One Advice | Bankruptcy, IVA & Debt News

When it comes to debt management, UK consumers who are struggling with their unsecured debts have a range of debt solution options available which can help.

Are you finding that you can no longer afford to pay your unsecured debts? Are your outgoings more than your incomings? If this is you, you are not alone. You may be looking to seek debt advice or have already got in touch with a financial solutions company, either way it is essential that you understand what your debt solutions options  are and what a debt management company can do to help

There is not just one debt solution out there. The right debt solution for you is dependant on a number of different circumstances, such as your income, level of unsecured debt and secured debt commitments. We would always recommend that you seek professional advice from an ethical debt solutions company, as you want to be sure that you are advised about the right debt solution for you.

Debt solution options include:

• Debt Management Plan: A debt management plan allows you to consolidate your debt into one lower monthly payment without the need for any further borrowing.
• Individual Voluntary Arrangement (IVA): A legally binding agreement between you and your unsecured creditors, allowing you to repay an affordable amount of your unsecured debt over a typical period of 60 months. All additional interest and charges will stop and any unpaid debt will be written off on completion of the agreement.
• Bankruptcy: One debt solution which you could consider is bankruptcy, however this is an extreme debt solutions with long-lasting effects. You should always consider alternate debt solutions and explore your options before declaring bankruptcy.

Whatever your personal financial situation, we would always recommend that you seek expert advice so you can benefit from experienced and professional advice in dealing with your debts and be advised about the right solution to deal with your a debt management problems.

The Credit Crunch has affected each of our lives, on both a national and global scale. But the good news is that the end of the credit crunch could be in sight, according to an independent financial analyst.

Michael Baxter, economist at Defaqto predicts that oil and food prices will begin to dip in 2009, which will promote the beginning of an economic recover. A general drop in inflation will aid the credit crunch end, as this will allow prices to fall and hopefully increase a boost in consumer spending.

Baxter comments: “You are going to see the price of oil fall quite rapidly in 2009 and 2010 because people can’t afford oil at the current price… I think that is where the recovery will come, but that probably won’t be until 2010 I think.”

One way for better debt management is to do your banking online so that you can keep a stricter eye one your incomings and outgoings.

According to the Association of Payment Clearing Services (Apacs), online banking is the best way to keep an eye on your accounts which may mean that you find yourself stricter with your spending habits, especially if you are on a budget.

Online banking has become a popular way to manage debt as it offers you easy access to your current account. There has been a 505% increase during the last seven years, with 1 in 2 adults now using online banking services.

Apacs spokesperson Michelle Mayer said: “I think what it will do is give people an exact picture of where they stand, which is always a good thing if you are trying to manage your budget. Having access to your finances whenever you want and seeing what is going in and coming out puts you in a good place.

Government reports suggests that high oil and food prices will be around for years to come. The Treasury have warned that the rapid growth in the world economy and population, coupled with supply shortages, will stop current prices falling back in line with previous levels.

This will not make pleasant reading for families that are already feeling the pinch of the credit crunch, which has already lead to a rise in borrowing costs, utility costs and shopping bills.

The Treasury report says: “Expert views and market expectations reviewed here suggest that prices are likely to remain higher than their historical averages” and that “it will be an ongoing challenge for supply to match demand at affordable prices.”

UK wholesale gas prices have risen by 250% in the past 12 months and the average weekly shop has increased by 6%, leading to shoppers feeling the pinch during the credit crunch.

Bankruptcies in the North-East of England rose to three times the national average in the first part of 2008. This area has seen a 34% increase in the number of people being declared bankrupt compared to the national 11% increase. Sunderland saw the highest increase at 77%.

Financial services company KPMG’s reported these findings and their head of personal insolvency, Paul Bateman, said: “Consumers are seeing the cost of their mortgages increase, fuel costs continue to go up and now food prices are rising in a manner not seen for years.”

The global credit crunch is being blamed for the increase in the number of insolvencies. One Advice are able to offer a range of debt solutions which are suited to those with varying levels of debt, from debt management plans to IVAs and free bankruptcy advice.

Consumer debt has soared by an additional £13 billion on the same period last year, as consumer borrowing reaches £22.4 billion in the first three months of 2008.

Unbiased.co.uk has released their Savings Break survey which showed how the credit crunch pinch means that consumer saving has fallen by £11 billion. They report that the savings break (which is the ratio between how much unsecured debt a consumer has compared with their savings) has climbed to 69p borrowed for every pound that is saved.

This is a notable increase from the first quarter of 2007, when this figure stood at 29p, thus showing how the average Brit is struggling with their debt as the cost of living continues to climb.

Chief executive of unbiased.co.uk, David Elms, said: “Consumers are playing double jeopardy – not only increasing the amount they are borrowing, but also reducing the amount they are saving. The early months of the year have traditionally revealed British consumers at their most financially stretched – the worry is that this year the scenario is even more bleak than normal. We have increased our debt two fold since the same time last year – and reduced our savings.”

If you are struggling with your debt, there are a number of debt solutions which you may consider. Alternatives to debt consolidation are something to consider as not everyone is suitable for a debt consolidation loan.

There are a number of debt solutions which require no further borrowing but still allow you to manage your debts with a lower monthly payment. The best way to understand what alternatives to debt consolidation are available is to get expert debt advice and One Advice can provide you with just that, call now for personalised debt help – 0800 048 1752.

The main advantage of a debt consolidation loan is that it makes your debt more manageable by reducing your debt repayments, as your new debt consolidation loan is designed to pay off your outstanding unsecured debts. It can also simplify your personal finances as you only have to make one payment to your unsecured debt per month. However, there are alternatives which allow you the same advantages without taking out another loan.

The most common alternatives to debt consolidation are:

• Debt Management Plan – A Debt Management Plan is an  informal agreement between you and your unsecured creditors where  you make one affordable payment to your debts. There is only one payment to make, to us, and we will distribute this fairly between your creditors so you don’t have to worry about multiple debt repayments throughout the month.
• Individual Voluntary Arrangement (IVA) - Like a Debt Management Plan, an IVA allows you to make a single reduced payment to your debts but offers additional benefits. You commit to repaying your debt over a typical 60 month period at a rate that is affordable to you. On completion of the IVA any unaffordable debt will be written off.
  It is important to note that an IVA is a formal, legally binding agreement between you and your creditors and to avoid bankruptcy you must commit to making the agreed repayments.

Remember that with dealing with your debts, there are alternatives to debt consolidation. For free help and advice about the range of  debt solutions available, call One Advice now on 0800 048 1752.