Debt Consolidation Advice, Help and News from Debt Advisers Direct

US: new law provides debt-free date

Tue, 2 Feb 2010 11:30:22 GMT

Thanks to a new law, credit card providers in the US will now have to tell their customers how long it would take them to clear their debt if they made just the minimum payments.

As The Financial Times reports, millions of Americans with credit card debt `are in for a dose of harsh reality when they open their February credit card statements`, since the law now requires their card issuer to tell them how long it would take to clear their debt making the minimum payment every month.

Statements will also have to inform the borrower how much they`d need to pay every month in order to clear their debt in 36 months - along with how much they`ve paid in interest and fees in the year to date.

Given that the average American household is carrying $10,000 (around £6,300) of credit card debt, paying the minimum every month would mean it takes them 48 years to clear that debt (at an annual interest rate of 18%) - assuming they took on no new debt in that time.

Jonathan Zinman, a Dartmouth College economics professor, commented: "Many people underestimate how expensive it is for them to borrow, and some are just humming along month-to-month not thinking at all about paying the balance off in full."

As in the UK, many people in the US have made efforts to reduce their debt recently. Credit card debt alone has fallen by 8.7% since early 2008, and now stands at $874 billion (around £550 billion).

"No-one should take on debt unless they have a clear idea of how they`re going to pay it off," said a spokesperson for Debt Advisers Direct. "For people who are already carrying credit card debt, it`s well worth talking to a debt expert and/or spending some time with an online `credit card calculator`, to find out how much money they could save by repaying their debt more quickly."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

More debt taken on than repaid in December

Mon, 1 Feb 2010 11:26:44 GMT

According to figures from the Bank of England (BoE), in December, the monthly amount of debt taken on through credit cards, loans and overdrafts `outstripped` the amount of debt repaid for the first time since June 2009, the BBC reports.

The figures revealed that outstanding consumer credit (unsecured debt) rose by £52m in December.

Meanwhile, the number of mortgages approved for house purchase fell to 59,023 - slightly lower than November`s figure, but still above the average for the past six months.

As the BBC reports, `the trend during the downturn has been for consumers to pay off debts`, and for five months in a row, the amount of debt repaid has been more than the amount of debt taken on. However, as figures from the Bank show, this trend changed in December, mostly due to borrowing on credit cards - which increased by £195m.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Savings rise as consumers pay down debt

Fri, 29 Jan 2010 11:17:8 GMT

According to a survey of 13,000 savers by ING Direct, Britons` savings have risen to the highest level in 12 months, as households paid down their unsecured debts and repaid larger amounts on their mortgage debts, the Telegraph reports.

The research found that average savings levels increased by £40 last year to £2,205.

Chief Executive of ING Direct UK, Johan de Wit, commented: "Britons spent much of last year cutting down on debt and getting their finances in order, and now it appears that they are looking to rebuild their savings.

"The psychological impact of the recession also seems to have made the public more credit averse and more cautious when it comes to spending.

"Households are taking steps to be more sensible with their money, including the recent move to build their savings buffer for any financially challenging times ahead."

A spokesperson for Debt Advisers Direct added: "It is encouraging to see that consumers are making efforts to reduce their debts and increase their savings.

"Making regular contributions to a savings account can provide excellent protection against debt should any unexpected costs occur."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Household debt `could trigger another downturn`

Thu, 28 Jan 2010 11:18:44 GMT

The high level of debt carried by the British public is one of the things that could trigger another downturn, economists are warning.

An article in the Telegraph warns that `some of Britain`s problems, such as its expected £178 billion budget deficit and high levels of household debt, will remain even as the economy comes out of recession and could trigger another downturn`.

It quotes Jonathan Loynes, Chief Economist at Capital Economics, who said that: "The problems are rather long-term. Household debt is based on the expectation that house prices would keep rising and we went into the downturn with the finances already in a pretty dreadful state."

The economies of countries such as Japan and Germany, with their larger manufacturing sectors, may have contracted more sharply than the UK`s as factories closed down - but the governments of those countries were also more able to stimulate their industries, helping them come out of recession faster than the UK.

Latest figures from the Bank of England show that the British public currently owe £1.459 trillion. £1.232 trillion of that is in the form of secured debt, while £227 billion is unsecured debt (personal loans, credit card debts, etc.).

The Bank`s figures show that people collectively repaid more unsecured debt than they took on in every month from July to November last year (figures for December haven`t been published yet). On average, they repaid around £400 million more unsecured debt than they took on in each of those five months.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

More families could fall into debt with energy companies

Wed, 27 Jan 2010 11:20:49 GMT

The energy industry regulator, Ofgem, has warned that a combination of `cold weather, high gas and electricity prices and mounting pressure on disposable incomes` could lead to a significant rise in the number of families falling into debt with their energy companies, The Independent reports.

The warning follows a report by the industry regulator, which found that large numbers of people are already falling into debt because they are having difficulty affording their gas and electricity bills.

The report revealed that even before the winter began, `more customers were getting themselves into financial difficulties.` The number of electricity customers entering into a new debt arrangement with their providers in the third quarter of 2009 increased by 13% (compared with figures from the second quarter of the year), while the number of customers entering into new debt arrangements with their gas suppliers increased by 21%.

The average level of debt of customers in difficulties was 20% higher than the figure recorded a year earlier, and there has been a considerable rise in the number of bill payers with debts totalling £600 or more.

An energy expert at uSwitch, Thomas Lyon, said: "These debt numbers could get worse as we are in the middle of a bitter winter which could add an extra £60 on to our next quarterly bills because of the extra heating and energy we have all had to use - this will hit those who pay by cash or cheque particularly hard."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Recession ends

Tue, 26 Jan 2010 11:19:25 GMT

The country has finally come out of recession, official figures from the Office for National Statistics (ONS) have shown.

After six quarters - 18 months - in a row, the economy has finally stopped shrinking, making Britain the last major economy in the world to exit recession and start growing again.

According to the figures, the economy grew by 0.1% in the final quarter of 2009. Even so, the economy at the end of 2009 was still 3.2% smaller than it had been a year before - and a full 6% smaller than it was before the recession started.

Three months ago, analysts expected the ONS figures to show that the country had exited recession at the end of the third quarter of 2009, but these hopes were dashed when the ONS reported a contraction of 0.2%.

This time around, analysts were even more confident.

In the Guardian, Howard Archer, economist at IHS Global Insight, is reported as saying: "Similar hopes for an exit from recession had been held for the third quarter and were then dashed, but this time around growth expectations are even higher. Indeed, I would be astounded if the UK did not grow in the fourth quarter of 2009 and would have to seriously consider giving up economic analysis and forecasting."

However, the end of the recession does not signal the end of the country`s financial problems. The Telegraph also quoted Mr Archer: "Serious doubt remains about the strength and sustainability of the UK`s recovery given the still very challenging economic and financial environment it faces."

"After all," said a spokesperson for Debt Advisers Direct, "Government debt and public debt are both extremely high, the banking sector is still fragile, the base rate can`t stay at today`s low of 0.5% - and when the base rate does rise, this is bound to put a lot of pressure on many people`s finances."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Debt defaults lower than expected

Mon, 25 Jan 2010 17:11:22 GMT

A recent report from the Bank of England has shown that lenders overestimated the number of borrowers who would default on unsecured debts such as credit cards and loans, the BBC reports.

It has been reported by lenders that despite their prediction of an increase (because they thought that unemployment would prove to be worse than it has been), default rates on unsecured debt dropped in the final quarter of 2009.

However, according to the Bank`s `Trends in Lending` report, during the same period, the actual amount lost through debt defaults increased - which led to an increase in the cost of credit card borrowing.

Meanwhile, borrowers have, on the whole, been determined to reduce their unsecured debts, and lenders have told the Bank of England that they `expected this trend to continue`.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

What if my circumstances change after debt consolidation?

Mon, 18 Jan 2010 16:48:15 GMT

Finding the right debt solution can be a difficult task, with all the options on offer. An expert debt adviser can help you to find the right option for your individual circumstances - but what if those circumstances change?

You`ll only be able to enter into certain debt solutions (like a debt management plan or IVA (Individual Voluntary Arrangement)) if you and your lenders are satisfied that it`s a good long-term option. Others (such as a debt consolidation loan) are only appropriate for people who are sure they`ll be able to afford the repayments.

When is an IVA the best option?

Mon, 18 Jan 2010 16:53:3 GMT

For people with unmanageable debt problems, an IVA (Individual Voluntary Arrangement) may be one option. An IVA is a legally-binding agreement with your lenders that enables you to repay as much of your unsecured debt as you can realistically afford within a set period of time (usually five years), after which your remaining unsecured debt will be written off.

However, an IVA is by no means the only option available to people with unmanageable debts - and you should make sure you explore all your options before making any decisions.

In debt: what can a bailiff take from my home?

Mon, 18 Jan 2010 17:0:8 GMT

If you have outstanding debts that you have been unable to repay despite repeated warnings, your lenders may take legal action against you through the County Court to obtain a Judgment on your debt. Once they have a Judgment, they may be entitled to instruct a bailiff to go to your home and seize goods up to the value of the outstanding debt.

You will receive notification in writing if a bailiff is due to call at your house. Use the time this gives you to your advantage, and contact an expert debt adviser at your earliest opportunity to discuss your options.

What can bailiffs take?

Bailiffs can take any household goods up to the value of the debt you owe, except for goods that are necessary for a basic standard of living. So, they cannot take:

Essential furniture and appliances such as your oven, fridge or bed
Clothing
Children`s toys
Anything that doesn`t belong to you (rented or other people`s property)

However, in some circumstances they can take items such as TVs, computers/laptops and stereo systems, as long as they belong to you. They can also take items that you jointly own with someone else.

They should not take anything that is essential for your work - so, for example, if you work from home, they shouldn`t take your work computer.

Do I have to let the bailiffs in?

You are under no obligation to let County Court bailiffs in, and on their first visit they are only legally allowed to enter your home if you let them in, or if they enter through an unlocked window or door.

After they have gained entry however, they have a legal entitlement to force future entry and take any goods they have previously levied.

What can I do if I have been informed a bailiff will visit me?

It is important that you act quickly and talk with an expert debt adviser about your options. A debt adviser can offer guidance on the best course of action for dealing with the bailiff and, if appropriate, can recommend a longer-term solution for dealing with any other debts.

To speak with one of our debt advisers today, call us on 0800 074 8639.

Britons take three months to clear Christmas debts

Thu, 14 Jan 2010 15:29:19 GMT

Research by over-50s group Saga found that after spending an average of £435 on Christmas presents, British credit card holders are taking an average of 90 days to repay the debt they built up over Christmas - 33 days longer than it would have taken them a decade ago, the Telegraph reports.

It was found that `younger people are less debt savvy` - with one in five under-50s admitting they were still repaying the debt they took on over Christmas 2008. However, those aged over 50 were `much wiser` when it came to credit card debts, with a third of card holders planning to repay their debts straight away.

Head of Communications at Saga, Paul Green, commented: "It is a shocking indictment of the nation`s economy that so many people are left struggling to cope with so much debt."

Peter Harrison, credit cards expert for Moneysupermarket.com, said: "In these uncertain times, when unemployment is rising, households don`t have the disposable income to pay off their Christmas debt and are now facing the impact of repaying it."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Budgets to be `squeezed` in second half of 2010

Fri, 8 Jan 2010 16:14:28 GMT

UK families` budgets will be particularly `squeezed` in the second half of 2010, according to Martin Bamford of Chartered Financial Planners Informed Choice.

As moneyexpert.com reports, Mr Bamford predicts that the second half of next year will be the time when higher interest rates will impact on consumers - as will higher taxes and `peak` levels of unemployment.

People with debt management issues, he stated, should budget carefully and work to reduce their debts. "In the short-term," he said, "they should do what they can to pay off expensive unsecured debts, such as credit cards, which are likely to be used over the Christmas period."

One way of doing this, moneyexpert.com advises, might be to take out a zero-interest credit card - the interest-free period could provide a valuable opportunity to work on reducing the overall debt while there are no interest charges adding to it.

The Bank of England`s latest figures show that the nation`s citizens were collectively carrying £1.458 trillion of debt in October: £1.230 trillion of that debt secured against property and the remaining £228 billion in the form of consumer credit (`credit card lending and other loans and advances`).

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Irish Reduce debt

Thu, 7 Jan 2010 15:55:26 GMT

People in Ireland are reducing their debt levels, new figures from the Central Bank have shown. As The Irish Times reports, Irish residents are `significantly` reducing the debt they`re carrying in the form of credit card balances, mortgages and other kinds of debt.

Because of the recession, The Irish Times states, consumers are actually paying off more debt than they`re borrowing, meaning the level of outstanding debt is falling.

For the first time in almost two decades, the annual growth rate in outstanding mortgage debt has actually fallen - partly because stricter lending criteria are making it harder for would-be homebuyers to get a mortgage.

When it comes to credit cards, people in Ireland collectively repaid more than they borrowed in nine of the first 11 months of 2009, and by the end of November, they were carrying 0.6% less credit card debt than they were a year earlier. The number of personal cards in use has also been falling - in November, for example, the number dropped by about 10,000, meaning there were 2.178 million cards in use when December started.

The overall value of overdrafts also fell in November – by about €81 million.

"As in the UK, consumers in Ireland are reducing their debt as a result of the recession," said a spokesperson for Debt Advisers Direct.

"It`s partly due to the limited availability of credit, of course, but even so it`s good to see people finding ways to bring down the levels of debt they`re carrying - firstly because it means they`re improving their financial situation, and secondly because they`re proving to themselves that they can make an impact on their debt."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Teenagers concerned about parents` debt

Tue, 5 Jan 2010 11:27:14 GMT

44% of teenagers are concerned about their parents getting into debt as Christmas approaches, a new survey from children`s charity Barnardo`s suggests.

The survey explored participants` feelings about all kinds of issues - not just debt, but money in general, as well as self-harm, the future, politicians, crime, and so on.

For example, the poll revealed that a quarter of the teenagers questioned - and in London, a third of them - have missed a meal due to a shortage of money.

"We are driven to accept that poverty and debt are concerns for adults," said Barnardo`s chief executive Martin Narey. "But the depth of UK poverty is such that children fret about it and particularly about parental debt. So much for a contented and peaceful Christmas."

Barnardo`s has interviewed teenagers all over the UK, and the resulting short film - The Teens` Speech - will be premiered on Christmas Day on MySpace`s UK home page and on YouTube.

Previously, a survey by Save the Children had suggested that many families would fall into debt in order to buy warm clothing and food this winter - and more than half of the people questioned said that they`d turn to high-interest debt to cover their costs.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Homeowners reduce mortgage debt

Tue, 5 Jan 2010 11:30:2 GMT

According to figures released by the Bank of England, UK homeowners reduced their outstanding mortgage debt for the sixth quarter in a row between July and September - paying off £4.9bn of secured debt - the Telegraph reports.

The figures contrast strongly with those of previous years, when many homeowners released equity from their properties - often to fund large purchases.

The rate at which homeowners unlocked equity from their homes peaked during the final three-month period of 2003, when £17.03bn was released. Since the second quarter of 2008, when homeowners stopped withdrawing equity, a total of £33.89bn has been knocked off mortgage debts.

Withdrawing equity from a property allows people to take advantage of rising house prices, increasing their mortgage debt but converting some of the rise in the value of their home into cash. And as the Telegraph reports, this money is `typically used to fund big purchases such as cars or home improvements, or for debt consolidation`.

The paper goes on to say that while many people will be happy to increase their mortgage debt when house prices are rising, they are less likely to do so when house prices are falling and unemployment is on the rise.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Advice issued to help people avoid Christmas debt

Thu, 31 Dec 2009 11:21:51 GMT

Contour Homes, one of Lancashire`s biggest housing associations, is warning people to budget over Christmas to avoid falling into debt.

The company has issued advice on how people can keep their costs down over the festive season to avoid falling into debt.

Sarah Knowles, Corporate Services Manager for the association, said: "It`s very tempting to overspend at Christmas.

"Everyone likes to get into the holiday mood but when the party`s over, many people are counting the cost of impulsive buys in January.

"Make sure you write a list of things you need - rather than things you want. Once you have written your list, take it with you everywhere and don`t give in to impulse buys. Budgeting is very important. You still need to pay those crucial bills such as rent and utility bills - they don`t stop just because it`s Christmas."

She went on to talk about what people should do if they find themselves in debt over Christmas, highlighting the importance of seeking debt advice as soon as possible to help deal with their problem.

"Debt can be devastating but you should not suffer alone or in silence. If you owe money to any organisation contact them right away and explain your situation […]. The worst thing you can do is ignore the problem as it will only get worse."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Mortgage lending falls 10% in November

Tue, 29 Dec 2009 11:25:33 GMT

According to figures from the Council of Mortgage Lenders (CML), gross mortgage lending in November totalled £12bn - 10% lower than the £13.3bn seen in October and 14% lower than the £13.9bn recorded in November 2008.

The CML states that `a modest seasonal decline between October and November is typical`, but a drop of 10% is a little bigger than normal.

Economist at the CML, Paul Samter, said: "There is little reason to expect much underlying change in the coming months. There could be a modest decline in underlying house-buying activity in early 2010 due to the stamp duty holiday ending, with activity `bunching` over the last few months of 2009. But seasonal factors are likely to be the dominant driver over the next few months."

A spokesperson for Debt Advisers Direct added: "Although the amount of mortgage debt taken on in November was slightly lower than October`s figure, this seems to be more or less in line with seasonal trends.

"As Mr. Samter has said, with the stamp duty holiday ending, we could see a decline in house-buying activity in the early months of next year - which means we would expect to see a decline in the amount of mortgage debt being taken on around then."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Cost of new mortgage debt drops

Mon, 28 Dec 2009 11:15:46 GMT

According to research by Moneyfacts.co.uk, the cost of servicing mortgage debt (for people taking out two-year fixed-rate mortgages) has fallen to its lowest level since the start of the year, the Telegraph reports.

The interest rate on the average two-year fixed-rate deal now stands at 4.86%, after lenders - over the last week - cut rates by as much as 0.4%.

The number of two-year fixed-rate mortgage deals charging less than 4% interest has risen from 53 to 94 in the last two months alone, suggesting that more people taking out a mortgage will be able to benefit from the low base rate - and make smaller payments towards their mortgage debt each month.

Michelle Slade, a spokesperson for Moneyfacts.co.uk, said: "Lenders finally appear to be putting the `open for business` sign back in the window and bringing competition back to the mortgage market.

"Borrowers will be hoping that the early Christmas present they have received from lenders will continue into 2010."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Families facing debt this winter

Fri, 25 Dec 2009 11:7:25 GMT

A survey by children`s charity Save the Children suggests that the majority of parents in households earning less than £30,000 per year are going to `struggle to manage this winter`, the BBC reports.

More than half (52%) of the 1,006 parents questioned said they would turn to high-interest debt to cover their costs over the winter months.

The research found that 27% of families on low incomes said that this winter, they would have to take on debt to cover the cost of fuel bills, 22% said they would have to take on debt to pay for warm winter clothing, while 21% said they would have to borrow to pay for `other essentials including food`.

The majority expect to take on up to £500 of debt to cover their costs this winter, and believe it will take them more than 12 months to repay it.

32% of the families surveyed said that their greatest worry was that they would struggle when it comes to paying back their debt, while 26% worried that they would be pushed further into debt.

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

`Upsurge` in homeowners struggling to service mortgage debt

Thu, 24 Dec 2009 11:28:14 GMT

According to the Housing Advice Service at Preston Council, there has been an `upsurge` in the number of Lancashire homeowners struggling to service their mortgage debt in the run-up to Christmas, lep.co.uk reports.

The Service opened 155 new cases in November - all of which were for people needing help with housing.

Six of those who contacted the Service within the space of a few days were owner-occupiers struggling with their mortgage debts - `unusual` for this time of year, according to housing bosses.

Senior Housing Advisory Officer at the Housing Advice Service, John Cameron, said that the recession `could be partly to blame`, but it could still take time before we see the `real impact` on homeowners.

A spokesperson for Debt Advisers Direct commented: "We would advise anyone struggling to afford their payments towards their mortgage debt to contact their mortgage provider and/or a professional debt adviser without delay."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).