One Advice | Bankruptcy, IVA & Debt News

The Banks behind the lending boom are now hindering the recovery of the financial system by being too cautious with their money. This has lead to a warning from The Bank of England stating that banks need to spend more of their cash in order to alleviate the credit crunch.

Their latest Financial Stability Report firmly accuses banks of being overly cautious, and that they are refusing to lend any more money in fear of further credit crunch losses. However this spending is needed in order to speed up the recovery of the UK financial system.

The housing market has been seriously hit by the credit crunch, with the number of mortgages decreasing and an increase in the cost of lending. The Bank of England further estimate that mortgage approvals are at an all-time low, falling an average of 44% from the previous year.

One Advice would always recommend that you seek professional bankruptcy advice before declaring yourself bankrupt, as there are a number of bankruptcy disadvantages which cannot be avoided.

We have a complete Bankruptcy Advice Service who can help answer any questions which you may have in relation to bankruptcy. We could be able to help you through the whole bankruptcy service or see if your circumstances are better suited to an alternate debt solution.

Bankruptcy Disadvantages

Below lists some of the key bankruptcy disadvantages. But this is not an inclusive list of all the bankruptcy disadvantages which is why you should seek expert bankruptcy advice as there could be further bankruptcy disadvantages which are not listed here.

1: Your credit rating will be damaged – When you have declare bankruptcy, the bankruptcy order will remain on your credit file for six years, making it very difficult to accepted for credit in the future. Although you may not wish to get credit again, you should still take this bankruptcy disadvantage into consideration incase you wish to get your foot on the property ladder as a mortgage may also be near impossible to get.

2: You will lose control of your finances – Bankruptcy means that you will lose control of your finances as your Official Receiver will be in charge of your assets which they may wish to sell in order to pay off your debt. This means that your home can be sold and you could lose your car or have it replaced for a smaller model. On top of this, you may still be required to make additional payments to your creditors.

3: Bankruptcy is a public process - The public nature of bankruptcy means that details of your bankruptcy order will be published in your local newspaper or the London Gazette, meaning there can be a social stigma attached to declaring bankruptcy.

Remember, these are only some of the bankruptcy disadvantages which may have long term consequences for you. Let One Advice offer you further bankruptcy advice and information – Fill out the Enquiry form to the right hand side of this article for personal bankruptcy advice.

One in 10 homeowners are expected to pay off their mortgage debt ahead of schedule due to the current conditions in the marketplace. Many are looking to make additional payments to their mortgage in order to take advantage of record low interest rates.

A study by First Direct, has revealed that more people are looking to clear their mortgage debt as quickly as possible. Out of the 24% of homeowners who are due to pay off their mortgage debt in the next 10 years, this figure could rapidly increase to 35% if they can manage their finances intelligently.

Jimmy Kelly, spokesman for the company, comments: “The average Brit now steps on to the housing ladder at the age of 34, compared to 29 in the 1970s – the aspiration to reach freedom day as early as possible has never been stronger… By making sound financial decisions and choosing a flexible mortgage such as an offset, freedom can be closer than ever before.”

According to research by uSwitch, debt consolidation could save consumers £20 billion if they consolidated all of their unsecured debt, such as store cards and credit cards, into one low cost form of credit.

Brits currently pay out about £98 billion in loan interest each year, so it is no wonder that many of us are looking to consolidate debts to lower the amount of interest paid. Louise Bond, personal finance manager at uSwitch, comments: “It is vital that borrowers give themselves the best possible chance of servicing their debt in the most economical and manageable way possible.”

However, a debt consolidation loan is not suitable for everyone. The research also discovered that of the 1.3 million debt consolidation loans issued in 2008, over a quarter of the borrowers who did not close down existing debts went on to get themselves a further £2,221 in debt.

Debt Consolidation Alternatives:

The purpose of a debt consolidation loan is to reduce the amount that you are paying towards the other debts, so you only make one payment to cover all of your debt. But it is important that you try to avoid the vicious cycle of falling into more debt.

If you are looking to consolidate debt because you are struggling with your current debt repayments then there are debt consolidation loan alternatives which can reduce the monthly payment you need to make to your creditors without the need for any further borrowing.

Debt Management Plan – Like a debt consolidation loan, you will only have one payment to make to your creditors. We will negotiate with your creditors on your behalf and some are also willing to freeze additional interest and charges on your debt. Although it will take you longer to repay all of your debt, it should not be a struggle to meet the payments.

One Advice can help you with the debt consolidation alternatives – Call now for free debt advice.

Our ‘financial personality’ can apparently be revealed by the way we deal with our bank statements, as a Reader’s Digest survey reveals that there are five different approaches to the way we handle money:

1:The Evader. This financial personality is typical of 25% of the population. You join one of the 12.3 million Brits who avoid financial responsibilities by actively avoiding opening bank statements, and live in denial about the amount of debt owed.

Evaders need to learn to take a closer look at their finances. No matter how badly your credit card statements read, it is essential that you confront your financial situation. You may need to seek debt advice and take a hard look at your budget as it is likely that many evaders will have very little savings.

2: The Hoarder. The financial personality is typical of 14% of British adults. You are a hoarder if you are worried about your finances, and the fear may lead you to make unnecessarily cautious financial decisions. It is likely that you will have sufficient funds in your banks and pensions but hold back from any form pleasurable spending due to the strong feeling of guilt after a shopping splurge.

3: The Splurger. The splurger is just representative of 0.4% of the population, and are likely to fall victim to bouts of impulsive buying on credit cards, leaving them regularly in the red and needing debt help. This carefree attitude needs to be put into check as it could lead to a lifetime of money worries.

Other financial personalities include The Ambler who doesn’t worry about their finances until they hit a financial brick wall, and the Validator who spends or invests money in order to be recognised and to improve their own self esteem.

Although you might not believe in the idea of having a ‘financial personality’, it does pull up a very interesting point: we each have a different attitude to our own finances. Harvey Jones, an independent financial expert who writes for www.rdmoney.co.uk, says: “Your personality may dictate how you spend or save your money, but sometimes you have to fight against your own worst instincts.”

Did you enjoy reading Part 1 and Part 2 in our Simple Ways to Save series?

We hope that you are putting your new money management skills to good use and are already feeling the benefit of how simple changes to your spending habits can really add up and help you to control any debt management issues.

Read below for the final 3 simple ways to save tips, and remember to share your money saving tips with readers by commenting on this post.

Simple Ways to Save: Tips 7-9

7: Bring your lunch to work: Buying your lunch every single week day can be an expensive habit, and you could find that you are spending £5 a day. This could add up to a staggering £1,300 – just think about how you could dent your debt with this amount or think about your house deposit.

Buying in bulk from you local supermarket means that you can really save yourself some serious cash, and there is no reason why your home-made sandwich should not taste as good as the pre-packaged one from the shop. Whilst on that subject… (more…)

Many High Street shops offer their own store credit cards, and many cashiers will tempt you to sign up with a juicy introductory rate or money off your purchase. But are store credit cards worth it, or would you be best off making the purchase on your normal credit card?

Store credit cards work in the same way as a credit card, as you use the credit (although it is important to remember that credit is always debt) to make the purchase and then you pay the debt back when the bill arrives, either in monthly instalments or by paying off the store credit card balance in full.

A store credit card is more limiting than a normal credit card as you will only be able to use the card in certain shops or a certain chain of shops. But the main disadvantage of a store credit card is the interest rate which is applied to the purchase if you choose to spread your repayments, as these are often much higher than normal credit card rates. This means that you could be very careful when applying for a store credit card, think about if you can afford to pay off the purchase when the bill arrives or if you would be better off to put it on your credit card or, and best yet, choose to wait until you can afford the item and pay for it with cash.

Store credit cards can offer you advantages over a credit card, if they are used wisely. For example, you will be able to benefit from discount off the item you are going to buy. Many retailers will also often certain perks which are exclusive to card holders, such as money-off events or free postage and packaging if you buy something from their website. But you need to way up the perks and implications of a store credit card and decide if it is right for you.

Never agree to a store credit card just because you are feeling pressured by the cashier, especially if you have a bad credit rating. You could be declined for the card which is not only embarrassing for you but could end up damaging your credit rating even further.

In comparison to paying with a credit card or with cash, store credit cards offer very little perks. They are only a good idea if you can realistically afford to repay your balance in full so that you do not have to pay the extortionate level of interest.

This guest post was kindly submitted by DebtLoans.com.au.
Please note that this has been written by an Australian blogger and therefore some of the suggestions or information may not be appicable here in the UK. Remember that this post does not take the place of seeking professional loan or debt advice.

5 Strategies For Getting Lower Rates On Your Loans

How They Help
While most people are focused on just lowering their monthly payments, lowering the actual interest rate that you pay on your loans could be extremely beneficial. This is especially true with long-term loans like mortgages, where the total interest paid over the life of the loan could be more than the value of the home. In some cases, a lower rate could result in instant savings of thousands of dollars.

How To Get Lower Rates
Your creditors may try to act like your interest rates are already at the minimum they offer. Credit cards in particular offer you an initial interest rate, but always have the option to raise it to over 20% even if you miss only one payment.

To the consumer, interest rates may seem like they can only get higher—luckily, most of them are adjustable and negotiable. For your home loan, you may have to wait until the national interest rate changes, but other loans, especially credit cards, just require a few phone calls and no cost. (more…)

Council tax counts as a priority debt which means it is important to make payments or you risk facing severe consequences. If you fail to pay your council tax debt, you could be visited by bailiffs, money could be deducted straight from your wages / benefits, a Charging Order may be issued by court which will secure the debt against your home or the council might begin bankruptcy proceedings against you.

As these consequences are so severe, it is even more important to seek professional debt advice and ensure that you make your council tax debt payments over paying your non-priority bills (such as store card or credit card debt).

Getting Council Tax Debt Advice

When you first miss a payment to your Council Tax, you will receive a reminder from your local council, and if you can afford to pay the council tax debt, no further action will be taken against you. However, if you do not or can not pay, your local council could ask the magistrates’ court to grant a liability order. A liability order means that the council will be able to pursue ‘enforcement actions’ against you.

The first step in council tax debt advice could be to contact your local council. You will need to explain about how you intend to pay off your Council Tax arrears and whether your financial situation has changed. Ensure them that you plan to pay off the council tax debt as soon as possible by discussing your income and expenditure which will help you calculate how much is affordable.

Additionally you can enquire about your eligibility for a Council Tax discount. For example, you could get a discount if there’s only one adult living in the property, or if you’re on a low income. In some cases, you may even be able to backdate a Council Tax discount.

Additional Council Tax Debt Advice

Perhaps your council tax debt is unaffordable because your outgoings are too high due to your unsecured debts. If this is the case, you could benefit from a debt management plan which could lower your payments to your non-priority debts which will make your council tax much more affordable.

With a Debt Management Plan, you only pay what is affordable to you after all living expenses (including your mortgage and council tax) have been deducted.

For further council tax debt advice and to understand more about the debt solutions on offer, call our debt advice team free on 0800 048 1752.

More than 23,000 people who took out 100% mortgages at the peak of the property boom could be facing a negative equity crises. New research from the Council of Mortgage Lenders (CML) says that for these homeowners, falling house prices mean that their mortgage on their home could be more than their home is worth

The figures released from the CML are only lightened by the fact that these type of mortgages only represent a very small section of the mortgage market, as they reflect just 2.5% of the total lent.

Negative equity means that the loan against the home is more than the property is worth. This only really becomes a problem when the owner wishes to move house or can no longer afford to repay their mortgage. New research shows that very few homeowners are planning to move home with the fewest transactions per estate agent since records began in 1978.

CML spokesperson, Sue Anderson adds that: “The housing market isn’t a homogenous whole – prices behave differently in different areas. And most people who bought in the past year probably won’t be looking to move yet anyway.”

Many thanks to Nil2Million.com for publishing my guest post on ‘Debt Management – 3 Misleading Myths’. In it, I share some of the debt management myths which you may come across when seeking debt advice. It is always important that you fully understand how a debt management plan works, so please check out this post for further debt management advice.

After writing it, I thought of some more debt management myths which may need explaining, such as:

Debt Management Myths: A debt management plan will include all my debts.
This is not true; a debt management plan is only for unsecured debts, like credit cards, store cards, personal loans and overdrafts. The plan can often include all of your unsecured debts but you will still have to continue making your secured debt repayments as normal.

Debt Management Plans are tailored to suit your circumstances so you should find that any pressure you are under to afford your secured debt is reduced. Always ensure that you make these payments on time.

Debt Management Myths: I am struggling with my debt, so bankruptcy is the only solution for me.
Struggling with your debt levels does not mean than bankruptcy is the only debt solution for you. You should always ensure that you do your research and be aware of the debt solutions options which are available.

There are many long term effects of bankruptcy which need to be fully realised before you decide on the bankruptcy option. It is an extreme solution and should only be reserved for those situations where an alternative debt solution is out of the question.

Bankruptcy should only be considered after you have explored all of your other options. One Advice offers a full Bankruptcy Service which can help you with every stage of the bankruptcy process, including help in completing the court documents to opening a new bank account.

Can you think of any more debt management myths? Please feel free to comment on the debt management myths which you feel need bringing to light or if you wish for me to write a guest post for your website.

The credit crunch is general doom and gloom when it comes to the way in which we spend our income, as more of us look for ways to tighten up our belts and save some additional cash. There are a number of ways we are actively choosing to avoid debt, such as spending the night at home instead of going out or shopping in cheaper stores.

More than one in four people (29%) are ‘desperately’ or ‘very’ worried about the future of our economic stability, but, according to research by BT, there are some credit crunch luxuries which we won’t say no to…

1. Broadband – 57% as us would be unwilling to give up broadband during the credit crunch. Although you could switch your broadband provider to save you additional cash, but remember to calculate any connection fees or modem costs before doing so.
2. Fresh fruit and vegetables - 43% of us would not give up our healthy fruit and vegetables. Although many of us may look to save money in this area by shopping at cheaper stores or helping out traders by shopping at the local market.
3. Mobile phone - 37% of us are unwilling to let go of our mobile phones, but having a mobile phone does not mean that you have to have an expensive monthly contract. There are a number of great value Pay As You Go Sims which could benefit you more, especially if you do not use your mobile phone too much.

Personal Finance commentator, Alvin Hall, says: “Clearly fresh fruit and vegetables should be top of everyone’s must have list, but staying connected offers a vital lifeline in this 24/7 society we all now live in… Broadband offers access to myriad ways of saving money – searching for the cheapest deal, selling unwanted goods on online auctions, downloading discount vouchers, entering competitions and even taking part in surveys.”

Pay off debt quicker by increasing your direct debit payment to just a small percentage more than the minimum payment and be amazed at the difference it could make. Comparison website moneysupermarket.com are urging those with credit card debt to increase their direct debit payments in order to pay off debt quicker.

The site gave the example of a consumer who owes £1,000 on a 16.9 % APR credit card. When making a 2% minimum payment, the consumer earns £151.74 in interest and only reduces the credit card debt down to £920.60. Whereas someone who paid 10% would pay off the debt in just 12 months, and almost half the amount of interest acquired (£79.16).

Thus showing how just a small increase in the monthly direct debit payment can really make a difference when it come to paying off your debt.

Peter Harrison, credit card expert at the site, said: “If you opt to increase your repayment amounts you will reduce your debt and the interest paid significantly. Even if you are with one of the few lenders that won’t allow you to set you direct debit higher than the minimum repayment, you can set up a standing order at a larger monthly amount.”