a nest egg. People need to know their money is safe as well as earning a decent rate of interest.”

If you are hiding your bills in a drawer and trying to forget about them, it is time to face up to financial reality. Sadly those bills will not go away and they will need to be paid at some stage. Missing payments to your debts could mean additional interest and charges will be added, making your debt even more unaffordable.

Here are some ways for you to deal with your debt problems if you can’t afford your bills…

1: Face up to your debt problems - Being unable to pay a few bills could be masking an even bigger debt problem. So it is time to stop burying your head in the sand and face up to your financial problems. Struggling to make payments to debt is a serious problem, especially if they are classed as priority debts as you could lose that service.

2: Prioritise your outgoings – Now that you are facing your debt problems head first, it is time to prioritise your outgoings. There is no point spending money on new non-essential items when you have priority debts to pay. Meeting priority bill repayments, such as mortgage or utility bill, should take preference over other debts.

3: Set Yourself a Budget - A budget is easy to write down on paper but much harder to stick to in everyday life. Keep a diary of every expense and be honest with yourself, so you need to include everything from your morning latte to late-night takeaway. This will give you a good idea about where you are spending unnecessarily.

4: Make Contact - Making contact with the company that you owe money to is essential. You can tell them that you are having problem paying the bill and they may be sympathetic especially if you are usually a regular payer. Even if you cannot afford the full bill, it is advised that you make some payment towards it as then your creditor can see that you are making an effort to clear your debts.

5: Get Debt Help - There is no need to struggle with financial difficulties by yourself. There are a number of companies out there which are designed to help you with your personal finances and One Advice is one of them. We offer a range of debt solutions and can offer you free debt advice about which solution is best suited for you.

The 2008 credit crunch saw the average household wealth fall by £45,000 (17%), according to a study by Citigroup, which examined the results of falling house prices, investments in pensions and share values. In total, this has wiped around £1.9 trillion off UK household wealth since July 2007.

Prior to these results, UK household wealth had more than doubled in the two decades leading up to 2007.

Citigroup claims the downturn has dented our so-called ‘wealth effect’, which is the confidence we all have in our spending power based on the perception of our own financial worth. About this matter, Michael Saunders, chief UK economist at Citigroup, said: “The Bank of England used to be sniffy about these “wealth effects” on spending, it is clear that we are seeing an impact. The plunge in wealth is likely to be reflected in further marked weakness in spending by consumers.”

Are you suffering from the credit crunch? Do you believe that your household worth has dropped by £45,000 so far?

Families are facing more potential debt problems as the average UK family is set to spend an extra £1,000 on food shopping a year, according to new research. The cost of food has risen across the top supermarkets, meaning that families are having to tighten their belts during the credit crunch in order to stop themselves falling into further debt.

Mysupermarket.co.uk have revealed that the average trolley price has risen by 21% in the past 12 months alone. They researched 24 staple items such as fruit, bread and pasta. Dairy and wheat products have seen the biggest price increase, with six pints of semi-skimmed milk rising from £1.68 to £2.12.

Johnny Stern, director of the site, says: “We would advise shoppers trying to stick to a tight budget to look out for better-priced like-for-like items and special offers within the supermarket you already shop at – there are significant and regular savings to be had to combat the crunch.”

It is no longer only those on low to average incomes who are feeling the financial strain and suffering with debt problems. According to recent research by Consumer Credit Counseling Service (CCCS), 12% of their clients earn more than £30,000 but still cannot afford their debt repayments.

This figure has jumped from 8.7% in 2007, and the commons causes of this increase are thought to be  unemployment and falling house prices which are putting high levels of pressue on tightened household budgets.

UK personal debt levels are approaching £1.5 trillion, so it is likely that the number of people who are struggling with their personal debt will increase, especially due to the unstable economic climate. Regionally, the south-east of England has the highest level of debt at an average of £29,000.

Malcolm Hurlston, the CCCS chairman, commented: “When unemployment triggers a debt problem, the fall in income can leave the borrower struggling to service both mortgage and unsecured debts, while the fall in house prices and growth in negative equity takes away the option of selling to clear the mortgage.”

More than one in ten struggling homeowners who have had things break down in the home have had to get into debt in order to fund the repairs, according to property repair group Homeserve.

Many of us may be faced with house problems at some point in the future, such as a burst pipe to a broken boiler, but this study reveals a worrying trend where people get into credit card debt when they are actually trying to become debt free. Unplanned costs can sometimes break a household budget, especially as 5% of people surveyed had to pay more than £1,000 to repair the problem.

The survey shows that 9% used their credit card to settle the bill, and the remainder had to borrow from family or friends, use their overdraft or apply for a loan in order to meet these unexpected costs.

Looking to stretch you budget further by looking for ways to save money? Here are some simple ways you can stretch your budget further with the money saving ideas:

1: Switch to Brandless items – I agree that there are some items which you might not be able to switch brand on, for example a certain type of chocolate or tomato sauce which you know just tastes much better than the rest! But there are a number of kitchen staples which you could swap for the store’s own brand, such as eggs, sugar, kitchen roll, soap and many tinned goods.

2: Cut down on luxuries – There may be luxuries which we all think we need, but if our aim is to become debt free then it is time to get harsh and give up or cut down on some of our luxuries.

Perhaps make your brow wax go further be stretching it out for another week, or ask a friend or family member to look after your children instead of hiring a baby sitter, and offer to return the favour.

3: Be a Coupon Clipper – One of the biggest dents into our monthly income is the shopping bill! Obviously buying food is an essential but there are ways which you could save money.

Clip any coupons that you see from newspapers or magazines and remember to search the web for discount codes and vouchers before ordering anything online, you could benefit from free delivery, a promotional gift or money off your order.

4: Stay In instead of going out – We are not suggesting that the only way to become debt free and save money is by staying in and saying ‘no’ to a social life, but the cost of eating out a couple of times a week can really add up, especially if you treat yourself to a bottle of wine too!

This fast way to save money also applies to lunch too, as buying your lunch every day can be a big expense. You can easily make a sandwich at home in the morning, just set your alarm clock 5 minutes earlier in the morning and smile at the thought of all that money you will be saving!

5: Quit the Gym – Are you a member of a gym that you never go to? Maybe you are keeping your membership because maybe you will go to the gym tomorrow, but tomorrow never comes right?

Gym memberships are expensive, and although this is fine if you are a regular gym member, if you are not sure what the inside of your gym looks like then it could be time to cancel your membership. You don’t need to be a member of a gym to stay healthy, there are a number of things which you can do for free, such as walking, cycling, running or hiking in the country side.

Have you got any more tips on how you can save money without even realising? Feel free to share your knowledge with our readers by posting a comment below…

The credit crunch means that many thrifty Brits are looking for ways to reduce debt by decreasing their cost of living. A study by Egg reports that 35% of us are eating and drinking less in order to make our pounds stretch further.

It seems as though we are all going to a back-to-basics lifestyle with many of us becoming more self-sufficient in order to save money and be free from debt worries. According to Egg, ways which we are making our money go further include:

* Using money-off coupons (58%)
* Switching from bottled to tap water (36%)
* Having a vegetable patch (23%)
* Cutting our own hair (19%)
* Brewing own beer to cut down on alcohol costs (6%)

There were also some more bizarre ways of saving on costs, including the 4% who have now taken to raising their own chickens!

Has the credit crunch made you cut back on spending? Are you avoiding debt by making small changes to your spending? Please leave a comment below and share your knowledge with our readers…

As debt struggles become a way of life for many people, the number of bankruptcy orders and Individual Voluntary Arrangements (IVAs) are expected to rise this year, according to 70% of Insolvency Practitioners (IPs).

The survey, by trade body for insolvency professionals R3, revealed that 68% of IPs predict that we could see the jump in the number of people declaring insolvency within the next six months.

The effects of the credit crunch are already taking a grip as the need for debt advice increases. A third of those surveyed said that there has already been an increase in the number of people who have fallen behind with their debts in the past three months. This jump is being blamed on the reliance of debt in order to afford the cost of living and that being in debt has become a way of life for many.

It is not only personal insolvency which is predicted to rise, as 90% of IPs are expecting to see an increase in business insolvencies during the next 12 months. Nick O’Reilly, president of R3, said: “Out of those, construction, retail and leisure are looking especially vulnerable. The fact that nine in ten Insolvency Professionals in the UK believe that in 12 months time they will be dealing with an increase in business insolvencies indicates we are unfortunately in for a long period of protracted pain. Our results show trends months ahead of official national statistics.”

Many of us are looking at saving money rather than spending it in order to pay off our Christmas credit card debt. According to Legal & General’s MoneyMood survey, 20% of the UK population are currently saying yes to paying off credit card debt over spending on the High Street.

However it seems that paying off our credit card debt has us ignoring our long term goals, as apparently 80% of us are not contributing towards our pension schemes as we would rather be paying off our personal debts.

Adrian Boulding, wealth policy director at the company, said: “We are encouraged to see our MoneyMood survey reflecting a more prudent attitude to credit card debt in these straightened times.”

However, it seems as though we cannot escape from credit card debt completely; a separate survey by the Post Office reports that up to 10,000,000 credit card holders plan to use their cards to meet general living costs.

Have you ever lied to your partner about a purchase? Maybe you purchased a pair of irresistible shoes and put it on the credit card that they don’t know you carry. If you do have secret credit card debt then you are not alone, a fifth of us admit to having ’secret debts’ and one in 10 lie about the number of credit cards they own.

According to this research, published by CreditExpert, 10% had secretly bought items from a joint current or savings account without their partner’s knowledge. Apparently London couples are the most secretive about their credit card debt with 29% not sharing information about their debts.

Yet, confusingly, 90% believe that being honest about finances was important in a relationship.

A record number of people declared themselves bankrupt in the first quarter of 2009, as Britain continues to sink deeper into the credit crunch.

According to the Insolvency Service, 19,062 people were declared bankrupt in the first three months of this year which is a rise of almost a quarter (23.4%) in comparison to 2008.

10,713 people took out an Individual Voluntary Agreements (IVA) during this same period, an 11.8% jump year-on-year. An IVA allows those who have unaffordable debts to have a bankruptcy alternative so they can avoid some of the long-term effects of bankruptcy.

Experts are predicting that the number of people who are declared insolvent could rise to over 150,000 before the end of the year. Anyone concerned about their finances, and are thinking about bankruptcy or IVA, should seek specialist debt advice before declaring themselves insolvent as there are a number of financial solutions available.