Tag Archives: debt counselling

Don’t Let Your Payday Loan Debt Grow

British consumers turning to payday loan companies for a quick finance fix are being warned to repay the money on time or risk facing high interest repayments.

According to insolvency professional trade body, R3, over 2 million people have turned to payday lenders such as Payday UK and Wonga over the past year. Many customers are drawn to the convenience of borrowing relatively small amounts (between £80 – £1,000) and, in some instances, the payday loan can be in the customer’s bank account within 24 hours.

Whilst borrowing a payday loan can prove cheaper than accessing an unauthorised bank overdraft the interest can accumulate quickly if the money isn’t repaid on time.

For example, Wonga have suggested that a standard payday loan of £100 could result in a repayment value of £187 if no repayments were made for 2 months or more. If the customer continues to default the debt is usually handed to a debt collection agency who will add on admin fees as well – driving up repayment costs further still.

One finance expert commented:

“There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. The golden rule is not to borrow money unless it is absolutely necessary.”

When a Scottish Trust Deed Might Help With Debts

Guest blogger Simon Wyllie suggests that Scottish Trust Deeds could help get you out of debt.

As households throughout the UK come under increasing financial pressure, it’s unsurprising that an entire industry has developed which advertises solutions to deal with unmanageable personal debt.

Many people remain unaware however that where you live in the UK determines which options are available to you. Residents of Scotland have access to a variety of measures to deal with debt difficulties that are unavailable in the rest of the UK.

A trust deed (often also referred to as a “protected trust deed” or a “Scottish trust deed”) is one such option. Trust deeds exist as an alternative to bankruptcy for residents of Scotland suffering from serious debt problems.

The marketing of trust deeds has caused some issues. Certain debt-help providers advertise them as being an easy way to escape from debt and to have much of it legally written-off. This view downplays the serious nature of a trust deed; it is a formal insolvency measure in many ways similar to bankruptcy and it should always be viewed as a last resort.

However, for anyone with serious debts that simply cannot be repaid within a realistic timeframe by other means, a trust deed might well be appropriate.

When signing a trust deed you appoint a “Trustee” to supervise your financial affairs for a fixed period (which is often three years). You commit to paying over your surplus income each month and also to paying over the value of any significant assets that you currently own (or may acquire during the trust deed term).

Due to the requirements connected to assets, homeowners should be cautious about their position prior to signing a trust deed. If they have equity in their home they will need to pay over the value of that equity. However, refinancing during a trust deed to release equity is currently virtually impossible. This may mean that some homeowners with equity may have to review other options to deal with their debts.

The technical nature of the trust deed process and trust deed guidance/legislation means that many people have questions that they need answering before they are prepared to go ahead with this debt solution option. In such circumstances making use of a trust deed forum might be appropriate as it enables the provision of expert trust deed advice alongside the shared personal experiences of individuals that are at various stages of the trust deed process.

Guest Blogger:

Simon Wyllie

Trust-Deed.co.uk

Rise in mortgage payment affects debt management plan

The wrath of global recession looms over the homeowners and the magnitude of this crisis continues to unfold. People who are paying less in terms of mortgage payment might be disappointed to find that the base rate will soon rise. Homeowners who can still manage their payments might find it difficult to pay off when their payment increases.

Many homeowners might default on their mortgage payment with the rise in the mortgage rates. If you cannot afford a mortgage payment then you need to take help from an expert to avoid the problems in future.

Can rise in mortgage payment affect your debt management plan?

You might panic as the rise in the mortgage payment might affect your debt management plan as that restricts your ability to accelerate the reduction of your debt. But you might be aware that a debt management program does not have a rigid plan. Make sure that you adjust your debt management plan according to your financial situation so that you can avoid missing your payments.

If your debt management payment needs to be lowered to make it affordable then your creditors might terminate the terms of negotiation. Therefore, you have no other alternative than filing bankruptcy.

You can discharge your unsecured debts by declaring bankruptcy. It helps to put an end to the illegal collection practices of the creditors by filing bankruptcy.

But you should be aware of the adverse impact of bankruptcy on your credit report. Filing bankruptcy damages your credit report for 7 to 10 years. During this period you will not be able to get any loans as the creditors might consider you high risk borrower. You should also know that the court appointed trustee will sell your property and fund raised from it will be disbursed among the creditors to pay off your debts. Therefore, you might lose your valuable possessions. Declaration of bankruptcy will also ruin your professional career.

About author: This article is written by Christina Jones, who is a financial content writer associated with Oak View Law Group. You can contact her here: christina.jones60@gmail.com

Family Debt Deeply Troubling

A study by insurance firm, Aviva, has revealed that the average UK family are struggling financially as a result of the rising cost of living and significant credit card and personal loan debts.

The research suggested that the average family are now spending around 10% of their income on repaying credit card and unsecured debt, up from 8% at the begining of 2011.

Unfortunately UK familes have seen an increased level of debt repayments as well, with the amount owed on personal loans, overdrafts and credit cards increasing as well. Seeing a rise of almost £520 on average in January 2011.

In spite of this the report also showed that families are able to save more, with the typical household saving £32 a month, up by £10 in January.

The head of pensions marketing at Aviva, Paul Goodwin, commented:

“While it is great news that families are saving more, the fact that many have higher unsecured debts and have seen an almost blanket increase in day-to-day living costs is deeply concerning.”

Mr Goodwin went on to add that many “UK families are worried about the future, with almost two-thirds anxious about any increases in the cost of basic necessities over the next six months. This research really serves to highlight the precarious balancing act that many face today as they look to meet their financial obligations and provide their families with some type of financial security.”

Families Coming Up Against More Debt Problems

With job losses increasing and incomes falling, it looks like large numbers of families around the UK are going to be left in a position where they’re unable to repay credit card, mortgage and personal loan debts, the Consumer Credit Counselling Service (CCCS) has revealed.

The CCCS believe that many households around the country are struggling as incomes stagnate or fall but the cost of living continues to go up. In some of the worst cases many people risked losing their job completely, leaving them with debts they simply can’t afford to pay back.

It’s believed, with good reason, that families were the most vulnerable, with people who had two kids having an average of only £62 a month left to repay debts after meeting essential costs.

The charity believes that families with three or more children needed a minimum of £45 a month extra on top of their usual income, simply to meet living costs.

With the 40% tax threshold being introduced at the start of the new tax year, along with severe changes to the tax credit system, there is a very real fear that, in an already struggling economy, people simply will not be able to meet living costs as well as repay existing debts.

Lord Stevenson, the Chairman of the CCCS commented:

“The picture is undoubtedly bleak and it seems likely that many more families, including better-off ones, will be increasingly prone to over-indebtedness in the months ahead.”

He went on to add:

“It is also not a uniform picture across the country: public sector cuts in terms of jobs, spending and benefits will weigh disproportionately on certain groups of people.”

Following research carried out, the group has stated that 55% of the 418,000 people it aided last year cited a fall in income or losing a job as the main reason they were unable to maintain debt repayments.

If you are struggling with debt you could visit the CCCS website or SupaCompare – who can help consolidate payments into an easy repayment scheme.

Image: renjith krishnan / FreeDigitalPhotos.net

Top Ten Ways Of Managing Personal Debt

With the UK being faced with rising unemployment and a flailing economy many people are finding themselves faced with spiralling debts.

If you have found yourself in this position then there is a good chance that that you are struggling to manage your finances effectively.

Of course there are always solutions to any debt problem – no matter how small or large. Let’s take a look at the top ten ways of managing your debt:

Don’t ignore debt – this includes any bills or statements that come through your door. Simply ignoring credit card, loan or bill debts won’t make them go away. You really need to face them head-on before they get out of control.
Pay off the largest, most important debts first.
Stop gathering more debt – cut up those credit cards and stop spending on needless items. It’s time to start prioritising between what you NEED and what you WANT.
Consider asking for a pay-rise at work, looking for another job that pays better or even take a second job to help meet debt repayments.
Why not shop around for alternative utility suppliers if you’re finding that your current suppliers are simply too expensive – there are always alternatives!
You could consider trading in your car for something more economical, especially with the rising price of fuel at the moment!
You could remortgage your house or possibly consider downsizing the size of your house if you are a homeowner. This will not only bring down the cost of your utilities but also other monthly bills such as council tax.
If you smoke, drink or order takeaways why not consider giving up those vices? Did you know that an average pack of 20 cigarettes cost around £6 – £7. Over the course of a month this REALLY adds up – just think how much you could save.
If you’re really struggling you could consider debt counselling – which is usually free. If you visit the Consumer Credit Counselling Service website you can find out more information.
If all else fails then you could consider a debt consolidation plan where the debt management firm helps you to consolidate many existing debts into one manageable sum. They will always ensure that this plan is tailored to your needs to make paying off your debts as easy as possible.

Further help:

Debt Management

SupaCompare Debt Management

Consumer Credit Counselling Service

Image: Pixomar / FreeDigitalPhotos.net

Consumers Plan To Reduce Debt & Improve Finances

Almost 60% of people are hoping to improve their financial circumstances over the course of 2011, with growing savings and reducing credit card and personal loan debt being the most popular goals, according to a recent survey by the Consumer Financial Education Body (CFEB).

Of the 2,130 respondents, over a third of them had decided to set themselves regular “mini goals”, and 13% had made an overall action plan. Only 8% had decided to seek professional financial advice.

To summarise:

31% of consumers resolved to pay off debt
26% of consumers hope to grow their savings
19% plan to make cuts to their spending
7% planned to put a budget together for 2011 or track their spending more effectively
4% planned on updating their will

The most concerning outcome of the report were the 43% of consumers who stated that they had not set any financial goals for the year, in spite of being unhappy with their financial situation, such as credit card and loan debt.

The Chief Executive of the CFEB, Tony Hobman, commented:

“It’s great to hear so many people have made a money resolution for 2011. Staying on course with any resolution can sometimes be tricky, but our Money Workout can help people to stay on track, and offers supportive steps for those who haven’t made a money-related resolution but feel unhappy or overwhelmed by their financial situation and would like to improve it in 2011.”

For help with mounting debts Creditwindow suggests seeking out a debt management company to help consolidate your debts into one loan and put an efficient financial plan together:

Consumer Opinion on Debt Raises Concerns

A recent study by the life insurer, Scottish Prudent, has revealed that British consumers would have to be around £16,000 in debt before worrying that they were in serious financial trouble.

The survey goes on to show that the average respondent would not begin to concern themselves with their finances until they owed almost £16,000 on credit cards and unsecured, personal loans.

The Organisation has said that the figures are a very worrying indication of how acceptable debt has become to the majority of people around the UK. Possibly more worryingly, recent figures from the Bank of England suggest that consumers throughout Britain owed a whopping £214 million from unsecured loans, credit cards and bank overdrafts at the end of November 2010.

The Head of Marketing at Scottish Prudent, Susan Barclay, commented:

“With the UK’s national debt figure dominating the headlines, it appears this could have had an adverse affect on how the nation view their own personal finances.”

Ms Barclay went on to add that to not believe borrowers would be in a serious financial situation before reaching high debt levels of almost £16,000 is a serious concern. She went on to say that is clearly “underlines how debt has become too readily accepted in the UK.”

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