November 2007 Archive
Posted on November 30th, 2007 in IVA.
The British economy faces a rocky future, the governor of the Bank of England has claimed.
Mervyn King made his comments to BBC Radio 5 Live’s Wake Up To Money programme, explaining that overseas instability combined with a tightening credit market was likely to impact upon levels of consumer spending.
"Recent economic news has been dominated by the continuing turmoil in global financial markets, which has led to a tightening of credit conditions, particularly for the most risky borrowers," he said.
Borrowing will be more expensive and less readily available, continued Mr King.
For some debtors, the effects of the credit crunch are already being felt as refinancing becomes more difficult.
One possible route out of problem debt is an individual voluntary arrangement (IVA), an option created by the government to provide an alternative to bankruptcy.
IVAs allow debtors to pay an affordable monthly sum which is divided among their creditors.
Any interest is frozen and after a certain period of time, the individual is considered debt-free, and remaining borrowing written off.
Posted on November 30th, 2007 in Repossession.
Borrowers coming off fixed-rate sub-prime mortgages face being unable to find a new deal for their homes, an expert has warned.
Julia Harris, analyst at financial comparison site Moneyfacts.co.uk, commented that in less than a year, the sub-prime market grew, expanded and "is now wilting fast".
She said sub-prime homeowners leaving their deals could be in difficulties "especially if their financial position has not improved sufficiently to allow them back into the prime market".
Earlier this month, Bob Sturges, of sub-prime lender Money Partners, told the Times those coming off their sub-prime fixed-rate deals face higher rates and if they cannot afford them, will have to sell their homes.
"This will affect tens of thousands, if not hundreds of thousands of people," he commented.
Many households will be looking to reorganise their finances in order to meet potentially higher mortgage costs and keep their homes.
There are a number of options open to those struggling to manage the cost of their borrowing, including individual voluntary arrangements and the services of a debt management company.
Posted on November 30th, 2007 in Debt.
Managing money at Christmas can be extremely stressful and the festive season can cause "a huge amount" of debt, a new report has warned.
CiC, a provider of employee assistance programmes, told recruitment magazine onrec.com that many people felt under pressure to provide expensive toys for children or to overspend on a partner.
"In addition to the obvious cost of gifts, a great deal of money can be spent on food and drink as well as travel expenses," CiC continued.
Those who find themselves in debt as a result of Christmas spending should draw up a realistic repayment plan, it urged.
However, recent research by Cornhill Direct found that ten per cent of those who borrow to fund Christmas find they are still in debt the following December.
Simon Coughlin, spokesman for the insurer, said it is "extraordinary" that one day can have such a lasting effect on people’s finances.
Posted on November 27th, 2007 in IVA.
Individual voluntary arrangements (IVAs), informal agreements and bankruptcy are all "valid solutions" to problem debt, an expert has commented.
James Falla, managing director of debt consultant Thomas Charles, said those in debt difficulties should be aware of all three possibilities.
"Each of those options are very valid solutions and will suit different people better depending on their circumstances," he commented.
Furthermore, Mr Falla urged debtors to be wary of organisations which push them towards one specific solution.
Bankruptcy, informal agreements and IVAs can be negotiated through debt management companies.
IVAs are a court-approved agreement whereby the debtor repays a fixed, affordable sum for a set period of time and at the end of that period, any remaining debt is written off.
According to financial advice charity Credit Action, at the end of September total personal debt in Britain stood at £1,380 billion, an increase of £120 billion over the previous 12 months.
During the second quarter of 2007, there were nearly 27,000 individual insolvencies across England and Wales, it reported.
Posted on November 27th, 2007 in Debt.
Credit card providers are increasingly targeting consumers seeking to regain control of their personal debt, it has been claimed.
Research by price comparison website MoneyExpert.com shows 72.5 per cent of credit cards offer deals such as zero per cent charges on balance transfers for a set period of time.
Sean Gardner, chief executive of MoneyExpert.com, said: "Card firms are concentrating on the balance transfer market as a way of building new business with more generous offers for those who want to get their debts under control."
Research by the website recently found as many as 3.4 million people who owe money are "very concerned" about staying in control of their borrowing.
For those struggling with problem debt, one solution is an individual voluntary arrangement (IVA), which freezes the interest charged on the outstanding amount.
IVAs allow the debtor to repay an affordable monthly sum for a set period of time, after which any remaining debt is written off.
