One Advice | Bankruptcy, IVA & Debt News

The credit crunch means that single people are more financially exposed and worried about their financial future due to only having one income.

According to research by Zurich, debt is at the forefront of many minds and many are looking to find the best ways to solve any outstanding debt problems. Almost half (45%) believe that avoiding credit card debt is important and to lead a debt free lifestyle.

Tony Solomon, from Zurich, said: “Modern life can leave very little time for people to sort out their finances. But the fact that more than a third of single adults worry about the added financial cost of being single, suggests that being single in this current economic climate may be more fretful than fabulous!”

It may seem as though the credit crunch has forced savings to the back of your mind, but according to a spokesman for National Savings and Investments (NS&I), there may not be a decrease in the number of people who are saving.

Apparently as country-wide financial worries are more widely reported, an increasing number of people feel concerned enough to start putting a little bit more money aside. The NS&I report: “One of the classic economic examples is that consumers stop spending. If you stop spending it is predominantly because you are paying off debt, or saving.”

However, during these credit crunch times more people may be looking towards paying off their debts as quickly as possible so they can look forward to becoming debt free, before they would consider saving.

As debt becomes a great burden for more people throughout the UK, almost tenth of British borrowers have missed repayments to one or more of their debts. As economic problems hit home, it seems that more and more people are having problems controlling their debt management issues.

According to MoneyExpert, almost 11% of people with a mortgage and unsecured debts, such as a credit card or unsecured loan, have missed these debt repayments within the last six months alone.

It appears that our unsecured debt is causing us the biggest worry, as credit cards and unsecured loans are offering us the biggest debt problems. Almost four million credit card holders admit that they have missed a payment to their credit card debt during the past six months, and over one million have missed payments to their unsecured loan.

Even more worryingly, the number of people who are missing payments to their credit cards equates to around 9% of the adult population in the UK.

Director of MoneyExpert, Sean Gardner, commented: “Interest rates may have been pushed down through 2008 but increased pressures from rising food and energy bills mean consumers are struggling to keep their heads above water.

An IVA is a legally binding procedure between the debtor and their creditors. If you are considering an IVA, it is important that you are aware of both the IVA advantages and IVA disadvantages.

If you are considering your options, ensure that you get expert debt advice from our specialist IVA advisors on 0800 048 1752.

IVA Advantages

• An IVA can write off unsecured debts that you cannot afford.
• Interest or charges frozen.
• You will not have to sell any major assets, such as your home.
• 60 months until you are debt free.
• One monthly payment based on your finances.
• Pressure from your secured creditors may be alleviated, as you won’t be paying as much on your unsecured debt.
• An IVA is a legal private agreement between you and your creditors and, unlike bankruptcy, your details will NOT be published in your local newspaper (although they will be available online).
• An IVA is legally binding, so your creditors cannot pursue you once the IVA has been accepted.

IVA Disadvantages:

• You must have unsecured debts greater than £12,000.
• Missing payments means that creditors can take legal action against you, such as a bankruptcy.
• It is a five year repayment plan.
• At least 75% of your creditors who vote, must agree to the IVA proposal.
• You may be asked to re-mortgage your home to release a proportion of your equity.

Student debts have now reached £22 billion, up £4 billion in just a year, according to new reports. This figure is £1billion more than the Government’s entire transport budget!

The NUS (National Union of Students) have warned that students will graduate from university with debts of up to £40,000, and the worries are that these debt levels could limit the life options for many graduates, meaning that many graduates could be seeking additional debt advice as they try to secure their future.

Universities spokesman for the Liberal Democrats, Stephen Williams, said: “Students are facing unprecedented levels of debt, which will have a dramatic long-term effect on their ability to buy homes, start families and save for old age.”

The credit crunch means that there are many areas of our lives where we have to cut back on spending, and our weekly food shop is probably one of the main drainers of our disposable income. But according to Fiona Beckett, author of The Frugal Cook, credit crunch cooking can be fun!

Beckett believes that our habits-of-old meant that we were relying too much on ready meals and takeaways for the stable of our diets. But as financial times have changed, she believes that many of us will rediscover the joys of home cooking; “People are going to have to cut back as people are losing their jobs, struggling to pay their mortgages, not being able to sell a house, so it’s something more and more people will have to come to terms with. It can be really pleasurable [having to cut back]. Cooking is fun.”

Many Thanks to Savvy Barefoot Investor for publishing my guest post on the 3 Debt Solutions to Avoid Bankruptcy. In it, I outline three key ways that you could avoid bankruptcy which include:

1: Debt Management Plans: A debt management plan means that you are repaying a lower amount to your debt. Although you can avoid bankruptcy with this type of plan, it is worth noting that it will take you longer to become debt free as you are paying a smaller amount on a monthly basis.

2: Debt Consolidation Loans: Consolidating your debt with a debt consolidation loan can allow you to reduce your monthly unsecured debt repayments into one single lower monthly payment. However, always ensure that you can afford this new loan payment and that you do not continue to spend on the credit cards or store cards that you consolidated.

3: Take it back to basics… Professional debt advice is available and there if you need expert help. But one of the simplest ways to get your finances in check and avoid bankruptcy is to create a budget. Understanding your personal finances is the key to being in control of your own debt.

The good news is that getting the right kind of debt advice can really help you with your finances. The debt solutions on offer can help you tackle your finances head on, all whilst avoiding bankruptcy. Following on from the original article, there are another couple of debt solutions which could help you to avoid bankruptcy: (more…)

Falling house prices could be that many homes could be in negative equity.

Nationwide building society have releases figures which show that average house prices have fallen by 1.7% in September. There has been a decline for 11 months in a row, and the average house value now stands at £161,797, compared to £164,654 in August, meaning that many homeowners could now be in negative equity.

These figures reflect a drop in consumer confidence and the possibility of rising debt due to the global economic crisis, which is likely to effect the housing market for the months to come.

Nationwide’s chief economist Fionnuala Earley remarked that: “We would need to see a significant shift in consumers’ sentiment before we begin to see any real recovery in activity and subsequently house prices.”

The credit crunch has led more Brits to take extra control of their finances, as one in five of us are now setting ourselves a budget so we can worry less about debt.

According to PayPal, although many of us are now creating a credit crunch budget plan, it seems as though we may be making unrealistic expectations, as 20% still dip into savings or use credit cards to fund day-to-day living expenses.

Carl Scheible, managing director of PayPal UK, said: “It’s concerning that so many people claim to keep to their budget, yet still rely on credit cards or savings for basic living costs. The consequences of this kind of strategy are soaring credit card bills and no savings to fall back on, which is dangerous territory.”

The credit crunch onset seemed to happen almost overnight, which has left many Brits with no time to change their spending habits and get help to manage debt. Moneyfacts Darren Cook, head of Public Relations, said that the credit crunch has “knocked on the front door and actually affected the consumer”.

If the credit crunch happened at a much slower rate, they believe that many people would have financially reacted to the change in circumstances, meaning that many would be able to deal with their debt and not have to worry as much about financial issues being a top concern.

Cook added that “If that change had happened gradually in 12 to 24 months then people would have been able to adapt their household expenses. It’s gone from one extreme to another and it’s caught people out.”

The ongoing credit crunch means that many of us are finding less money in our pockets at the end of the month. And, for some, this drop in disposable income may mean they can no longer afford their mortgage and will need to seek mortgage arrears advice.

According to recent analysis from Standard and Poor, the number of UK mortgage arrears in the sub-prime mortgage market has increased by over 23% in the second quarter of 2008. Those who have more than three months of mortgage arrears have increased to over 12% of this total. Standard and Poor have described mortgage arrears as “a way of life” for many subprime borrowers.

Are Mortgage Arrears a “way of life” for you?

If you find yourself struggling with mortgage arrears, then it is important that you seek mortgage arrears advice and tackle this problem as soon as possible. Your mortgage is a priority debt which means that failure to make payments to your mortgage means that you are at serious risk of repossession. (more…)

If you are struggling with debt and you are looking for a debt solution then an IVA could be your key to becoming debt free. It was introduced as a way for those struggling with their debts to avoid bankruptcy.

No other debt solution can write off any part your debt.

An IVA Can Help You Become Debt Free:

An IVA is a legal agreement with your creditors where you agree to pay a monthly amount over a set period of time, usually 60 months. On successful completion of your IVA, any unpaid debt is written off as part of the IVA agreement and you will become free of any unsecured debt.

The perks of an IVA may sound too good to be true if you are looking for a way to become debt free. But if you qualify then it is an avenue well worth exploring and you have the legal right to propose an IVA to your creditors.

Your IVA can only be arranged by a licensed professional called an Insolvency Practitioner (I.P) as it is a complex legal procedure.

To find out more information about how a debt free IVA is right for your financial circumstances, please contact us today for free debt advice on freephone 0800 048 1752.