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Are Secured Loans Improving As A Secured Loans Lender Reenters The Market?

Champion Finance, the Glasgow based finance broker, who have been arranging homeowner loans throughout the whole of the UK for twenty six years, now feel that a new glimmer of hope is being witnessed after what has been a very bleak time for the once so buoyant secured loans industry.

During the recession secured loans fell to less than 20% of their position at the start of 2007. Household names such as First Plus ceased trading. By the beginning of 2010 there was less than a handful of secured loan lenders compared to more than twenty before the recession.

Many homeowners who could have benefitted from these products especially for such purposes as debt consolidation could not obtain the homeowner loans they wanted The self employed were especially adversely affected as self certification of income was completely abolished for those requiring a mortgage or a remortgage and two years fully audited accounts are now required by mortgage lenders.

The good news is that Champion Finance can now offer homeowner loans to self employed without accounts, provided that they have been trading for at least six months, can provide three months bank statements and have a maximum LTV of 60% in their property. This is thanks to Link Loans reentering the secured loans sector and offering these loans through respected intermediaries such as Champion Finance who in addition to being in a position to offer a mortgage and a remortgage from the whole of the market also provide debt advice. Link Loans are now strongly funded by RBS and their reappearance must surely indicate the long awaited resurrection of homeowner secured loans.

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Debt Advice Could Help Relieve Money Anxiety

Responding to a survey which found that two thirds of 18-24-year-olds frequently feel stressed or anxious – with money worries being cited as a main cause – insolvency specialists the IVA Advisory Centre said that anyone feeling anxious about their money problems should seek financial advice.

The company added that anyone facing debt problems should speak with an expert debt adviser about ways of clearing their debts.

A survey carried out by YouGov found that 66% of people in the 18-24 age group felt stressed or anxious at least once a week, with money and job concerns cited as the main cause.

Over all age groups, 45% of respondents reported money worries as a main cause of anxiety, with 33% saying the same about their job prospects.

Some said they would seek support from friends or family in this situation, but almost a third (31%) said they kept their worries to themselves.

The survey is by no means the first to link money worries with anxiety. Earlier this year, the London Health Forum estimated that 250,000 Londoners suffer from mental health problems as a result of debt, at a cost of £450m a year to the NHS.

A spokesperson for the IVA Advisory Centre said that anyone feeling anxious due to money problems should seek advice on ways to improve their finances as soon as they can.

The spokesperson added that if financial difficulty leads to debt, the borrower should not hesitate to get debt advice at the first sign of problems.

“Being in debt can be an extremely worrying situation, so it’s no wonder that this has contributed to a lot of worry and anxiety.

“For many people, part of the worry is that they feel like there is no way out. However, there is a lot an expert debt adviser can do to help people in debt, even if the borrower can’t see any way of ever repaying the debt in full.

“In some cases, a few words of advice might be all it takes. Some people find that they can make more room for their debt repayments by keeping to a strict budget, while others might be able to find areas in which they can cut back and reduce their outgoings.

“Of course, not everyone’s problems are as easily solved as that. For people who simply can’t afford to repay their debts, a debt adviser may be able to recommend a debt solution that could help them to reduce their debt repayments to a manageable level.

“For people who can’t afford their existing repayments but can afford to repay the debt in full over a longer period of time, a debt management plan could help. Or, for people who can’t see any way of ever repaying their debts, an IVA could help them to avoid bankruptcy and its potential downsides, such as the repossession of their home.

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Debt Management: The Earlier, The Better

Responding to news that the Credit Services Association (CSA) has agreed that its members will grant 30 days’ ‘breathing space’ to borrowers who have fallen behind on their debt repayments, debt management company Gregory Pennington has advised struggling borrowers to take advantage of the opportunity to seek expert debt advice.

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The CSA, which represents debt recovery agencies in the UK, says the addition to its code of practice is “one of a series of positive measures being introduced […] to ease the pressure on debtors”.

It comes after discussions between the CSA and the Department for Business Enterprise and Regulatory Reform (BERR) aimed at helping the increasing number of people getting into trouble with debt.

The CSA said that it “acknowledged that the present economic environment is placing greater pressure on debtors, and debts are increasingly being passed to agencies for collection”.

Starting from the moment that the borrower informs the debt recovery agency that an accredited debt adviser has been appointed to the case, debt recovery agencies will take no further action to recover the debt for a 30-day period. Borrowers can use this time to establish the best way to tackle their debts, with the assistance of their debt adviser.

Consumer Minister Gareth Thomas said: “This new 30-day rule will give people a breathing space to help them take control of their finances as well as encourage them to seek help from debt advisers.”

A spokesperson for Gregory Pennington said: “This 30-day period will give struggling borrowers some room to do something about their debts before a debt collector will take any action. This has become more important in recent months, with the economic downturn putting pressure on many people’s finances.”

However, the spokesperson reminded borrowers that their situation with debt doesn’t have to go as far as dealing with debt collectors, as taking the right action early can often set the borrower on their way to becoming debt-free.

“A debt collector will rarely get in touch with a borrower unless they have fallen quite significantly behind on their debts. With that in mind, the best course of action for anyone struggling to repay debt is to get in touch with a debt adviser at the first sign of problems.

“Debts can grow very quickly – and the higher the interest rate, the more rapidly they will grow. That means that the further the borrower falls behind on their debt repayments, the more costly it may become.

“We advise that people who are having difficulties with their debts should not hesitate to get expert debt advice. The sooner the problem is addressed, the sooner it can be solved.

The spokesperson added that finding the right kind of debt solution can be a huge step forward for people who are looking to clear their debts.

“There are a number of debt solutions available to help people in various situations with their debts, and a professional debt adviser can offer guidance on the most suitable solution for a borrower’s circumstances.”

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Saving & Debt: Base Rate Should Not Discourage Caution

Commenting on the recent spate of base rate cuts – and the resulting 0.5% base rate – financial solutions company Think Money pointed to the potential implications of the Bank of England’s actions over recent months, and urged savers not to risk debt problems by turning their backs on saving.

“In the short term,” a Think Money spokesperson began, “it’s important to realise that many people – the vast majority of the country – haven’t benefited from these cuts in any way at all. A full 50% of the UK’s 11.75 million mortgages are fixed-rate deals, 40% tracker and 10% SVR (standard variable rate).

“Clearly, anyone on a fixed-rate mortgage won’t benefit any more than someone who’s renting their home. As for SVR deals, lenders aren’t obliged to pass on any reductions, and many have passed on only part of these cuts. Even people on tracker deals haven’t universally seen their interest rates drop by the full 4% since October, as many of those deals have come up against their collar.”

In the longer term, there’s the question of what lessons people will take with them once the recession is over. Many people on fixed-rate mortgages will be looking at the low rates on offer today, calculating how much they could save if they switched and comparing this against the cost of the early repayment charges they would pay if they left their current mortgage early.

“In future, they may be unwilling to sign up to fixed-rate deals – or at least reluctant to sign up to the longer-term fixed-rate deals which come with more substantial charges for early repayment.

“In other words, some may be tempted to sign up to a tracker or SVR deal the next time the base rate reaches 5 or 6%, believing that another fall will soon follow. There’s nothing inherently wrong with variable deals, but they’re not suitable for everyone: people whose monthly finances can only just cover their mortgage payment should think very carefully before committing themselves to a deal with an interest rate that could go up as easily as down. For people in that situation, erring on the side of caution – and taking a fixed-rate mortgage – could be far more sensible.”

The other long-term effect of these base rate cuts, of course, could be in the country’s attitude to savings. Now that the average interest rate on instant access accounts has plummeted to little more than 0%, interest is simply not keeping pace with CPI (Consumer Price Index) inflation – and for people who aren’t paying variable mortgages, this figure is more relevant than the RPI (Retail Price Index) measurement.

“We would, however, stress that interest is by no means the only reason people should build up their savings. With or without interest, a savings account is its own reward, helping people cope with financial challenges without running into debt problems.

“Even so, the thought of watching savings shrink in real terms may be enough to put many people off saving in a standard savings account. This could be terrible news: whether they stop saving altogether or feel they need to ‘gamble’ their money in higher-risk investments, they could be leaving themselves open to all kinds of debt problems in the future.”

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Debt Advisers Direct Have Underlined The Importance Of Seeking Debt Advice Before Financial Problems Reach The Stage Where They’re Insurmountable

“In the midst of a recession, professional debt advice has an even greater role to play than usual,” said Melanie Taylor, Head of Corporate Relations for Debt Advisers Direct. “With repossession and unemployment figures rising and many households living with the threat – or the actuality – of reduced income, people across the country are realising that once-manageable debts are suddenly taking up much more of their monthly budget. In many cases, the strain is simply too much.”

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The insolvency trade body R3 recently expressed its concern ‘that those with financial problems do not think they ‘need’ debt advice‘. Quoting from YouGov’s quarterly ‘DebtTracker’ of February 2009, R3 pointed out that only 37% those who had fallen behind with many bills or credit commitments had actually taken action and sought debt advice in the previous six months.

Of those who acknowledged that they were struggling with bills and commitments, a full 65% were of the opinion that they simply did not need advice about their financial problems.

“It’s alarming to see so many people in trouble and not looking for help,” Mrs Taylor continued. “Financial problems rarely resolve themselves unless the individual takes positive action. Clearly, many people are able to do so on their own, but while it’s good for people to have confidence in their skills, even the most financially capable people may find they benefit from the insights which someone who specialises in debt could supply.

“Particularly worrying is the thought of people who desperately need to look for debt advice but have yet to do so – either because they’ve not realised the severity of their financial problems or because they’re nervous about asking for help.

“Regarding the first of these two groups, we would like to stress the need for everyone to keep a close eye on their income and expenditure at all times – and this is especially important during challenging economic times when incomes are more likely to fluctuate and access to debt solutions such as debt consolidation or remortgagingmay be relatively restricted. One call to a debt adviser should help them gain some clarity on their situation, helping them understand exactly where they stand and what their options may be.

“Regarding the second group (those who acknowledge their financial problems but may be embarrassed about seeking help), we would like to make three specific points. First, that there are plenty of people in their situation; second, that debt advisers are there to help, not to judge; and third, that the solution to their debt problems could well be much simpler than they expect.

“Many people don’t want to face up to their debt problems because they dread hearing that bankruptcy, repossession, or some other ‘extreme’ scenario is the only way forward. In the vast majority of cases, however, these fears are unfounded. It’s true that there were 10,400 repossessions in the final three months of 2008, yet this only represents 1 in 1,100 mortgages – just as the 19,000 bankruptcies in that period represent an extremely small percentage of the people facing debt problems.

“Once they take the step and talk to a debt adviser, borrowers may be surprised to realise their lenders are willing to consider ways of repaying their debts in a way that’s actually quite manageable.

“Nonetheless, the earlier they seek debt advice, the more options they’ll probably have open to them. By taking action sooner rather than later, they’re likely to save themselves a great deal of time and worry, as well as money (in the form of fees, legal costs and interest charges).”

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Debt Advice Important For Struggling Borrowers

Responding to news that total personal debt levels in the UK have risen over the past year, Debt Advisers Direct have warned of the dangers of getting into debt in this difficult time for the economy, and advised anyone who finds themselves struggling to repay debt to seek expert debt advice.

Debt Advisers Direct

New lending figures released by the Bank of England this week revealed that total personal debt in the UK stood at £1.458 trillion at the end of February – a rise of £34 billion compared with the previous year.

That means that despite increased caution amongst financial institutions with regard to lending, the average UK adult has taken on approximately £680 in additional credit over the past year.

However, Bank of England statistics also show that the rate at which personal debt is growing has slowed compared with February 2008, when the total increased by £111 billion compared with the previous year.

A spokesperson for Debt Advisers Direct commented: “A £34 billion increase in total personal debt may surprise some people, given the relatively cautious nature of the lending industry over the past 18 months, even though it is only around a third of the levels seen in the previous year.

“On the one hand, it may suggest that the market for loans and mortgages is not as difficult as many people believed. Lenders have still issued a relatively large amount of money in the past year.

“On the other hand, it could also indicate that people are making more use of the credit they already had. For example, whereas people may have used their credit cards and overdrafts sparingly in the past, many people who have been put under pressure by the economic downturn may have found it necessary to spend more on credit.

This is fine in the short term, so long as those debts are repaid, but if the borrower can not afford to repay those debts in full, then the situation can become more serious.”

The spokesperson added that consumers could benefit from avoiding getting into debt wherever possible, and ensuring that they promptly pay back any credit they do use.

“With more people currently at increased risk of redundancy or a reduction in income, it makes sense for people to ensure that their finances are well prepared for the future. For most people, that should involve reducing debts wherever possible.

“Of course, that is difficult for people whose finances are already stretched to their limits. We have seen massive rises in many essential costs of living over the last 18 months, which have led to many people falling behind on their commitments.

“That’s where a professional debt adviser can help. There are a number of debt solutions that can help people in difficult financial situations to reduce their debts and make their monthly outgoings a lot more manageable. It’s important that anyone who finds themselves struggling to repay their debts seeks debt advice as early as possible to prevent the problem from becoming any worse.”

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Workers Must Ensure They Are Prepared For Pay Cuts Says Gregory Pennington

In response to a new report claiming that 70% of UK companies may be planning to freeze or cut wages this year in an attempt to get through the recession, debt management company Gregory Pennington has advised workers to take what steps they can to prepare for any potential reduction in income.

The company added that anyone with debts to their name could be at a disadvantage if their income is reduced, and as such they should look to address their debts as a matter of priority.

The latest monthly business survey by the British Chambers of Commerce (BCC) claimed that of 400 companies questioned, around 70% planned to freeze or cut wages later this year.

58% of companies said they planned to freeze wages this year, while 12% planned to actively reduce wages.

Most of the rest of the companies, however, planned wage increases of between 1% and
3%, with almost one in ten companies saying they would raise wages by more than 3% –
suggesting some areas of business are not struggling, despite the recession.

Even so, half of the companies were considering making staff redundant in the next six months in an attempt to survive the economic downturn, according to the survey.

A spokesperson for Gregory Pennington said that despite some surprising optimism amongst the 9% of companies which would be raising salaries, most people would be best advised to ensure that their finances are as healthy as possible in preparation for the next few months.

“We are in a difficult situation, in which many costs of living are rising rapidly while the equity in our homes is falling. Along with the prospect of high levels of unemployment, it’s unclear whether the situation will get better or worse in the coming months.

“In any situation involving that kind of uncertainty, it’s especially important that people are quick to ensure that their finances are in the best possible shape for getting through potentially difficult times.

“Perhaps the most important factor is savings. People with savings have a ‘safety net’ they can fall back on if they find their finances are hit particularly hard, and this could help families and individuals alike to compensate for any reduction in income.

“However, getting on top of any debts is also very important – and if the borrower has savings they can fall back on, it’s often most important that those savings are used to repay their debts. The logic behind this is simple – the interest on debt usually grows more quickly than the interest on savings, so the borrower will spend less overall by paying off their debts as quickly as possible.

“However, workers need to consider this carefully. If they are facing potential redundancy, they may wish to hold on to their savings so that they can continue to repay their priority debts, such as their mortgage.”

The Gregory Pennington spokesperson added that there are many people who may be experiencing problems with debt who do not have any savings to fall back on – and those people should seek debt advice as soon as possible.

“A lot of people may be facing a reduced income or even redundancy with little or no savings. If those people also have debts to repay, the situation can be quite worrying.

“However, a professional debt adviser can help people to find the best way of tackling their debts – which can offer a lot of relief in difficult times.”

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The Importance of Keeping on Top of Mortgage Payments

Responding to the news that the number of homeowners falling behind on their mortgage payments has risen by almost a third (31%) in the past year, debt consolidation company DebtAdvisersDirect.co.uk has emphasised the importance of keeping on top of mortgage payments, adding that a mortgage should be the top priority for any homeowner.

The company added that borrowers who are having difficulty with their mortgage payments should seek expert debt help as soon as the problem emerges.

The latest figures from the FSA (Financial Services Authority) showed that there were 377,000 borrowers in arrears on their mortgages at the end of 2008 – up 10% in the final quarter alone, and 31% higher than the same period in 2007.

The figures refer to mortgage accounts in arrears by 1.5% or more of the borrowed balance, roughly equivalent to arrears of at least three months.

The figures mean that 3.4% of all mortgages were in arrears at the end of 2008, compared with 2.3% at the end of 2007. Meanwhile, new repossessions increased by 60% compared with the same time period in 2007.

A spokesperson for Debt Advisers Direct said: “We would expect an increase in the number of homeowners falling behind on their mortgage debt in recent months, but these statistics show just how quickly it is occurring.

“Considering the economy is potentially about to enter a more severe stage of the recession, it’s very important that homeowners are careful with their finances and avoid falling behind on their debt repayments.

“In particular, a mortgage should be the number one priority for any homeowner. It is important that all debts are repaid on time, but a mortgage pays for the borrower’s home – and as such, failing to keep up on payments could eventually result in the home being repossessed.”

The spokesperson also said that if other debts are making it difficult to pay the mortgage, a professional debt adviser may be able to recommend a suitable debt solution that could make the borrower’s unsecured debts more manageable.

“There are few debt solutions that deal directly with mortgage repayments, although in some cases a debt adviser may be able to negotiate with mortgage lenders for a reduction in payments. However, a debt solution that deals with the borrower’s unsecured debts could reduce the homeowners monthly outgoings, and therefore make it easier for them to meet their mortgage payments.”

The Debt Advisers Direct spokesperson added that if the situation becomes more serious and the homeowner cannot see a way of repaying their debts in full, an IVA (Individual Voluntary Arrangement) could help them avoid bankruptcy by paying off an agreed percentage of their debts, and therefore help them avoid losing their home.

“If the homeowner can agree a repayment plan for their mortgage arrears, then an IVA can be arranged around that, meaning both the homeowner’s mortgage and their unsecured debts are taken care of.”

However, the spokesperson was keen to emphasise the importance of speaking to a professional debt adviser before deciding on any debt solution.

“Different debt solutions are more appropriate for people in different situations, and equally they all have their drawbacks. An expert debt adviser can help to explain the pros and cons of each debt solution, to help the borrower in establishing which debt solution is best suited to their individual needs.”

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New Report Suggests That The Available Incomes Of Households Have Fallen Significantly Over The Past Year

Responding to a recent report suggesting that the average household had found it more difficult to repay their debts in 2008 than in the previous year, Debt Advisers Direct have warned consumers to take extra care with their finances. In financial terms, January can be a particularly difficult time, as many households find they’ve spent more than intended over the Christmas period – and Debt Advisers Direct have advised people struggling with debt to seek professional debt advice as soon as possible.

A new report for the Bank of England entitled ‘The financial position of British households’, carried out by NMG Research, is a snapshot of the financial situations of the average British household at the end of September and beginning of October.

The report claimed that the average household had found it more difficult to service existing debts than in the previous year, largely due to higher household bills which reduced ‘available’ incomes. It also said that the purchasing power of this available income had reduced due to high inflation.

More than half of the households in the survey had reported a fall in their monthly available income compared with the previous year.

In total, of those questioned:

• 31% reported a fall of more than £100 per month,
• 20% reported a fall of £51 to £100,
• 12% reported a fall of £1 to £50,
• 25% reported no change, and
• the remaining 12% reported an increase in ‘available’ income.

A spokesperson for Debt Advisers Direct commented: “It’s been known for some time that British households have been under pressure financially in the past year, but these figures demonstrate the extent of the problem. In particular, a drop in available income of more than £100 can make a significant difference to the ability of households to meet their commitments and repay debts.”

The fall in available income was particularly evident amongst homeowners. In both high-LTV and low-LTV categories, 39% of mortgagors reported a fall of more than £100, while a further 19% reported a fall of £51 to £100.

The report suggested that this may have been due to homeowners experiencing higher mortgage costs, especially those who came to the end of fixed-rate or discounted variable-rate mortgage deals.

“Due to rising mortgage costs earlier in the year, homeowners have been particularly
hard-pressed, although this situation may have eased since the figures were recorded due to base rate cuts and the subsequent lower mortgage rates,” the Debt Advisers Direct spokesperson said.

“The implications for homeowners are potentially more serious, since homeowners stand to have their homes repossessed if they default on mortgage payments. Homeowners who are paying relatively high interest rates could improve their situations through remortgaging, although they should consider any costs involved.”

The Debt Advisers Direct spokesperson added that there are a number of debt solutions available that could help those who have experienced a fall in available income.

“For people with several debts who want to reduce their outgoings and simplify their
finances, a debt consolidation loan might be the best option,” she said. “By spreading the repayments out over a longer period of time than the original debts, monthly payments can be lower, which can make a big difference to available income. However, more will be paid in interest as a result of the longer repayment period.

“For those with more serious debts, particularly if the repayments exceed the household’s available income, a debt management plan could help. This involves working with a debt adviser to negotiate lower monthly payments based on how much they can afford. However, a debt management plan will normally require people to pay whatever available income they have left after payments to household expenses have been taken into account, so anyone entering a debt management plan should be fully committed to repaying their debts.”

For debt help and advice on a range of debt solutions, visit the Debt Advisers Direct website or call 0800 074 8639.

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Debt Advisers Direct remind consumers with debt problems of the importance of seeking debt advice early on, before their finances are further affected by the recession

Commenting on the nation’s economic troubles, Debt Advisers Direct stressed the importance of seeking debt advice in time, before debt problems can escalate out of control.

“Whatever the economic climate, it always makes sense to address debts at the first sign of trouble,” said a spokesperson for the company. “During times of economic uncertainty, it’s more important than ever.

“The problems in the housing market alone pose a significant threat to the livelihoods of people in all walks of life. What was initially seen as an issue for estate agents has grown to affect builders, movers, decorators, furniture stores and so on – after months of negative news from companies directly linked to the housing market, we’re now hearing of problems in a much wider range of industries.

“With so many either out of work or facing the possibility of unemployment, people are spending less and problems in the housing industry are spilling over into the high street, placing even more jobs at risk – at a time when new employment may be hard to find.

“Coping with a period of reduced income is never easy, but people with high levels of debt are far more likely to experience financial problems almost as soon as their income drops.

“This underlines the need to tackle debt problems sooner, rather than later. Many people with smaller debt problems may find a chat with a debt adviser could help them get on top of their finances without making any major lifestyle changes. Once the adviser understands their financial circumstances, they should be able to provide some budgeting advice and suggest practical ways of reducing their level of debt.

“When it comes to more serious financial problems, however, many people are put off by the sheer size of their debts. Someone who owes tens of thousands of pounds may not feel there’s anything they can do to make an appreciable ‘dent’ in their debts.”

In most cases this is unlikely to be true: “However much they owe, they may still have a range of options, depending on their circumstances. A debt consolidation mortgage, for example, could be right for someone who wants to reduce their monthly outgoings and simplify their finances, while an IVA (Individual Voluntary Arrangement) could help someone who literally can’t keep up with their debt repayments – and who can’t realistically expect to repay their debts in a reasonable timeframe.

“We were very pleased to see the emphasis which the Chancellor’s Pre-Budget Report placed on debt advice – the Government is dedicating more than £15 million of additional funding to ensure people can access debt advice when they need it. Similarly, we were pleased to see certain credit card providers and mortgage lenders extending a ‘grace period’ to people who fall behind on their repayments.

“Even so, we remind borrowers how important it is to talk to a debt adviser before things reach the stage where they’re missing payments of any kind: taking steps to tackle their debt today is virtually certain to improve their chances of getting through the recession with their finances in a good state.”

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Think Money Have Advised Consumers To Avoid Getting Into Debt Wherever Possible This Christmas, With The Recession Threatening To Put Further Pressure On The Finances Of British Households In 2009

Financial solutions company Think Money have warned consumers to be careful over the amount of debt they incur over the festive season, in order to avoid potential debt problems in the midst of an economic recession.

They have also advised those consumers who do rely on credit to act early and tackle any debts before they have the chance to grow, and to be selective over the types of credit used in order to prevent the debts from becoming unmanageable.

For many families in the UK, including those who are usually comfortable financially, the Christmas season has become associated with debt. The tradition of spending large amounts of money on food and gifts has meant that large numbers of households fall into debt every year, even if it means spending a large part of the following year repaying those debts.

Indeed, a survey taken earlier this year by Savebuckets.com suggested that one in four Christmas borrowers were still repaying their Christmas debts in the following October – nine months after the money was originally spent.

A debt expert for financial solutions company Think Money commented: “In today’s society, many households actually expect to get into debt in order to get through the Christmas season – which can put them at risk of debt problems in the future. It’s much safer to focus more on how to avoid falling into debt – and with the right preparation and attitude, it is very much possible to do that.”

The spokesperson added that staying out of debt over the Christmas period does not necessarily have to mean cutting back on costs. “The households who are best prepared for the Christmas period are those who have thought about it long in advance and have been saving throughout the year. By saving just a relatively small amount each month, it’s quite possible to save enough to cover all the costs involved, without having to compromise.

“However, it seems that it is currently more common to pay with credit in the run-up to Christmas. This may have been fuelled by the relatively easy access to credit of the past few years, although due to the credit crunch, this may be a little more difficult this year.”

The spokesperson also said that the type of credit used can be crucial to consumers’ ability to repay the debt. “For those consumers who do rely on credit over the Christmas period, choosing the right form of credit is a simple step that can make all the difference.

“For example, it’s generally unadvisable to make large purchases on credit cards unless the buyer is absolutely sure they will be able to repay the debt in a short space of time. The APR on credit cards is typically very high, which means the debt can grow very quickly unless it is repaid promptly.

The Think Money spokesperson added that anyone finding themselves struggling with debt should seek debt advice straight away. “There are a number of debt solutions that can help to minimise outgoings and/or help to reduce debts, such as debt consolidation or an IVA (Individual Voluntary Arrangement). We urge anyone in serious debt to seek professional debt advice as soon as possible.”

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Debt Management Company Gregory Pennington Have Advised Anyone Currently Struggling To Repay Debts To Seek Professional Debt Advice

Responding to a new report from PricewaterhouseCoopers suggesting that over a quarter of borrowers are worried about their ability to repay debts, debt management company Gregory Pennington has advised consumers that all forms of borrowing should be planned well to ensure that the debts can be repaid, and has encouraged anyone struggling to repay their debts to seek professional debt advice.

The Credit Confidence Survey by PricewaterhouseCoopers suggested that over one in four people (27%) are worried about their future ability to repay debts, while 20% of UK credit customers are worried about the future availability of credit – suggesting a reliance on credit to pay off existing debts.

16% of those questioned reported that they were already struggling to make debt repayments, “very few” of whom have considered options to restructure their debt, such as a debt management plan.

The report also found:

• Unsecured borrowing has actually risen by 6% compared with last year – although secured borrowing has fallen ‘dramatically’
• Insolvencies increased by around 9% in the third quarter of 2008, compared with the second quarter
• Every working hour, over 100 adults enter into bankruptcy, an Individual Voluntary Arrangement (IVA) or start a Debt Management Plan

A spokesperson for Gregory Pennington commented: “Although the survey on the whole represents good confidence levels amongst a lot of borrowers, the fact that over one in four borrowers are worried about their future ability to repay debts highlights the importance of future planning when it comes to borrowing.

“One of the most important steps for borrowers to take before taking out a loan is to establish how much they want to borrow and how much they can afford to repay each month. There is also the matter of how long the repayment terms should be – the longer the terms, the more time there is in which the borrower’s circumstances could change, and a change in circumstances could affect their ability to make repayments.

“Of course, there are many cases in which unforeseen circumstances prevent borrowers from repaying their debts, such as unemployment or a fall in earnings.

“Whatever the reason, anyone struggling to repay their debts should take decisive action as early as possible. A debt adviser can provide information on a range of debt solutions that can help to minimise monthly outgoings, which could be crucial to those hard-pressed by the current economic situation.

“For example, a debt management plan through a professional debt adviser can enable people to pay back their debts at a more manageable pace, while reducing or freezing interest and other charges. However, this can mean the debts take longer to repay than originally planned.

“Alternatively, a debt consolidation loan can ‘group together’ the borrower’s debts, meaning they pay one creditor instead of many. A debt consolidation loan can also be spread out over a longer period of time than the original debts, meaning monthly outgoings are reduced – although this can mean paying more interest in the long run. However, if the borrower is consolidating high-APR debts such as credit cards, the lower interest rate can often mean that less interest is paid overall.

“For more serious debts, typically of £15,000 or higher, an IVA (Individual Voluntary Arrangement) might be the most appropriate option. An IVA involves working with an Insolvency Practitioner to draw up a proposal for lower debt repayments based on an amount that the borrower can afford. This normally continues for five years, and on successful completion the remaining debt is considered settled.

“As with anything debt related, it’s always advisable for borrowers to speak to an expert debt adviser before deciding on the appropriate solution for their debts.”

Via EPR Network
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Following the first rise in consumer confidence since December 2007, debt management company Gregory Pennington have said that while this may bode well for the health of the economy in some respects, it is by no means a sure sign of economic recovery, and consumers should not be complacent about their finances in the coming months

Following the announcement from Nationwide Building Society that consumer confidence has improved for the first time since December 2007, debt management company Gregory Pennington commented that this is an encouraging sign that the Government’s recent actions aimed towards economic recovery may be working, but warned consumers that difficult times may still lie ahead – and those facing financial worries, particularly debt problems, should tackle those issues as soon as possible.

Nationwide’s overall Consumer Confidence Index (CCI) rose 8% in the month, bringing the index up from 51 in September to 55 in October. Most significantly, this is the first rise since December last year – a sign that some form of economic recovery could be on the horizon, possibly as a result of the recent Government bank bailout scheme.

The number of people who thought the economy would be performing better in six months time almost doubled from 14% in September to 27% in October.

However, Nationwide’s figures showed slightly less optimistic opinions amongst consumers regarding the current state of the economy: three quarters (75%) of those questioned believed the current economic situation is bad, compared with two thirds (66%) in September.

A spokesperson for debt management company Gregory Pennington said that increased consumer confidence for the future is encouraging, but added that consumer confidence should not be confused with expert’s predictions.

“The Consumer Confidence Index is to do with how people feel,” she said. “It’s likely that consumer confidence has improved on the back of the recent Government bank bailout scheme, as well as cuts in the base rate. But that doesn’t necessarily mean we are much more likely to avoid any of the issues highlighted by economists in recent months.

“On the one hand, consumer confidence is very important for the economy and could be pivotal in terms of how soon and how quickly the economy recovers. When consumer confidence is high, people are more willing to spend their money and less inclined to save, therefore pumping more cash into the economy and maintaining a healthy cycle. Conversely, when consumer confidence is low, less money flows through the economy – and that puts the economy at risk of recession.

“The Consumer Confidence Index is a reasonable indicator of how the economy could fare in the coming months, as long as attitudes remain the same. But it doesn’t tackle the underlying issues that continue to threaten the economy – issues which could cause consumer confidence to fall back down.”

The spokesperson added that even though consumer confidence on the whole is recovering, there are many people facing financial hardship due to fast-rising inflation over the past year, many of whom find themselves struggling with debt.

“We have been through an unusual situation for the economy over the past year, in which affordable living costs suddenly became unaffordable for many households,” she said. “The sharp rises in food, energy and petrol prices have prompted many people to cut back, but many people who were already stretched financially may have been forced into debt in order to make ends meet.

“We advise anyone who finds themselves struggling with debt to seek professional debt advice. The right form of debt management could help to bring down monthly outgoings and really relieve the pressure on those hardest-pressed by the financial crisis.”

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The Government’s ‘Energy Package’ May Help Some People Stay Warm This Winter, But It Is Not Enough To Address The Immediate Financial Problems Caused By High Energy Prices

Responding to the government’s ‘£1 billion energy package’, debt consolidation experts Debt Advisers Direct reminded consumers of recent comments by leading charities Help the Aged and the National Housing Federation.

Despite enabling households ‘to take advantage of help that could save them over £300 every year on their energy bills’, the package met with a lukewarm reception: “Individual changes which have been flagged by the Prime Minister are sensible and move in the right direction,” said Mervyn Kohler, Special Adviser at Help the Aged. “However, they are too little, too modest and will take too long to address the urgent plight of many pensioners today.”

The energy package includes:
· Free loft and cavity wall insulation for some; half-price insulation for others.
· Increased Cold Weather Payments (paid during particularly cold periods) from £8.50 to £25 per week.
· An increased Winter Fuel Payment (either £50 or £100 more).
· Potentially discounted tariffs by the end of the year for ‘around 600,000’ customers, many of whom will have a price freeze this winter

“The measures announced by Gordon Brown may provide some help, but must be seen in context,” a spokesperson for DebtAdvisersdirect.com commented. “The average annual energy bill is widely expected to be more than £1,400 next year – more than twice what it was in 2005. While everyone appreciates the importance of long-term improvements to energy efficiency, recent price increases of up to 35% have left many with immediate financial problems.”

To quote from The Press Association website: ‘Soaring energy bills will push one in 10 households into debt with their fuel supplier by the end of next year, experts have warned. The National Housing Federation said hikes in the cost of gas and electricity would force many low-income families to have to choose between heating their homes or eating this winter.’

The right debt solution, however, could help borrowers afford both. “Part of the problem today is the sheer number of price rises we’ve seen in the past year,” said theDebtAdvisersDirect.com spokesperson. “Not just energy prices, but others such as food, rent and petrol.”

“People with credit commitments can be hit particularly hard by this – even after they’ve paid their rent / mortgage, food, fuel, etc, they still need to find the money to service their ongoing unsecured debt repayments. In many cases, this is simply impossible, and reducing those monthly debt payments is the only way forward. This is where debt consolidation can make a big difference.”

A debt consolidation loan is a simple idea. By consolidating multiple unsecured debts into a single, large debt, borrowers can reduce the amount they’re paying each month: “Their monthly repayments may have seemed reasonable when they first took out credit, but the recent increases in basic living costs have dramatically reduced the average consumer’s disposable income.”

Debt consolidation gives borrowers a chance to re-assess their finances and the speed at which they can pay off their debt by calculating how much they can afford to put towards their debts in today’s economic environment. “As with any debt solution, a debt consolidation loan comes with both pros and cons, so it’s vital to seek professional debt advice before making a decision.”

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Whatever Financial Problems An Individual Is Facing, It’s Crucial They Seek Debt Advice As Soon As Possible

Debt specialists GregoryPennington.com remind consumers with debt problems of the need to seek debt advice on time.

“Whatever their nature, virtually all financial problems have one thing in common: they get worse if left unaddressed,” says a Gregory Pennington spokesperson. “Whether someone’s behind on their mortgage payments or struggling to keep up with credit card bills, all the experts agree that the sooner they seek debt advice, the better their chances of clearing their debts as quickly and painlessly as possible.”

At the moment, mortgage payments are at the forefront of many homeowners’ worries. “The Council of Mortgage Lenders (CML) has reported 18,900 repossessions in the first half of the year, signifying a year-on-year increase of 48%. Given their forecast of 45,000 repossessions in 2008, this means they expect over 25,000 more before the end of the year.”

With timely debt advice, however, many of those potential repossessions needn’t happen at all. In a video on the BBC’s website, Judge Stephen Gold (Kingston-upon-Thames County Court) states: “The big message which I think needs to be screamed from the rooftops of the County Courts is this: that if you get into difficulty with your mortgage, don’t bury your head in the sand. Engage with the lenders. Pay what you can.”

“For unsecured debts,” the Gregory Pennington spokesperson continues, “the principle is essentially the same. When people contact us for debt advice, we stress that simply talking to a lender – whether they do it themselves or we do it on their behalf – can often produce results. A lender might agree to accept lower payments, for example, or to reduce the interest rate on a loan. It’s in the lender’s interest to arrive at an arrangement which the borrower can afford, so the money can be repaid as soon as realistically possible.

“Before they grant any concessions, of course, most lenders will want to see that the borrower is doing their utmost to order their finances and repay the debt. So the debt advice we provide goes a long way beyond ‘Talk to your lender’: we help people with all sorts of financial issues, from improving their budgeting skills to understanding their rights and responsibilities in relation to different kinds of debt.”

“If the individual’s situation has reached the point where debt advice simply isn’t enough, we can help them choose the debt solution that offers the best way out of debt. Depending on their circumstances, that could be a debt management plan, in which we talk to their unsecured lenders on their behalf, negotiating changes to their repayment terms so they can clear their debt at a rate they can afford.”

In cases where debt management isn’t appropriate, an IVA (Individual Voluntary Arrangement) or Trust Deed could be the answer: helping people reduce their monthly debt payments, these debt solutions can free up the money they need for mortgages payments, food bills and other essential living costs.

“Everyone’s circumstances are different, and no debt solution is ‘better’ than another – it’s a question of which is the most appropriate for that particular person under those particular circumstances. As always, the most important thing is for them to seek debt advice as soon as possible, before any further financial problems restrict the range of options open to them.”

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Despite The Reduced Availability Of Credit, A Debt Consolidation Loan May Still Be A Viable Option For Worried Borrowers

Amid worries about the reduced availability of credit, debt consolidation experts DebtAdvisersDirect.co.uk stress that lenders are still offering debt consolidation loans and other forms of credit.

A spokesperson commented: “With inflation more than twice the Bank of England’s target, people in debt are particularly worried about stretching their household budget further and further, especially when talk of an economic slowdown is threatening to reduce many consumers’ income levels as well. When there simply isn’t enough money in the monthly budget, a debt consolidation loan or other debt solution could take the pressure off.

“In recent years, the easy availability of credit has led many people to turn to debt consolidation loans as a way of reducing both their monthly debt repayments and the complexity of their finances. So the Bank of England’s Q2 2008 Credit Conditions Survey makes disturbing reading.”

The Survey provides a summary of what ‘bank and non-bank’ lenders have seen over the past three months, and what they expect for the coming three months. It reveals that lenders had reduced the availability of both secured and unsecured credit to individuals and expected ‘some additional reductions in credit availability over the next three months’.

“The key word here is ‘reduced’,” the spokesperson continued. “The Survey shows that the availability of secured credit, for example, was down around 45% in Q2, with lenders tightening credit scoring criteria and decreasing maximum LTV (loan to value) ratios. Although it’s a significant reduction, it does not mean credit is unavailable. As long as they have sufficient equity in their home – and as long as they approach a lender who specialises in helping people in their situation – many people still stand an excellent chance of obtaining a secured debt consolidation loan.”

Looking ahead, however, lenders do anticipate a further reduction in the availability of secured credit. Even though they expect Q3’s reduction to be smaller (just over 20%), the cumulative effect could well make it harder for certain people to access the debt consolidation loans they need in the months ahead.

Where debt consolidation isn’t an option, alternative debt solutions may still be available. Debt management, for example, can be an effective way for someone in debt to bring their expenditure back in line with their budget without accessing any further credit. “When someone joins a debt management plan, they essentially ask debt specialists to renegotiate their repayment terms. This can bring their monthly debt repayments down to an affordable level, freeing up the funds they need to cope with the rising cost of living.”

Should debt management not be appropriate, an individual may still be eligible for an IVA (Individual Voluntary Arrangement), a legally binding agreement with their creditors. “In an IVA, the individual agrees to make fixed monthly payments, based on what they can afford after essential living expenses, for the duration of the IVA – normally five years. If 75% of the creditors (by debt value) consent to the terms of the IVA, they’ll agree not to take any legal action against the individual, and to write off any remaining debt once the IVA has successfully concluded.”

Whatever an individual’s circumstances, the spokesperson stressed, their first move should be to contact a debt specialist as soon as possible: “In the vast majority of cases, debt problems only get worse when they’re ignored. The important thing is to seek professional debt advice as soon as you realise you have a potential problem.”

About Debt Advisers Direct
http://debtadvisersdirect.co.uk helps people with financial difficulties, providing debt advice and tailor-made debt solutions.

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DebtAdvisersDirect.co.uk warn that recent large increases in the price of gas could seriously affect people in debt.

Following recent increases in the price of gas, debt consolidation experts DebtAdvisersDirect.co.uk warned of the probable impact on those already struggling to cope with higher living costs, economic uncertainty and record levels of personal debt.

Shortly after EDF Energy’s announcement of its decision to raise gas prices by 22%, British Gas owner Centrica announced an increase which would see the average gas bill rise by 35%, taking a ‘standard’ annual £650 bill up to almost £900.

“In itself,” said a spokesperson for DebtAdvisersDirect.co.uk, “this increase could be enough to push certain households into debt – or further into debt – but this is by no means an isolated instance. Today’s consumers are facing substantial increases across the board, from food and petrol to gas and electricity. The cumulative effects can be devastating: for many, there may simply be no way of finding another £227 per year, which works out to almost £5 per week.”

Zoe Mcleod of independent charity National Energy Action summed it up as follows: “Centrica is the second energy supplier to put its prices up. We expect this sequence to continue across all suppliers forcing more than 1 million households in England into fuel poverty. Across the UK fuel poverty could affect 6 million households by the end of the year.”

Despite British Gas’ reassurance that the increase would be postponed until April for the 340,000 customers who qualify for its ‘Essentials’ tariff, the effect on millions of other customers will be immediate. “With so many demands on their budget, consumers are facing some tough decisions,” the DebtAdvisersDirect.co.uk spokesperson continued. “They may feel forced to ‘juggle’ their debts using credit cards, or even to neglect some bills so they can pay others.

“As debt advisers with 15 years’ experience, we strongly advise against either course of action. However serious someone’s debts are, there are far better ways of handling them. The important thing is to seek expert debt advice – and to do it sooner, rather than later.”

In many cases, the right debt advice can help people cope with the extra strain on their finances: “Some people may be able to free up the necessary extra funds by learning to budget more effectively, or by renegotiating payments to their creditors. For others, however, no amount of debt advice will be enough – if their budgets are already stretched to the limit, they may need to look into professional debt solutions, such as a debt management plan or debt consolidation loan.

“In today’s economic climate, of course, the kinds of debt help available may be limited, as problems in today’s credit market are keeping some people from accessing the debt consolidation loans that could help them regain control of their finances. In cases like this, an alternative debt solution may be more appropriate.

“Debt management, for example, relies not on access to further credit but on negotiations between an individual’s creditors and the debt management professionals who ask them to accept lower monthly payments and grant other concessions. As always, we would recommend that anyone in financial difficulty seek professional debt advice as soon as possible.”

Via EPR Network
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Gregory Pennington advise people to stay on top of their finances

As the credit crunch reaches the end of its first year, debt management company Gregory Pennington (http://www.gregorypennington.co.uk) have advised people to keep on top of their finances, and warned that there may still be tough times ahead.

A spokesperson for Gregory Pennington said: “While studies suggest some of the country feel they have not yet been affected too badly by the credit crunch, these people may begin to feel the effects as future events unfold.”

A recent survey in The Times revealed that 66% of those asked felt their family would fare badly over the next year, while 77% felt the country as a whole will suffer. The spokesperson said that while these views are probably justified, there is still a lot people can do to lessen the effects of the credit crunch.

“The most important thing is staying on top of your finances,” says the debt solutions company. “Make sure you are meeting all your priority financial commitments before anything else, and try to build a budget around that. If you find you can’t meet those commitments, seek expert advice as soon as possible.

“We would also advise people to save as much as possible, because that little bit extra could come in very useful if things get tight.”

The fact that the remaining 34% of people questioned in the survey did not feel (or weren’t sure) that their family would suffer over the next year suggests that the credit crunch has not necessarily affected everyone. But the Gregory Pennington spokesperson warned that other problems linked to the credit crunch may start to kick in over the next few months.

“It’s important to distinguish between the different elements of the economic downturn we’re currently experiencing,” he said. “The credit crunch primarily affects people looking for credit – particularly homeowners, who may be faced with large arrangement fees or higher payments when they remortgage, and also those looking to obtain loans and new mortgages.

“People who aren’t reliant on credit, or homeowners who have a long-term fixed rate on their mortgage, may well have been largely unaffected – so far.

“But it’s now very possible that we will see the knock-on effects of the weak housing market combined with rising costs of living – higher unemployment, increasing amounts of people struggling to meet their comments, and more people facing problems with debt.

“Even if it does get to that stage, there are still things you can do. Seeking professional debt advice from an expert debt adviser is essential if you find yourself in financial difficulty.

“There are a range of debt solutions available to meet different situations, including debt management plans, IVAs (Individual Voluntary Arrangements), debt consolidation loans and remortgages, etc. One of these could be a lifeline if you find yourself with unmanageable debt, which is a growing threat in the current economic climate.”

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