Debt Advice & Help

When you find yourself drowning in debt, you do need to sit down and make a plan for how you can keep your head above water and finally get out of the water completely. More and more UK residents are feeling the pinch of the credit crunch with rising prices that does not leave them with enough money each month to make their normal payments.

Many people don’t even realize how much debt they have and the total of their monthly outgoings until they sit down to formulate a budget and a repayment plan.

To start making a budget for yourself, you need to make a list of all your monthly payments. In doing this, it will be helpful if you also list the outstanding balances of all the debts and the interest rate charged on each one. Don’t forget to include your electricity, fuel, and utility payments because these are essential services.

The amount of money you spend on groceries and leisure also has to be part of this plan. Add up the amount of the outgoings and subtract it from the amount of income you have each month. If you find that there is a negative amount because you have more outgoings that income, then you are in financial difficulty and need the services of a professional to help you clear your debt.

Once you have a clear picture of your finances, then you are in a better position to come up with a structured plan for repaying your debts with the goal of paying them all off in full. The credit cards and loans that have the highest interest rates are the ones you should get rid of first. If you have a credit card or line of credit with a low interest rate, you can transfer some of the balances. The minimum payment may be a little higher but it will still leave you with extra money for paying other bills.

If you are not experiencing any difficulties in making your monthly payment, but need a structured plan to help you clear your debts, any extra money you have can go towards reducing your debts. If you transfer balances to a lower credit card, for example, you can still continue to make the same payment amounts and in this way, you will reduce the balance by a larger amount each month. As you pay off one debt, apply the money to another, and so on. By making larger monthly payments you are reducing the amount of interest that you pay and this reduces the term of the loan.

Another solution for clearing your debts is to take out a debt consolidation loan. In such a loan, the lender will pay off the outstanding balances of the accounts you choose and give you a loan for the total amount.

You will still owe the same amount of money, but instead of having to make several payments on different loans, you have only one monthly payment that is lower than the total of the combined payments because you only have one creditor instead of three or four.

This will relieve some of your financial stress because it does leave you with extra money each month for essentials and to make higher payments on any debts that were not included in the debt consolidation loan.

If neither of these structured plans suits your financial situation, you can avail of the help debt counsellors can provide. Such people can contact your creditors and negotiate with them to lower your payments. They can set up a structured plan for you so that you can make the payment to the counselling agency and the counsellor will disperse the payments to the creditors for you. The amount you do have to pay will be based on your income, your level of debt and the number and amounts of your payments.

Store cards and credit cards do carry high rates of interest and often you do not know how much your payment will be from month to month. It is best to try to eliminate these loans and combine the balances into one loan so that you do have a set amount of payment each month. You can also contact a lender to take out a secured or unsecured loan that will help you organize your finances and make it easier for you to keep up with your monthly commitments.

It is important to get a handle on your finances in an attempt to clear your debts so that you can keep making your payments on time. This will help you keep your good credit rating and allow you to maintain the same borrowing power. When you have a good credit rating, you can also take advantage of good interest rates on any money that you borrow.

Source: http://www.thriftyscot.co.uk/032009/using-a-structured-plan-will-help-you-become-debt-free.html

Every day the news reports another company that is laying off thousands of workers or one that is shutting its doors permanently. There are very few news reports that do not have some mention of the “global credit crunch” and while we are getting tired of the phrase, it is one that is likely to be around for quite some time yet.

The downturn in the economy actually started in the US in the housing market in 2007 and since then it has affected just about every country of the world. It has wreaked havoc on the banking, financial and investment markets in a major way and has changed the way in which anyone can obtain credit. The worst effect of the credit crunch has been in the huge numbers of job losses, which have affected the UK just as much as other parts of the world.

No one doubted that the credit crunch would have an effect on banks and financial institutions when it first made the news, but no one expected the extent of which it is today. It has had an adverse affect on the financial sector with huge losses in what were once profitable businesses and banks have discovered that their sources of funding have essentially dried up.

This has resulted in job losses across the board and this was only the beginning. As more and more companies found themselves in financial difficulty and lenders tightening the conditions under which they approved loans, they were forced to downsize or close, putting many people out of work.

The housing market has also taken a huge hit during the global credit crunch. Only a year or so ago house sold at high prices and many homeowners borrowed heavily on the equity they had built up in their homes.

The huge drop in house prices on the real estate market means that many homeowners with home equity loans or lines of credit are now finding themselves in a position of negative equity. This means that the price for which they can sell their home is not enough for them to even be able to pay off what they owe on the home, let alone pay off other outstanding debts.

Even though house prices and interest rates have fallen to a new low, this does not mean that more people are buying. The stringent lending conditions mean that fewer people are able to qualify for a mortgage. Estate agencies have had to close putting real estate agents out of work as a result of this downturn.

All aspects of the financial sector of the economy have sustained setbacks. Loans, credit cards and other forms of finance have been affected making it more and more difficult for the ordinary consumer to obtain credit when they desperately need it.

This in turn has affected the amount of money that consumers have available to spend outside of paying their bills and looking after essential household expenses. For this reason, businesses with very little connection to the financial sector have suffered tremendous losses.

Consumers have cut back on their spending habits and are becoming more fiscal in looking after their finances. Manufacturing sectors, retail outlets and the service industry has been affected as a result with consumers buying only what they absolutely need. The big name stores are losing money and are not making as much profit as they have been accustomed to making and therefore are downsizing in the numbers of staff members they have on the payroll.

It is not just the large businesses that are suffering from the credit crunch. Many small businesses have had to declare bankruptcy and there have been huge job cuts in the manufacturing and service sectors of the economy.

One recent report from the Federation of Small Businesses says that it is time for the government to stop putting emphasis on trying to lower interest rates and start looking for ways to stimulate the economy so that people can go back to work and start earning a wage once again. This includes focusing instead on finding ways for businesses to find access to much-needed funds to ease the struggles they are experiencing in an effort to retain their workers and keep their doors open.

The recession is now in full swing and is likely to worsen during 2009. This means that more and more people will most certainly lose their jobs in all sectors. Those who do still have a job are watching their money more closely and making an effort to pat off as much of their debt as possible.

Until the economy starts to rebound and the banks start to relax their lending restrictions, there is very little that consumers can do but wait out the recession. No one knows for sure when the end will come and many experts are predicting that it will be some time before any improvements can be noted.

Source: http://www.thriftyscot.co.uk/032009/how-the-credit-crunch-is-affecting-the-workforce-in-the-uk.html

The entire world is in the grips of a recession with businesses scaling back and UK residents, like people everywhere, facing job losses and rising prices. The result is that people who previously were able to meet there monthly commitments without difficulty are now realizing that they are deeply in debt and have nowhere to turn in order to find the money they need to pay their bills. Many are facing repossession of their homes and have to look at the possibility of filing for bankruptcy.

The debt charity, National Debtline, has reported an increase in the calls to their hotline from people who do not know what to do about their financial situations. One caller reports that in an attempt to keep the mortgage payments up to date on her home, she has neglected other payments and now she has creditors looking for repayments.

This is a typical situation with many residents finding themselves owing large amounts of money on credit cards and store cards. These creditors are stepping up their efforts to receive payment and are placing charge orders on residents that could force them to sell their homes.

In Britain today, this is a common situation. The debt advisors on the other end of the line try to calm down the callers and allay their fears by offering them solutions to their debt problems.  One of the ways in which they do this is to explain the legal system to the callers and explain what charging orders mean for them. They highlight the options that the callers have left open and in most cases these are quite limited.

“I am resigned to losing my home,” says one caller to the National Debtline, “I can no longer to maintain it.” The problem with putting a home for sale in an effort to obtain the money needed to repay the debt, however, is not a viable solution. This is because house prices have fallen to the point that the sale will not even produce the money needed to pay off the mortgage and the other debts will still remain outstanding. For most, the only recourse is to file for bankruptcy.

Even to declare bankruptcy is costly. A fee of £495 applies to the court charges for bankruptcy filing and most callers do not have this money available.  There are ways though in which UK residents faced with this possibility can obtain the money for this court fee.

There are charitable organizations from which one can get help in paying the fee. The process of getting help with dent advice through the National Debtline takes about an hour and the caller will receive an application form for bankruptcy and help in paying the fees.

Debt advisors report an increase in calls of this nature in recent months. One of the advisors, Aidan Tidy, says that the calls come from all walks of life. Executives and professionals, who had been earning high salaries, are now struggling to keep up with the payments in order to preserve the lifestyle to which they have become accustomed.

Another caller looking for debt advice, Graham, aged 42, says that in the past he had an impeccable credit record and had no problems making payments on credit cards.  Graham is an office administrator who currently owes about £56,000 and has not possible way of making the current payments.

According to Graham, he had access to lots of credit and that was part of the problem. “I borrowed money with every intention of paying it back, but circumstances change,” he says.  “I was getting lots of aggressive letters from creditors and you just feel lonely and vulnerable.

The calls to the National Debtline have doubled in 2009. In January, 2008, the center received about 800 calls a day. In January, 2009, there are about 1600 calls every day.

Another debt advice service, Citizen Advice, reports that they have also seen a dramatic increase in the number of people who are experiencing problems meeting the payments on their credit cards, secured loans and mortgages, all of which are affecting their ability to continue fighting repossession.  Citizen Advice took 3000 calls on January 5, 2009 and are averaging about 2000 calls a day ever since.

The government awarded more than £ 5 million to National Debtline last year to help it pay the salaries of fifty additional counsellors. When these training positions were advertised, there were more than 5000 applications received.

The problem that many people are encountering when looking for help in debt counselling is that there are many agencies who charge a fee for this service.  National Debtline does not charge for its service and trained advisors will help callers find viable solutions to their money problems.

It is always better to ask for help than to suffer in silence. “The earlier you call the better, but it’s never too late to seek help,” one advisor says,  “If you act in a sensible and open way with your creditors, most of the time you can arrive at a workable solution.”

Source: http://www.thriftyscot.co.uk/022009/dramatic-increase-in-the-numbers-of-calls-for-debt-advice.html