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Credit Cards, Debts, Financial, Financial Management, Financial Services, Loans, Money, Personal Finance

Homeowners Could Benefit From Latest Fixed-Rate Deals

Now could be a good time to find a new fixed-rate mortgage deal, according to financial solutions company Think Money.

With rates on many fixed-rate deals recently falling – and with uncertainty over when the base rate could rise – fixed-rate mortgages could become an increasingly attractive option for homeowners.

In July, Yorkshire Building Society cut the rate on its best five-year fixed-rate deal to a market-leading 3.49%, with an arrangement fee of £995. Borrowers who don’t want to pay this much up front can get a rate of 3.69% with a £95 arrangement fee.

According to Moneysupermarket, the best five-year fixed-rate deals before this offered rates of 3.79% (Chelsea Building Society) and 3.89% (Nationwide). Even those deals carried lower rates than many of the two-year deals available only a few months earlier.

The recent fall in the interest rates available may reflect intensifying competition between mortgage lenders, says an expert at Think Money.

“Many economists now believe we won’t see an increase in the base rate until late next year, which may have made some mortgage lenders more relaxed about offering lower interest rates. The fact that some of today’s five-year deals offer better rates than some of the two-year deals available a few months ago suggests that mortgage providers are serious about their lending.

“This could make five-year fixed-rate deals a very attractive option for many homeowners. Only a few months ago, such low rates over such a long period would have been unthinkable.

“However, it is worth remembering that tracker mortgage deals still tend to offer lower rates than fixed-rate deals at any given time – so some borrowers may prefer to go down that route instead.”

“Ultimately, the right mortgage deal depends on the borrower’s circumstances – and as such it’s often a good idea to seek advice before they make a decision.”

Lower rates mean lower monthly payments for homeowners. Furthermore, it could reduce costs for those considering borrowing more on their mortgage for other purposes, such as debt consolidation.

“Consolidating debts into a mortgage can greatly reduce the month-to-month cost of repaying those debts, because they are essentially spread over the entire duration of the mortgage. And when mortgage rates are low, this could prove to be a very cost-effective way of dealing with debt.

“However, we advise anyone considering doing this to think carefully, as it will increase the size of the borrower’s mortgage. Furthermore, taking longer to repay the debt may mean the total cost is higher in the long run, and if for any reason they can’t keep up with their payments, they may risk losing their home. But as long as the borrower is sure they can keep up, it could make very good financial sense.”

Via EPR Network
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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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IVAs: Help Avoiding Repossession

Responding to the latest figures from the CML (Council of Mortgage Lenders), debt management company Gregory Pennington has stressed the role which debt solutions addressing unsecured debt can play in helping people avoid repossession.

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Released on May 15th, the CML’s figures show that 12,800 repossessions were carried out by first-charge mortgage lenders in the first quarter of 2009. “Compared with many predictions, these figures are relatively low,” said a spokesperson for Gregory Pennington. “Indeed, the CML itself has used the word ‘pessimistic’ in reference to its own estimate of 75,000 repossessions throughout 2009, and has recently revised this figure downwards to 65,000.

“It’s good to see lenders and borrowers working together to keep the figure as low as possible, but it’s important not to become complacent. There were still around 23% more repossessions in Q1 2009 than in the previous quarter – and 50% more than we saw in Q1 last year.

“Looking ahead, the repossession figures for the rest of 2009 are by no means set in stone. They depend not just on the state of the economy and the forbearance shown by secured lenders, but on the attitude of borrowers and unsecured lenders alike.

“In this recession, many people are suffering multiple ‘shocks’ at the same time. With 2.2 million unemployed and many others dealing with reduced wages, homeowners are also facing the issue of falling equity. While there’s no direct link between low (or negative) equity and repossession, this is limiting many homeowners’ ability to access ways of dealing with their debt – from debt consolidation loans and remortgaging to downsizing to a smaller property.

“It all underlines the importance of finding a solution that addresses a borrower’s priority and non-priority commitments at the same time. A founder member of DEMSA (the Debt Managers Standards Association), Gregory Pennington has 15 years’ experience of dealing with lenders of all kinds.

“Secured and unsecured lenders alike clearly have a thorough understanding of the problems consumers face today. They understand the link between secured and unsecured debt problems.

“Secured lenders know that many of today’s borrowers are facing complex financial problems, trying to deal with unsecured debts as well as secured.

“Unsecured lenders, in general, appreciate that a homeowner’s secured debts must take priority – and that repossession is unlikely to improve the borrower’s chances of repaying their unsecured debt.

“This is one reason unsecured lenders will often agree to the terms of an IVA (Individual Voluntary Arrangement).”

A solution that’s designed to address the concerns of everyone involved, an IVA can help unsecured lenders recover as much of their money as realistically possible, and can help borrowers avoid the need to focus on their mortgage / rent at the expense of their unsecured debts. Insolvency Practitioners (IPs) achieve this by calculating how much the individual can realistically afford to repay per month after they’ve taken their mortgage / rent payments and other essential expenses into account.

“Even so, we always emphasise that entering an IVA is a serious step, and is by no means suitable for everyone facing debt problems. Depending on their situation, different homeowners may be better advised to consider alternative solutions to their debt problems.”

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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 Advisers Direct have responded to new figures showing that UK gas prices have increased at over four times the rate of the European average, emphasising the importance of good financial management

Responding to new figures suggesting that British energy bills are rising four times faster than those in Europe, Debt Advisers Direct have advised consumers to take extra care over their finances – particularly with regard to repaying debts – and have said that anyone who finds themselves struggling with their debts should seek expert debt advice as soon as the problem emerges.

The figures, compiled by the Organisation for Economic Co-operation and Development (OECD), showed that energy prices have risen by 16.7% in Britain over the past year – over four times as much as the 3.8% average across Europe.

The OECD recorded a 1.3% rise in Denmark, 1.5% in Germany and 5.3% in Sweden. Of the developed nations studied, only Australia (20%) and Turkey (28.7%) experienced bigger price rises than the UK in the past year.

Energy companies have come under fire in recent months over their energy pricing –despite significant falls in the wholesale cost of gas and electricity, none of the major companies have cut their prices to consumers.

A spokesperson for Debt Advisers Direct said: “The OECD’s report demonstrates the extent to which UK energy prices have risen compared with other nations. A lot of billpayers have felt unfairly treated by their energy providers in recent months, and this news may have many wondering why the companies haven’t acted to reduce their prices yet.

“Scottish Power have recently announced a 10% cut to one of their gas tariffs, and other companies are likely to follow suit – but this cut does not cancel out the two big price rises made by most companies last year.”

The spokesperson added that a large number of people are still struggling to meet their financial commitments as a result of rising prices in the past year, with many of those experiencing debt problems.

“A combination of rising bills, rising costs of living and shrinking incomes have left many people struggling with their finances,” she said. “Some of those costs are starting to come down, but that won’t necessarily help those already in debt.

“Our advice to anyone in debt is to seek expert debt advice early. Even if living costs do come down, debt can still be a big burden and it’s important to tackle it in the right way.

“For people who want to reduce their monthly outgoings and simplify their finances in order to make their bills and debts more manageable, a debt consolidation loan might be the answer. A debt consolidation loan involves the borrower taking out a new loan to pay off their existing debts – effectively consolidating the debts into one.

“Most people who take out a debt consolidation loan lower their debt repayments by spreading them out over a longer period of time. Although this incurs more interest in the long run, it’s possible to save money in interest overall if the borrower is consolidating debts with a higher APR than the new loan.

“For more serious debts, a debt management plan could help. This is an informal agreement between the borrower and their creditors as to how the borrower intends to repay their debts – usually at a slower rate than originally agreed, and there may also be a freeze on interest and other charges.

“Alternatively, if there is no real chance of ever repaying the full debts in a realistic period of time, an IVA (Individual Voluntary Arrangement) may be the best option. An IVA is a legally-binding agreement between the borrower and their creditors for lower monthly payments, based on how much the borrower can afford.

”For an IVA to go ahead, creditors accounting for 75% of the total debt must approve the proposal. An IVA usually lasts for five years – and homeowners may be expected to release some of the equity in their homes in the 54th month of the IVA. On successful completion of the agreement, the remaining debts are considered settled.”

“Our advice to anyone unsure about how to tackle their debts is to speak to a debt adviser beforehand.”

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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 Problems Can Affect People From All Age Groups And Should Always Be Taken Seriously

Following a study suggesting that the 18-34 age group are most at risk from the credit crunch, with many carrying significant debts, financial solutions company Think Money have advised people in this age group to take extra care with their finances as the prospect of a recession looms.

Furthermore, they added that debt problems are just as serious for people of any age, and should always be addressed as soon as they start.

The study, carried out by think tank Reform and the Chartered Insurance Institute, claimed that many 18 to 34-year-olds had so far experienced a “uniquely gilded life” which had given them a “false sense of security”.

As a result, they have “run up huge credit card bills, smashed their piggy banks and are now staring at a broken housing ladder”, the report claims.

The report dubs the age group the “IPOD (Insecure, Pressurised, Over-taxed and Debt-Ridden) generation”, and claims that one in five such people carry debts of £10,000 or more, while one in three have no savings.

The overall situation leaves the IPOD generation particularly vulnerable to the current state of the economy, with the report stating that they “have the raw skills to understand their position and the dawning sense of responsibility to do something about it (…) However they are hamstrung by a financial establishment determined to service the old and patronise the young.”

A spokesperson for Think Money said: “It may well be the case that many of the large numbers of younger people getting into debt do so because of a diminished sense of responsibility, brought on by comfortable living conditions and, until recently, relatively easy access to credit.

“But with the credit crunch ongoing and a recession becoming a very real possibility, a lot of younger people may be about to experience the kind of struggles that instilled an “instinctive fear”, as the report puts it, into people from previous generations.

“Whatever the reason, in the current economic climate, it’s more important than ever for people to tackle their debts now. Especially with high-APR debts such as credit cards, it’s essential that those debts aren’t allowed to grow.

“There are a number of debt solutions designed to help people in different financial situations.

“For people with a number of smaller debts, a debt consolidation loan could help. A debt consolidation loan involves taking out a new loan to pay off all your existing debts, meaning you only have to repay one creditor instead of many. The interest rate is often smaller than your original debts, especially if you are paying off high-APR debts such as credit cards – although if you choose to lower your monthly payments by spreading them out over a longer period, this will incur more interest which could cancel out the benefit of a lower overall rate of interest.

“If you have a number of debts that you are struggling to repay, a debt management plan might be a better option. This involves speaking to a debt adviser, who will discuss your financial situation in confidence, and will then negotiate with your creditors to agree repayments based on how much you can afford each month. In many cases, interest and other charges can be frozen, reducing the total amount you have to pay.

“If you have more serious debts of over £15,000, an IVA (Individual Voluntary Arrangement) could get you debt-free in five years. An IVA involves making regular monthly payments to your creditors based on the amount you can afford to repay, and after the five-year period your remaining debt will be considered settled.

“However, be aware that an IVA requires approval from creditors holding a total of at least 75% of your debts before it can go ahead, and you may be required to withdraw some of the equity in your home in the fourth year of your IVA.

“Debt affects people of all ages, so we urge anybody struggling with debt to seek expert debt advice as soon as possible.”

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People In Debt Should Review Their Financial Situation As Soon As Possible And If Necessary Seek Professional Debt Advice

The deteriorating state of the economy should lead borrowers to review their finances as a matter of urgency, say debt experts Debt Advisers Direct, following the Autumn forecast from the Ernst & Young ITEM Club.

“Released on 20th October, the Ernst & Young ITEM Club Autumn forecast ‘sees an economy that has deteriorated dramatically in the last quarter and is now in recession’,” said a spokesperson for Debt Advisers Direct. “The good news, however, is that the recession is expected to be both short and shallow, with GDP rising – even if only by 1% – in 2010.”

“Even so, the impact of today’s economic downturn will be profound,” the spokesperson continued. “By definition, even a ‘shallow’ recession involves a shrinking of the nation’s economy, with the inevitable consequences: lower spending, higher unemployment, greater uncertainty about the future, etc.

“On an individual level, the threat of a reduced monthly income is likely to lead many to review their financial situation. This isn’t to say that economic gloom is a good thing, but everyone needs to stop and take stock of their finances from time to time, and reports such as this can provide a much-needed incentive to do so.

“It’s important for everyone – even people with no debts and significant savings – but for the millions of UK consumers in debt, it’s particularly vital. Many people in the UK have grown used to spending more and more of their monthly budget on debt repayments. In many cases, those repayments take up almost their entire disposable income, so if anything happens to their income, they could almost immediately face a whole range of consequences, from legal action to bailiffs and County Court Judgments (CCJs) – to say nothing of the damage to their credit rating.

“The important thing, of course, is to take action before it’s too late. Seeking professional debt advice is normally the best way to start – any borrower could have a wide range of debt solutions available to them, so it’s vital they talk to a professional organisation which understands every option and can provide impartial debt advice, tailored to their individual circumstances.”

An Individual Voluntary Arrangement (IVA) or debt consolidation loan, for example, could help someone cope with a reduced income – yet neither debt solution would make sense for someone who’s fairly sure they might lose their income (or a significant part of it) in the near future.

“A borrower who is working, but whose job seems to be at risk, may be better off with a flexible debt solution such as a debt management plan: if their income drops, they can ask a professional debt management company to talk to their creditors on their behalf, renegotiating their debt repayments as and when it becomes necessary.”

Different borrowers, in other words, will need to adopt different strategies to deal with their debts. “There’s no ‘silver bullet’ for debt. Debt management plans, debt consolidation loans, debt consolidation remortgages, IVAs, even bankruptcy – each has its place, but the debt solution that’s right for one person can be completely inappropriate for another. The key thing is to take the time to get the right debt advice before making any commitments.”

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The Risk Of A Severe Economic Downturn Still Remains, And Taking Care Of Personal Finances Should Be Made Top Priority In The Coming Weeks And Months

Debt management company Gregory Pennington have warned that the economy remains uncertain, despite a number of signals suggesting a potential recovery, and have advised anyone facing severe financial problems to seek professional debt advice as soon as possible.

The Bank of England Monetary Policy Committee’s announcement on Wednesday that the base rate would fall to 4.5% was intended to calm fears surrounding the money market and increase lenders’ willingness to do business with one another, subsequently increasing liquidity and boosting the loans market.

A number of lenders announced cuts to their mortgage rates following the base rate announcement – which may come as a relief to prospective homeowners or existing homeowners looking to remortgage, following many lenders’ reluctance to respond to the last base rate drop.

Meanwhile, petrol prices recently fell to as little as 103.9 pence per litre, while food price growth slowed by 0.2% in September, according to the British Retail Consortium (BRC)– arousing speculation that overall inflation has hit its peak and will now begin to slow.

However, a spokesperson for Gregory Pennington commented that while there are encouraging signs for the economy, there is no guarantee that further difficulty for the economy can be avoided.

“The first thing to bear in mind is that while the base rate cut is intended to help the economy, it was brought in as an emergency measure,” she said. “The threat of a severe economic downturn is still looming and there are no guarantees it can be avoided.

“The fall in oil and food prices are very encouraging, but both are heavily affected by external factors, largely outside our Government’s control.”

The debt management company spokesperson was keen to emphasise the continued need to take care over finances and manage debts effectively in the coming months. “There is still the possibility that things could get tighter in the near future, so it pays to tackle any financial issues now, rather than waiting to see what happens next.

“People who are struggling with debt are especially at risk, because their finances are already stretched – and any further rises in costs of living could make those debts unmanageable.

“As always, we advise anyone struggling with debt to seek expert debt advice as soon as possible. Leaving it too late could allow your debts to grow, which is particularly dangerous if costs of living do continue to rise.

“There are a number of debt solutions to help with various financial situations. A debt management plan is a flexible means of getting out of debt in which your repayments are based on how much you can afford, and in some cases interest and other charges can be frozen.

“Debt consolidation involves grouping your debts into one convenient monthly payment, therefore simplifying your finances, and your debt can also be spread out over a longer period of time, meaning monthly payments are smaller – although this can mean you pay more interest in the long run.

“For more serious debts of over £15,000, an IVA (Individual Voluntary Arrangement) might be more appropriate. These work by agreeing with your creditors to make payments based on what you can afford for a period of five years, after which the remaining debt is considered settled.”

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Debt Advisers Direct Warn Anyone Struggling With Debt To Seek Expert Debt Advice As Soon As Possible

Responding to the International Monetary Fund (IMF)’s report suggesting that the global economic slowdown is likely to worsen and spread to more economic sectors, Debt Advisers Direct have warned the public that extremely testing times may be ahead, and people should look to get their finances in order and clear any debts as soon as possible.

In their new Global Financial Stability Report, the IMF have warned of “growing turmoil”, saying that the state of the global economy has worsened since its last assessment in April 2008. They also said that Governments’ willingness to act would be crucial in “bringing about a return to stability in the international financial system”.

Although the global economic crisis has so far been mostly limited to the financial sectors in more developed economies, the IMF warned that may soon be about to change, with other sectors and developing economies likely to be affected in the future.

A note on the IMF press release said: “financial institutions in emerging markets, which until recently remained fairly resilient, will be confronted with a much more challenging economic environment: A combination of global credit tightening, and economic slowdown, which could accelerate a downturn in the domestic credit cycle in some countries. Those economies with greater reliance on short-term flows or with leveraged banking systems funded internationally are particularly vulnerable.”

A spokesperson for Debt Advisers Direct said that the threat of financial hardship applies to everybody – not just people on lower incomes or those already in debt.

“The nature of the economic crisis is that many peoples’ jobs are at risk, and that applies just as much to people earning high incomes as it does to low earners. At the same time, many costs of living such as food and energy are still on the rise, so most of us are likely to feel the squeeze to some extent.

“For that reason it’s essential that anyone who is currently struggling financially, particularly those struggling with debt, seeks the relevant advice as soon as possible.”

The Debt Advisers Direct spokesperson added that there are a range of debt solutions available to help people in various financial situations. “For those with a number of debts, a debt consolidation loan could be the answer,” he said.

“Debt consolidation involves grouping all of your debts into convenient single monthly payments. It can also reduce interest rates if you are consolidating high-APR forms of credit such as credit cards, and it can allow you to reschedule your payments over a longer period, making your monthly payments lower. However, this may result in paying more interest in the long term.

“Alternatively, for those who want a less formal debt solution, a debt management plan can reduce your monthly payments to an amount you can afford, as well as freezing interest and other charges.

“Or for people with debts of over £15,000, an IVA (Individual Voluntary Arrangement) is an alternative to bankruptcy which could help you keep your home and other assets.”

The spokesperson added: “Above all, it’s very important that anyone struggling with their debts seeks the appropriate advice immediately, because it’s very possible that things are going to get even tighter in the coming months.”

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Debt Solutions Company Debt Advisers Direct Have Warned That There May Be Tougher Times Ahead, And Advise People To Make Sure They Are Protected

Responding to the news that average bank balances are down by 5% compared to last year, a spokesperson for debt solutions company Debt Advisers Direct said that this is a clear sign that the credit crunch and fast-rising inflation is starting to truly affect consumers.

HSBC reported that average balances of its 8.2million customer accounts had fallen by 5% in the first six months of 2008, as rising costs of living and inflation at a 16-year high puts increasing pressure on consumers’ disposable incomes.

The Debt Advisers Direct spokesperson commented: “This is one of the first clear signs that people are feeling the pressure of the credit crunch, even if 5% is a relatively small figure.

“It’s been said many times that the impact of the credit crunch would take a while to filter through, and it would appear that time has come. Prices and living costs have reached the point where they are beginning to have a clear effect on bank balances – and that should be taken as a warning that it’s time to act.”

The spokesperson continued that while many people may not feel they have been significantly affected by inflation just yet, many leading economists have suggested the worst is yet to come.

“Economists have been predicting a more severe downturn for some time, and while that hasn’t happened yet, there are clear signs that the economy as a whole is slowing down,” he said. “This is likely to lead to further cuts in disposable incomes, especially with the sharp rises in gas and electricity prices due to come in shortly.”

HSBC had also suggested that some of the reduction in disposable incomes might be due to more people transferring money into savings accounts. In reaction to this, the Debt Advisers Direct spokesperson commented: “It would be reassuring to think that a large part of the lower disposable incomes is due to savings – and some of it probably is – but research suggests that most people do not save enough money for their future.

“Saving will become increasingly important in the next few months. Just a few hundred pounds put aside can be a useful financial buffer when money gets really tight.

“Of course, there are some people whose income simply does not stretch far enough once all their living costs are taken into consideration – particularly people struggling with debt – and those people are most at risk.”

The spokesperson added that for anyone who finds themselves struggling with debt, or thinks they might be about to, it’s essential that they seek professional debt advice as soon as possible.

“There are several solutions out there for people who find themselves struggling with debt,” he said. “For people with multiple debts who are getting by but want to simplify their finances, a debt consolidation loan could help.

“Debt consolidation loans involve combining all your existing debts into one, meaning you pay only one lender instead of many, and you may be able to reduce your monthly payments this way. However, you are likely to pay more in the long run if you do reschedule payments.

“Debt consolidation is a good way of freeing up extra funds each month – which could be crucial if the economy does hit hard times.”

He continued that even for those with unmanageable debt problems, there is help available. “For more severe debts, a debt management plan or an IVA (Individual Voluntary Arrangement) might be more suitable. Both can reduce your monthly payments in line with what you can afford.

“Before making any decisions, though, you should always contact an expert debt adviser. They will talk you through your situation and decide which debt solution is appropriate for you.”

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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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