New figures show that personal debt is soaring among pensioners.  According to analysis by the independent financial adviser Key Retirement Solutions, average personal loans among those aged over 55 exceed £8,700. But, by the time these people got into their 70s, this had rolled up to £10,660. True, the equity release specialist has a vested interest in steering them toward borrowing against their homes, but its sample size of 4,500 clients is impressive and the conclusions make worrying reading.

What seems to be happening is that the tax-free lump sum which most people receive when they start to draw their pension is being blown in the early years of retirement, as they seek to support a lifestyle which they can no longer afford. After that, their little plastic friends must take the strain. 

To be fair, many pensioners could argue their debts have less to do with profligacy than necessity, however many septuagenarians might struggle to feed the interest meter on debts exceeding £10,000, let alone repay any of the capital.

The government is expected to announce details next week of a new package to help the millions of households that have fallen into fuel poverty.  Ministers have come under pressure to act after the latest price increases from Britain's energy suppliers and are looking at introducing measures which could include child credits or help with bills.

Four of the big six energy companies, EDF Energy, British Gas, E.ON and Scottish and Southern Energy, have already increased gas and power prices this summer, pushing annual average dual-fuel bills to between £1,210 and £1,328. ScottishPower and RWE npower are expected to follow suit.  

In an interview with the Daily Telegraph, John Hutton, business and enterprise secretary, said: "There is genuine concern about the difficulties people will face paying heating bills over the coming winter and we are looking at extra support." It is less clear how the package will be funded.  There have been calls for a windfall tax on energy company profits though the government is said to be cautious about such a move because it could hit companies' investment plans.  Another possibility is that the government could raise extra cash by increasing the percentage of carbon permits to be auctioned under phase two of the European Union's emissions trading scheme.

If you are struggling with your household finances, MRA can offer expert, confidential advice.

http://www.guardian.co.uk/politics/2008/aug/29/economy.utilities

A debt map of British regions shows that residents of the City of London top the table for excessive consumer credit with average consumer borrowings of £41,002.  By contrast, people with debt difficulties who live on Orkney owe the least, at £4,188.

In other areas, the most indebted districts after the City are Salisbury, Wiltshire, (£39,474), the Isle of Man (£36,538) and Dorchester, Dorset (£35,939) whilst the least chronic debt is carried by those in Kirkwall, Inverness (£11,002); the Shetland Isles (£11,500) and  Galashiels, near Edinburgh (£13,523).

The figures, which come jointly from advice company ClearDebt and the advice and support website reallyworried aboutdebt.co.uk, cover more than 9,500 people.  Nick O'Reilly, president of the insolvency profession's trade body R3, said: 'People living in the City may well have felt happy with higher levels of debt until their circumstances changed. The middle classes who go into debt suffer most because their previous financial comfort allowed them to build up the biggest borrowing.

If your borrowing has become difficult to manage you can get confidential, expert advice and a range of debt management solutions from MRA.

www.thisismoney.co.uk/dealing-with-debt/article.html

Up to 300,000 workers will lose their jobs by 2011, pushing the number of people out of work close to 2 million, the British Chambers of Commerce says today. This would take unemployment to the same level as the year that Labour came to power. The number of people claiming unemployment benefits surged at its fastest rate for 16 years during July, rising by 20,100. The total number of people out of work is 1.67 million, according to official figures.

http://business.timesonline.co.uk/tol/business/economics/article4553694.ece?&EMC-Bltn=LLWAF9

Over 12.5 million customers were affected by a second increase in the price of domestic energy in six months.  A study from uSwitch.com has found 39 per cent of households – ten million – say they cannot afford this rise, which could take the average annual bill to £1,127.  Another four million (17 per cent) said they can only comfortably afford an extra £10 a month and only one in ten could stretch themselves to a monthly increase of up to £20.

The survey also reveals one in two households (13 million) are planning to cut down on heating as the cold weather draws in this winter, 54 per cent will become more energy efficient and four million (15 per cent) of homes will take drastic measures to reduce their energy usage by cooking fewer hot meals.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Households who are concerned about their jobs, their homes and their ongoing ability to pay their bills will be left with no choice but to cut back on both heating and eating this winter.  The government needs to provide a strategy and regulatory environment to ensure that the lights stay on at an affordable price."

The number of properties that are being repossessed has risen sharply over the past few months.  The Council of Mortgage Lenders (CML) said that the number of homes repossessed in the first half of 2008 was up 48 per cent compared with the same period last year.

Citizens Advice head of consumer policy Sue Edwards said: "We are concerned about the increase in mortgage arrears and repossessions.  In too many cases lenders are still not doing everything they can to help borrowers in trouble.  To prevent the mortgage crisis deepening, it is vital that all lenders do everything in their power to help people avoid losing their homes"

"Anyone who is falling behind with payments on a mortgage or secured loan should speak to their lender straight away. Lenders should negotiate with borrowers, but if you are having problems, make sure you seek free, confidential, independent advice without delay,” says Edwards.

If you are worried about keeping up payments on your mortgage, or have other debt problems, MRA can offer support, advice and a range of debt solutions.

 In today's world, many households carry some kind of debt - from mortgages through to credit card bills. In a period of economic change, debts which were previously manageable may now seem less so.  That is why the government has acted to make available a range of practical debt advice services.  “Getting the right advice can make all the difference, helping people to cope with tighter purse strings in the face of rising costs and increasing mortgage repayments,” says justice minister Bridget Prentice.  "In the most serious cases, the right advice can help people who face the threat of repossession from losing their home,” she adds.  ? ?

The new Government backed initiative encourages all creditors to engage with people who owe them money prior to taking legal action.  Extensive changes are also being made to Her Majesty’s Court Services’ Possession Claim Online system to ensure that the information received by tenants and homeowners contains details about local advice providers. This new system emphasises the importance of seeking advice at an early stage.  ? ?There is no shame in owing money, but the most important part is prevention. Facing up to your debts is the only way you can get over them.

 As summer approaches and the temperature rises, so the balance transfer credit card market is also beginning to hot up.  There are some 40 credit cards offering 0% balance transfers for periods of 12 months or longer, according to price comparison website moneysupermarket.com, and a new card by Capital One has pushed the previous limit up to 17 months.  Customers can benefit from 0% balance transfers until October 1, 2009.  This beats the longest 0% balance transfer deal currently on the market, Virgin Money's 15-month 0% deal.   Steve Willey, head of credit cards at moneysupermarket.com, said: `this is great news for consumers looking for a new credit card to transfer a balance`.

However, consumers should be aware of the costs involved in transferring their debt. The balance transfer market was criticised earlier this year by price comparison website MoneyExpert.com for its lack of capped transfer deals. The majority of caps limit the cost of a transfer to approximately £50, but anyone looking to transfer money without a cap would have to pay an average transfer fee of 2.8%.  As the average balance transfer is now £2,666, the cost without a capped fee would be £74.65.

MRA can help those with credit card debt by offering a range of tailored debt management solutions.

House prices are falling at their fastest rate since the depths of the early Nineties housing crash, according to the latest property market survey.  The average price of a home in Britain is down 6.3% since the start of the year and 7.3% below the market's peak last October.  Many homeowners are now losing almost as much from their property as they are earning from their job.  The average priced home in Britain has shed £13,500 in value since the market peak in the autumn, about two-thirds of what the average wage earner would have been paid in salary over the same period.

Fionnuala Earley, Nationwide's chief economist, said: `while the Bank of England had little scope for cutting interest rates now because of high inflation the situation should improve by the end of the year.  Our central expectation is that wage growth will remain stable, consumer spending will come under increasing pressure in the coming months and the economy will continue to slow. If this proves correct, the Bank's Monetary Policy Committee should feel able to adjust rates before the end of the year.'

For homeowner feeling the effect of falling property values and rising cost of living, MRA are at hand to offer advice on debt management.

With average consumer loan balances and credit card debt continuing to rise, debt management is becoming increasingly crucial for many Brits who need help.  Debt management approaches vary. The first step is to get debt help or debt advice from knowledgeable experts. Initially there may be options such as debt consolidation loans or other self-directed approaches but sometimes consumers are simply too deep into debt to find lenders willing to work with them directly. For these borrowers an IVA, or individual voluntary agreement, may be a better solution.  These unique solutions have many benefits compared to bankruptcy. They often include significant write offs of existing debt. They involve repayment plans that pay off the loan, in a manageable way, within five years. Any outstanding balance is usually wiped out after this time. As importantly, there is less long-term negative impact on borrower credibility. Borrowers need to carefully explore this important debt help opportunity with experts to get its greatest benefits.  IVA plans are government supported, which makes them extremely credible debt solutions. 

MRA can work with borrowers to provide debt advice and debt counselling and to arrange appropriate debt management solutions.

www.guardian.co.uk/money/2008/jun/18/creditcards.debt

The price comparison website uSwitch has reported that credit card companies are lending money without ensuring borrowers earn enough to repay the amount owed, causing a debt management crisis amongst Britons. 

Where it is generally expected that people use credit responsibly and don’t borrow beyond their means, it is also the responsibility of lenders to investigate the financial background of those who borrow, asking questions such as what happens if they (the borrower) get into financial difficulty; would we (the lender) get the money back?  Irresponsible lending and over borrowing is a no-win situation for all involved and has wider implications for borrowers in the already worsening economy.   

www.thisismoney.co.uk/dealing-with-debt/article.html

The need for more financial and debt management advice in schools and higher education was brought into sharp focus recently when a survey carried out by Nat West bank showed that 8,500 youngsters, aged 11-19, asked to describe the sort of lifestyle they would have at 25, answered with a poor grasp on reality.   A majority believed they would own their own cars by 21 and a house by 25. Furthermore, a third believed that they would never have debts, whereas half of those who acknowledge they were likely to have student debts, believed they would start paying it off before leaving university   

With an economic climate that is predicted to have worsened by the time those surveyed will be attending university and making their way into the workforce, it is important that todays young enter into the adult world with realistic expectations: teaching young people, how to budget, use credit responsibly and create a good debt management plan will arm future generations with the tools they need to deal with the worsening economy. 

Dan Atkinson of the Mail on Sunday has reported that in an attempt to minimise the number of individuals filing for personal bankruptcy, the Ministry of Justice department passed an act, which gives private debt companies and charities the authority to write off part of an individuals’ debt, if they agree to enter into a debt management plan to pay of the reminder debt.  While the precise terms of the act are still being ironed out, it is clear that under the new law, private debt companies and charities will be allowed to go over lenders heads who attempt to block repayment arrangements.  The power to force creditors to accept the terms of a debt management plan will only be allowed by private debt companies and charities that hold an approved licence under new laws set out by the Ministry of Justice.  This act comes at a time when other debt management arrangements designed to avoid bankruptcy, such as Debt-Relief Orders (DROs) and simplified versions of Individual voluntary Arrangements (IVAs) are also being introduced. 

Laura Clark of the Daily Mail has recently reported that the total debt of graduate and undergraduate students currently stands at astonishing £21.95 billion pounds.  A survey carried out by Nat West bank has shown that after three years in education, the average student will leave university with debts of up to and possibly over, £ 33,500, forcing many leavers to seek out debt help and advice before entering the workforce.  However, these figures published by the Department for Innovation, Universities and Skills only refer to government-subsidized debt owed to the Student Loans Company and do not take into consideration students who also rely on credit cards and loans from commercial lenders to help towards university costs.  Loans needed to cover high tuition fees, rising accommodation cost and living expenses is officially at an all-time high and in the absence of any reliable student debt management plan, tomorrows graduates are in danger of finding themselves in a financial quagmire on leaving university.  The NUS who hold the introduction of high top-up tuition fees largely responsible for the debt problems faced by today’s students, argue that more must be done to support our future workforce by better debt management today.     
 

Reports by Capital Economics of an increase in household bad debts and the growing reluctance of businesses to offer credit facilities, suggests that larger purchases on items such as clothes, electricals and white goods maybe coming to an end.  Retailers are some of the worst to be affected by the current economic crisis as consumers have awoken to the reality of stormy times ahead.  Many spenders are preparing to weather out the poor economic climate by focusing on serious debt management, such as purchasing cheaper goods on-line as opposed to in high street stores or shopping malls.  However, alternative spending habits such as on-line purchasing means that many retailers are in serious danger of falling into unrealisable debt.  Dolcis, Ethel Austin, The Sleep Depot and Toyzone have already collapsed into administration, with more likely to follow in the coming year.