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Personal debt continues to rise
Britons now owe more money than the value of the entire country’s annual produce, according to the latest figures from Credit Action.
Total UK personal debt stood at £1,464bn at the end of February 2010, a 0.9 per cent rise from the last year, Credit Action said.
The average household debt in the UK, including mortgages, is now £58,083. The increasing debt pile now means that an average family has to cough up 15 per cent of total income purely to meet interest payments on the debt, according to research by PricewaterhouseCoopers.
Britain’s total interest repayments on personal debt were £68.4bn in the last 12months. The average interest paid by each household on their total debt is approximately £2,716 each year.
Richard Talbot from Credit Action said that the interest payments meant £187m is paid in personal interest payments every day.
But despite a ballooning debt burden, consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,658 per average UK adult at the end of February 2010.
And government debt is still climbing upwards by £397,500,000 a day, which is threatening to derail the UK’s economic recovery.
However, in fresh signs that the banks are more willing to lend again to businesses, total lending in February rose by £2.1bn, while banks increased secured lending by £1.6bn during the period.
The government has announced plans to make it easier for people in financial difficulty write off their debts in Debt Relief Orders (DROs).
The Department for Business, Innovation and Skills has proposed changing the eligibility criteria for a DRO so that people with small pension pots can apply for the low cost debt relief solution.
DROs were introduced last April as a low-cost alternative to bankruptcy with debts less than £15,000, assets of less than £300 rising to £1,000 if they had a car, and less than £50 surplus income a month.
But insolvency practioners had complained that the process excluded individuals if they had built a small pension pot over £300.
In a recent survey by Citizens Advice Bureau (CAB) figures showed that 96.3 per cent of people were excluded from DROs because of their pension, and 78 per cent of these people had a pension fund of less than £5,000.
DROs were introduced last April as a low-cost alternative to bankruptcy with debts less than £15,000, assets of less than £300 rising to £1,000 if they had a car, and less than £50 surplus income a month.
But insolvency practioners had complained that the process excluded individuals if they had built a small pension pot over £300.
Ian Lucas, business minister, said: “Debt Relief Orders help people who would otherwise be trapped in poverty to get back on their feet. Following representations from independent money advisers, I’m proposing a common sense change to ensure that vulnerable people with a very small pension pot are treated fairly.”
He said the government will consult on the proposed changes shortly.
But the government has also proposed changes to the annual fee structure to ensure more cash is recovered earlier in the process so that the cost of the regime is shared by the debtor and creditors.
The department will increasing a debtors deposit on a bankruptcy petition from £360 to £450, and raising a creditor’s deposit on a bankruptcy petition from 6 April this year. And the government will be hiking the administration fee for a company’s winding up order from £2,610 to £2,235.
Lucas said: “We have always made it clear that we expect those petitioning for bankruptcy to pay their fair share of the cost and that the taxpayer should not be responsible for the cost of bankruptcy.”
But Sue Edwards,, Citizens Advice Bureau Head of Consumer Policy, warned that she was concerned that the 25 per cent increase in the amount people must pay as a deposit to go bankrupt will prevent more people from seeking the right debt solution.
She said: “We already see many CAB clients unable to afford to go bankrupt even though it is the best option for them. This increase will only exclude more people.”
If you are experiencing difficulty paying back your creditors and would like to have a no obligation face to face chat to a debt expert, call debtDr on 0845 123 4000 or click here and we will call you back.
Record personal insolvencies
A record 35,574 people in England and Wales were declared insolvent in the last quarter of 2009, according to statistics out today from the Insolvency Service.
The figure – a 24.9 per cent jump on the same period a year ago – was made up of 17,007 bankruptcies, 13,219 individual voluntary arrangements (IVAs) and 5,348 debt relief orders (DROs).
Mark Sands, director of personal insolvency at RSM Tenon cautioned: “There is no reason to believe that these levels will reduce as we go into 2010, as the aftermath of the recession will continue to impact on people in debt for a long time to come.”
But in contrast to the jump in personal insolvencies, the number of businesses going bust dropped by 1.7 per cent to 4,566 on the previous quarter and fell by 1.1 per cent on the same period the year before. See Full Story
debtDr offer a person to person service with one of our experienced consultants visiting you in your own home, or at a more convenient location if preferred, to discuss your situation and concerns call
0845 123 4000 or 0845 224 2761
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 "prescribing life without debt" Kicking the habit
None of us are perfect when it comes down to bad habits, but some are worse than others; not understanding your debt or finances is one of them. Kicking these bad habits into touch means that you can look towards“prescribing yourself a life without debt”
Too many credit card
Having too many credit cards means that you have the potential to get into too much debt. Although introductory offers many tempt you in, it is important that you take control of your credit card debt. Start by paying off the highest APR cards means that you can look forward to “prescribing yourself a life without debt” in a much quicker time.
2: Spending more than you earn
Spending more than you earn by living beyond your means is a financial habit which you need to nip in the bud right now. This is the quickest way to get into debt, especially if you regularly have to rely on your credit card the week before pay day. Take control by creating a monthly/weekly budget and keep to it! when setting up new direct debit’s or standing orders try to arrange it so the payments are taken a day or so after you are paid.
Missing credit card payments
Always make sure that you meet your credit card, store card or catalogue payments as they fall due. speak to the creditor and ask them to change the day they take a payment so it fits in to your budget better. Missing these payments not only means that you will have to pay late fees but any missed payments will also show on your credit file, which could make it more difficult to get accepted for credit in the future.
Losing touch of your finances
Being unaware of how much cash you have in the bank to how much debt you have outstanding (Do you Know how much?) this may mean that you have lost touch with your finances, Checking your credit report is a good way to see your own credit history.
Not seeking debt help when you need it
Sadly debt problems will not sort themselves out, and if you are missing credit card, store card, or even mortgage payments, if you are not opening post, Do you know about the problem but just choose to bury your head in the sand, do not feel embarrassed, ashamed or guilty this is a natural defense reaction, there will be a solution to your problem, problem is you may not be able to see it, this is when you need to seek professional advice as soon as possible.
Contacting a professional
debtDr offer a person to person service with one of our experienced consultants visiting you in your own home, or at a more convenient location if preferred, to discuss your situation and concerns call
0845 123 4000 or 0845 224 2761
Or text 07709 410 208 to request a call back
UK personal debt hits £1.46bn
"prescribing life without debt" 0845 224 2761 Total UK personal debt at the end of October 2009 stood at £1.46bn, a report from money advice charity Credit Action has revealed.
The charity’s statistics show that the 12-month growth rate of personal debt fell to 0.7 per cent, while total lending in October 2009 rose by £300m and that secured lending increased by £900m, while consumer credit lending fell by a net £600m.
Total secured lending on homes at the end of October 2009 stood at £1.23bn and the 12-month growth rate was unchanged at 0.8 per cent.
Total consumer credit lending to individuals at the end of October 2009 was £228bn and the annual growth rate of consumer credit continued to fall to – 0.1 per cent.
Credit Action said average household debt in the UK is now £9,120 excluding mortgages, but this figure increases to £21,210 if the average is based on the number of households which actually have some form of unsecured loan.
Average household debt in the UK is £58,316 including mortgages and if this is added to the 2009 budget figure for public sector net debt (PSND) expected in 2013-14, then this figure rises to £116,156 per household.
The average owed by every UK adult is £30,208 including mortgages and this is 133 per cent of average earnings. Average outstanding mortgage for the 11.1m households who currently have mortgages now stands at £110,801.
Britain’s interest repayments on personal debt were £65.7bn in the last 12 months. The average interest paid by each household on their total debt is approximately £2,627 each year. According to PricewaterhouseCoopers the average household will need to spend approximately 15 per cent of net income purely to service the interest payments arising from this debt.
Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,724 per average UK adult at the end of October 2009.
The report also reveals that the Citizen’s Advice Bureau are dealing with 9,300 new debt problems each day and that £180m in interest is being paid across the UK daily, while a property is repossessed every 11.2 minutes.
If you are facing rising debt and you feel that there is no way out , Don’t bury your head in the sand. Call us at debtDr on 0845 123 4000 you are only one step away from speaking to one of our debt experts, Who will be able to offer you help and advice on your situation
Bogus callers posing as council staff are luring homeowners into a council tax scam, say council leaders.
Residents are asked for banking details by people who claim they have paid too much or too little council tax.
Warnings have already been issued in Northumberland, Portsmouth, North Tyneside and Stafford.
But trading standards officers are now warning everyone to be on their guard and report any calls or e-mails to their council or police immediately.
Banking details
During the scam, people are contacted over the telephone or on their doorstep and asked for bank details so a council tax refund can be made or to avoid a fine for late payment. For Full Story
debtDr info:- Council Tax is one of your priority debts, if you fall behind with your payments call your local council tax office. They should be able to help by spreading any arrears over your future payments.
debtDr info:- Never give out your bank account details over the phone banks and other resepectable organisations will never ask you for account details over the phone
If you are experiencing difficulty making your council tax payments, let debtDr take a look at your finances contact us on 07709 410 208 or 08452242761
Banks are still finding “sneaky ways” to make money out of people, the consumers’ association Which? has said.
It claims the rate on authorised overdrafts is at its highest level since records began in the mid-1990s.
According to the latest Bank of England statistics, the average overdraft rate is 18.96%, although many of the big banks can charge considerably more.
Which? says that the rate for unauthorised overdrafts has fallen owing to a major court case.
It has accused banks of raising the rate on authorised overdrafts to make up the difference.
“It is like a balloon,” says Phil Jones, of Which?. “When you push in one part, it comes out in another.”
“So we see that the banks are consistently taking sneaky ways to make money out of people.”
Charges
Dawn Cunnington, from Kidderminster in the West Midlands, said that when her husband had a few weeks off sick seven years ago, they went slightly overdrawn, and were immediately hit with a £35 charge
Over the years the charges spiralled, and she ended up paying over £4,000.
Her official complaint about those charges has been suspended, pending the outcome of the long-running court case. In the meantime her bank has continued to charge her on a monthly basis.
The charges now total more than £5,000.
“It gets you really upset,” she said. “You start to get angry then. I phoned the bank, and the only help they could give us was an offer of increasing the overdraft.”
Defence
Many banks have reduced the rates on unauthorised overdrafts.
On 1 October, the Royal Bank of Scotland cut its charges. On 1 December, the Halifax will restructure the way it charges customers, which will benefit some people with an overdraft.
In relation to high rates on authorised overdrafts, the industry argues that its own costs remain stubbornly high.
The British Bankers’ Association (BBA), which represents the banks, is reminding everyone that the cost of borrowing no longer tracks the Bank rate as it once did.
Instead banks have to borrow money on the more expensive wholesale market. The risk of borrowers defaulting is also higher than it was.
“The cost that the banks have to pay for the money they buy in has increased,” said Eric Leenders, of the BBA.
Test case
After more than two years of court cases, and appeals by the banks, the Supreme Court will make a significant ruling about bank charges on Wednesday.
At stake are billions of pounds, and complaints from nearly a million bank customers in the UK.
The court is due to decide whether the Office of Fair Trading (OFT) has the right to determine what is, and what is not, a fair bank charge.
If the OFT wins the case, it is due to announce its findings at the beginning of next year.
In theory, the way could then be open for customers like Dawn Cunnington to have their charges refunded.
But if the banks follow their track record to date, they are likely to appeal against any ruling made by the OFT. That could mean a whole new round of legal action, lasting for years.
One government source has told the BBC that the case might therefore continue until 2015 or so.
In which case Dawn Cunnington can expect to be charged a further £2,400 in interest, before the case is finally resolved.
If credit card and loan payments are spiraling out of control, Dont rob Peter to pay Paul Contact
debtDr on 0845 123 4000
Bad debts have risen for nine of out ten companies according to research by credit information provider Creditsafe.
It said 91 per cent of UK companies polled in October had seen an increase in defaulted payments from creditors in the last year and one in ten (10.4 per cent) saw this increase by over 20 per cent in the last 12 months.
In fact, despite whispers of recovery, over half of UK businesses (56 per cent) told Creditsafe they are more concerned about late and defaulted payments than they were at the height of the financial crisis. A staggering four per cent of UK enterprises are awaiting payment of at least £100,000 from creditors. One in ten companies (9.7 per cent) has bad debts on the balance sheet that equate to at least 20 per cent of their annual profits.
David Knowles, business development director at Creditsafe, said: “The ability of the UK economy to rise out of recession may be strangled by bad debt. Many companies are carrying huge levels of debt on their balance sheets, which if not recovered could see a dramatic increase in businesses entering administration. As credit has become increasingly expensive and restricted, businesses are now struggling to contend with such high levels of debt and a greater number of defaulted payments.”
Six in ten (63 per cent) of UK businesses have taken steps in the last 12 months to help mitigate their exposure to bad debt and reclaim monies owed. The most popular method has been increased debt collection activity, with firms increasingly litigating to force creditors to pay out.
If your Business is facing rising debt and you feel that there is no way out Call us at debtDr on 0845 123 4000 you are only one step away from speaking to one of our debt experts, Who will be able to offer you a no Charge face to face consultation.
The 2009 rise in corporate insolvencies has halted and turned down slightly, according to official statistics published today.
The quarterly statistics published by the Insolvency Service show total liquidations in England and Wales were 4,716, down 4.7 per cent on the previous quarter, though an increase of 14.6 per cent on the same period last year.
Additionally, there were 1,578 other corporate insolvencies in the third quarter of 2009 – comprising receiverships (410), administrations (974) and company voluntary arrangements (194). In total these rose 9.3 per cent from quarter three 2008.
Paul Reeves, director of corporate recovery, insolvency and restructuring specialist Leonard Curtis, said: “Despite the banks claiming to lend more money, the rise in company voluntary arrangements (CVAs) provides compelling evidence that companies continue to struggle to secure finance and increasingly take the CVA route to avoid collapse by making arrangements to pay creditors over the longer term.”
While it was hopeful news on corporate insolvencies, individual insolvencies continued to rise in the third quarter. There were 35,242 personal insolvencies, an increase of 28.2 per cent on the same period a year ago. Bankruptcies fell slightly, but both individual voluntary arrangements (IVAs) and debt relief orders (DROs) grew in number.
Debt relief orders only came into force in April and have risen from 1,978 in the second quarter, to 4,505 in the third. Experts predict they could reach 11,000 by the end of the year.
Meanwhile, both corporate and individual insolvencies fell slightly in Scotland and Northern Ireland on the previous quarter.
Bev Budsworth, managing director of The Debt Advisor said: “We have already seen over 98,000 personal insolvencies this year which is close to the total figure for 2008. It’s clear that we still are experiencing the ‘debt hangover’ from a decade or so of spend, spend, spend mentality and we are likely to see close to 130,000 insolvencies in 2009 alone.”
She added: “The increase in IVAs is proof that they are regarded as ‘fit for purpose’, allowing people to pay off as much of their debt as they can afford in a structured way, whilst keeping the roof over their heads. The number of DROs continues to increase which I think is to be expected as consumers increase their understanding and awareness of this option. I fully expect levels to reach around 11,000 by the end of the year and run at about 16,000 for 2010.”
If you are experiencing difficulty paying back your creditors and would like to have a no obligation chat to a debt expert, call debtDr on 0845 123 4000 or click here and we will call you back.
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