Sunday, 28 August 2011

Half the nation concerned about their debts

Nearly half of individuals (47%) are concerned about their debts, according to the
latest wave of R3’s, the insolvency trade body, Personal Debt Snapshot. The
quarterly tracker of the nation’s finances reveals a 7% rise in debt concern,
compared to this time last year.

Of those who are concerned about their debts, credit card debt continues to dominate
fears for 53% of individuals; an increase of 5% on last quarter. Concern about
certain types of debt has increased this quarter: Payday or other short term loans
(up 2%), hire purchase (up 3%) and store cards (up 1%); while worry about secured
lending has reduced such as mortgage repayments (down 4%) and bank loans (down 2%).

Frances Coulson, R3 President comments:

“Households that are already struggling may find traditional lenders unwilling to
provide further credit and are therefore drawn to short-term credit solutions.
Individuals turning to short-term loans and credit cards should be wary of the high
interest rates that often accompany these products. Overall debt can quickly
snowball out of control.

“Concern about secured lending is also likely to have fallen due to the Bank of
England continuing to keep interest rates at an historic low. Households have begun
to feel comfortable that their mortgage repayments will remain as they are for the
foreseeable future.”

Over a quarter (27%) of people are saving less then they usually do, equating to 13
million individuals, this compares to 24% in July last year and 32% in April 2011.
While one in five (21%) consumers are putting off big financial decisions, compared
to 14% a year ago and 28% last quarter.

Frances Coulson continues:

“Early 2011 was a tough period as individuals struggled to keep control of their
finances and felt uncertain about the future. It is encouraging to see people have
started to bolster their savings and pay off their debts. But we must remember that
financial distress is still higher than it was a year ago. Delays in taking big
financial decisions are up considerably on last year, indicating that the public is
still hesitant about what the coming months have in store.”

Allied to this is fear of redundancy: the overall fear of redundancy is twice as
high as this time last year. Twice the amount of people in the public sector fear
redundancy compared to private sector workers, with one in five public sector
workers raising their concerns, compared to 9% of private sector workers.

Frances Coulson said:

“Employees in the public sector are clearly wary that more job losses are yet to be
announced and the full force of public sector cuts is still to be felt. We know that
unplanned changes of circumstance, such as job loss, are key triggers of insolvency.

“With around six million people employed in the public sector in the UK, significant
redundancies could result in increased insolvency levels. More people have started
saving and paying off their debts, so these reserves should serve them well if they
do face a period of unemployment. Those struggling with debt should seek financial
advice rather than dealing with the distress on their own.” 

Tuesday, 23 August 2011

CAB advice for struggling homeowners ahead of new repossession figures

National charity Citizens Advice has produced top tips for homeowners struggling to keep up mortgage payments ahead of tomorrow’s repossession figures. This advice is based on its experience helping people deal with more than 100,000 mortgage and secured loan arrears, and stopping 5,000 people becoming homeless over the past 12 months.

Chief Executive, Gillian Guy said:

“With the cost of living going up daily and incomes lagging badly behind, mortgage lenders and the government must focus on helping people stay in their homes. Repossession is a terrifying prospect and should always be the last resort”

She reminded anyone struggling to meet their mortgage repayments that they can get free, independent advice from their local CAB.“You have a greater chance of staying in your home if you seek advice and take action as soon as you think you’re having problems,” she added.

Top tips if you start to fall behind on your mortgage:
* Make mortgage payments top priority - you could lose your home if you fall behind with payments.
* Let your mortgage lender know if you're having problems - don't just stop paying or miss payments. Your lender should treat you fairly and sympathetically and be willing to negotiate affordable repayment arrangements with you. If they know you are doing your best to stop the debt growing they are more likely to allow you more time to sort the problem out.
* Get free, independent advice as soon as you realise there's a problem. Don’t wait until you’re threatened with court action by your lender. Contact your nearest Citizens Advice Bureau (for contact details, and for more detailed information about dealing with mortgage arrears, go to the CAB website; or try National Debtline ( 0808 808 4000 or Shelter ( 808 800 4444 )
* You may be able to cut down your monthly mortgage costs. For example, your lender may agree to reduce your monthly interest payments, increase the term of the mortgage to give you more time to pay, or allow you to make interest-only payments for a while.
* Check for any mortgage payment protection insurance you may have if you suddenly lose your job or are unable to work because of illness or injury.
* Get advice on benefits, tax credits and other help you may be entitled to if you are struggling. A CAB adviser can check if you are missing out on additional income and help you make a claim.
* Don't ignore court papers and court hearings. If you are notified that your lender is seeking possession through the courts, it doesn’t mean you’ve already lost your home. Don’t be intimidated by your lender into believing there’s no point attending the court hearing. Do go to court, but get advice first if you can. Otherwise look out for an advice desk at the county court run by a free independent advice service such as the CAB or Shelter. Getting advice – even at this stage – will give you a much better chance of saving your home.
* Find out if you qualify for government help. If you are facing repossession, the government’s mortgage rescue scheme (MRS) may allow you to sell your house but continue to live in it and pay rent.. Ask your local council for details. If you’ve lost your job and are claiming benefits, you may be able to get help towards paying your mortgage interest.

Sunday, 7 August 2011

R3 comments on Government’s response to the personal insolvency review

“R3 welcomes the Government’s announcement today to consult on increasing the petition debt levels for creditors. R3 believes that a rise from the current level of £750 to £3000 would be a more appropriate sum for a creditor to petition for bankruptcy.
“R3 has long campaigned for the rebalancing of the relationship between debtors and creditors, as a number of creditors petition for bankruptcy on low levels of debts. The threshold of £750 which was set in 1986 is now outdated. The Government today acknowledged: ‘that to be able to threaten someone with bankruptcy for such a small amount is disproportionate.’ We are pleased the Government is listening to R3’s concerns on this issue.
“The Minister also revealed that the Government recognises the potential for regulatory reform of Debt Management Services. We have called for better regulation of the Debt Management Plans (DMP) industry for some time. R3 research shows that DMPs are often unworkable because the level of debt is too high, and 10% of individuals in a fee-charging DMP were not told they would be charged until the scheme began. We call on the Government to go beyond recognising the need for reform and make the necessary changes to the industry. R3 suggests the regulation of the DMP market be removed from the OFT and become the responsibility of the Insolvency Service, to ensure all insolvency providers are regulated to the same high standard.”

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