September 2007 Archive
Posted on September 28th, 2007 in Debt.
Young people need education in financial literacy if they are to avoid becoming over indebted, an expert has said.
Becky Boden-Wilkes, spokesperson for the National Debtline, said it was important young people were taught skills such as borrowing.
She said debt was not necessarily a bad thing and then credit could help manage the "ups and downs".
However, she called for more education so that young people understood, for example, the true cost of a £5,000 personal loan.
"Financial literacy is a really big thing. Financial literacy and budgeting could make a massive difference," she added.
The recent Push survey into student debt discovered those who began university last year can owe as much as £17,500 by the time they leave, and new students should expect debt of more than £20,000.
It warned that some students were facing "real financial hardship".
Charity Credit Action has said students are being "educated into debt" but not out of it and that there is not enough guidance on how to break free of what they owe.
Posted on September 28th, 2007 in IVA.
Using an individual voluntary arrangement (IVA) allows troubled debtors a real solution to their financial problems by writing off the debt they cannot afford to repay, an expert has claimed.
Vice president of R3, the Association of Business Recovery Professionals, Nick O’Reilly said such agreements are increasingly popular, particularly among young borrowers who want to put "their affairs in order" to allow them to gain commitments such as a mortgage.
He said writing to creditors and asking them to freeze interest on debt was one possibility, but that there was never a release from debt using that route.
With IVAs, however, "it’s a finite period, and you know that providing you abide by the terms of the arrangement, at the end of it, it will be successfully concluded and you will be able to write off a proportion of the money that you owe", he said.
IVAs were introduced by the 1986 Insolvency Act to provide an alternative to bankruptcy.
Posted on September 28th, 2007 in Debt.
New research suggests homeowners with a chequered credit history could face a 26 per cent increase in their mortgage payments as a result of the global crunch.
Standard & Poor’s (S&P), providers of financial market intelligence, has said 80,000 UK borrowers who are about to come to the end of their mortgage deals face "payment shock", reports the Financial Times.
The firm claims it will be considerably harder for borrowers to remortgage with the same terms as before and subprime customers could face many lenders refusing them mortgages and instead have to use expensive standard variable rates, it adds.
"The likely scale of this upcoming effect – and the potential subsequent impact on borrowers’ payment behaviour – is relatively severe by recent standards," the report claims.
Nationwide has warned that more than 250,000 mortgage holders will come to the end of their two-year fixed rate deals between October and December this year.
It estimates payments will increase by around £200 a month unless borrowers move to another deal.
Posted on September 27th, 2007 in Debt.
A debt management firm in Redhill has claimed the average household debt in the area is nearly £10,000 higher than the national average, it has been reported.
DCM Money Solutions surveyed nearly 2,000 customers and revealed the average debt was nearly £40,000, excluding mortgages, according to an article in the Redhill and Reigate Life.
Mark Morley, DCM’s regional business partner for the area, said the high debt reflected an increase in unsecured loans and debt such as credit and store cards.
The survey discovered an average of ten separate debts for each household, compared to an average of eight across the rest of the UK, the newspaper reported.
Charity Credit Action states that at the end of July this year, the total personal debt in the UK stood at £1,355 billion.
Website MoneyBasics.co.uk was set up by the charity to provide debt advice. It says that one option for debtors who cannot afford their repayments is an individual voluntary arrangement (IVA).
A benefit of using an IVA is that creditors will often be more flexible as they are being offered regular payments.
Posted on September 27th, 2007 in Debt.
A consumer credit charity has said that an increasing number of people aged 60 and above are seeking debt advice.
The Welsh Centre for Credit Counselling has published a report of debtors it has helped in Wales over the last five years, reports the BBC.
It has revealed that despite an overall reduction in debt in Wales, there had been a rise in the over-60s group seeking advice.
A spokesperson for the charity said it was worrying and was a trend replicated across Britain. She said: "It may also be that people find it difficult to adjust to retirement and lower incomes."
The largest group seeking the charity’s advice were people aged between 40 and 59, which the spokesperson said was especially concerning as at that age, people should be saving for their retirement.
Earlier this year Help the Aged reported one in five retired homeowners still had to make mortgage repayments, despite their reduced income. It found one in five pensioners was living in poverty, which it claimed could affect general health.
