The current personal debt snapshot reveals the highest levels of worry over debt ever recorded. Furthermore, the survey identifies a group who could be termed ‘Zombie’ debtors – who currently pay only the interest and charges on their debt, but not the debt itself. They stand at around one in six people.

Debt concerns: Three in five (60%) of the population say they are worried about the current level of their debt. This is up 21% on this time last year and is the highest level of concern ever recorded.

A staggering 78% of 24-34 year olds are concerned about their current levels of debt, which drops down to 31% of 65’s and over.    

‘Zombie’ debt: One in six individuals (16%) are only able to service their debt but not reduce it.  This includes 11% of people who say that they are only paying the interest on their credit cards, while 9% say that they are only paying the interest charges on their overdraft.

Payday loans: From the sample 67 people say that they have taken a payday or other short term loan. Of this group, two thirds (68%) did so because they were unable to get credit anywhere. The proportion of those who regret taking out a payday loan stands at 60%, while 48% believed their payday loan made their financial situation worse. In fact only 13% of this group believed their payday loan had a positive impact on their finances.

Looking ahead to the next six months, 7% of the population think that it is likely they will seek a payday loan or other short term, high interest loan. This equates to approximately 3.5million GB adults who will need access to high interest loans.   

Financial outlook: A fifth of individuals (20%) believe their financial situation will improve over the next six months, when in July this stood at a quarter (25%). Today’s figure is closer to where it stood this time last year. One in three of the population believe their financial situation will worsen in the next six months.

Early intervention, best advice: if you are worried or concerned about your finances seeking advice early will maximise the options available and give you much needed piece of mind. A wide range of options are available including formal procedures such as an Individual voluntary arrangement (IVA) or less formal debt management arrangements that can offer the same protection for everybody by providing the necessary breathing space to get you out of debt and back on track.       

END.

There’s no need to go running for cover

There may be a few worried TV fans after watching recent episodes of BBC Wales series The Baker Boys.

The fictional employees who bought an ailing Valleys pie company have recently been seen scurrying around their homes, trying to find hiding places as the bailiffs bang their doors.

The storyline had seen a certain amount of personal debt come about due to the workers buying the company with their redundancy money and then taking a cut in pay.

I understand why TV dramatists accentuate some of life’s more extreme moments – but it’s a shame that, in this case, financial concerns were made to look more horrific that they need to be.

Yes, it’s tough to find yourself in dire straits – but you’re not alone, there’s a lot of help out there and you have your rights at such times; the individual does have protection and all is not lost!

For instance, did you know that you’re not obliged to let bailiffs into your home? A right of entry would need to be sanctioned by court to allow this and is rarely the case. Most often a bailiff (or debt collector) will appear at the door on the instruction of a creditor eager to put you under pressure to pay sums due.

Moreover, there are mechanisms to help people through tough times. For instance, in many cases, there’s no need to be declared bankrupt – an Individual Voluntary Arrangement (IVA) can keep creditors at bay through the negotiation of payment terms and most often will help protect the family home.

ends

http://www.guardian.co.uk/money/blog/2011/dec/08/diary-of-a-debtor-redemption?INTCMP=SRCH

The final point made is a good one – advice and lots of it is the best cure.  Speak to us for a no pressure chat about your situation and how we can help you.

…DON’T.

Debts need prioritising. Carefully selecting who you pay & when will immediately bring about an order to your situation that will keep your creditors happier, help prevent legal action and ease the stress of being in debt.

So, what are the top priorities and what order should you pay them?

1.  Mortgage and rent payments. We all need a roof over our head so always ensure you budget for this as your first priority. If you have a capital and repayment mortgage try temporarily switching to interest only. This can substantially reduce monthly payments.
2.  Weekly shop. We all need food on the table. Check your receipts and switch to cheaper options.
Avoid fast foods and convenience stores that are much more expensive.
3.  Council tax. There are harsh penalties for non payment – including imprisonment. You may also qualify for a discount so speak to the council. You will often find them sympathetic to financial hardship if you keep them informed.
4. Fines, maintenance payments, court judgments. Again harsh penalties if you default. These must be given priority.
5.  HP agreements and loans. If this is essential (such as a loan to buy your car to get to work) then it’s essential. But always try to avoid further borrowing simply to repay other debts. It usually only makes matter worse.
6.  Gas, electricity, water. Despite what the water authority may tell you it is illegal for your water supplier to disconnect you. Utility companies often understand but make sure you keep in touch with them. You may need to install a budget metre.
7. T.V licence, phone bills. Minimise your spending wherever possible. When needs must read a book!
8. Credit cards. Maintaining the minimum payments will protect your credit rating. Try transferring
balances to cards with lower interest rates.
9.  Friends and family. Be open and honest. Explain that debts will not be forgotten and will be settled as soon as possible – but it may take some time.
10.  Subscriptions. Memberships and subscriptions can be cancelled or put on hold. These can always be resumed when your finances are back in order.

Above all keep creditors informed. You will be surprised how willing they are to help if you keep in touch with
them. But never promise payments that you can’t keep up.

Remember If you would like to discuss arranging an IVA, bankruptcy or a debt management plan or have any questions we are happy to help – by phone, email or live chat.