Bad debts on credit cards were actually down in the last quarter of 2009, but loans and overdrafts saw a jump of a third, up to £1.36bn
In the last 3 months alone, over £6bn of debt was defaulted - the highest level since records began in 1993. Lenders recorded a loss of £4.12bn of credit card debts that will never be repaid.
This loss could be partially attributed to the way in which debt management companies are able to negotiate with the lenders on behalf of our clients. Free debt management companies do not often offer the service. MRA Debt Help have forged good relations with many lenders and can negotiate with your creditors, not only to set up your debt management plan, but also to negotiate settlement figures if your circumstances change.
To speak to an independent debt counsellor for free debt help and advice, call MRA Debt Help on 01424 777156.
]]>The Ministry of Justice is looking to impose a minimum level of debt for which a creditor can ask for an order of sale. There are a small number of charging orders that result in an order for sale, but the MoJ expect this to increase due to the current economic situation.
The MoJ are looking to ask whether people think that there should be a minimum level of debt before an order for sale can be issued, to act as a further safguard against debt management clients with smaller credit card debts (as an example) losing their homes.
The consultation ends on 30 April 2010, and offers several solutions to the potential problem including removing CCA (consumer credit act) debts from orders for sale completely - which would be seen as unworkable. Introducing a limit appears to be the favoured option, and one that lenders and debt management clients would be equally at ease with.
]]>During the same period, it has also been revealed that the number of Britons dipping into their overdrafts has decreased. Moneysupermarket.com released the information based upon surveys it has conducted.
12 months ago it released figures stating that 17% of people it surveyed were permanently in their overdraft - even after their salaries had been paid in. A further 52% of people had used their overdraft in the previous year.
The latest update to these figures has been released, and reveals some encouraging facts. The number of people who said they are permanently overdrawn has decreased to 10% - with a further 12% that have used their overdraft facility within the last year.
It is possible that this reduction could be down to the numbers of people receiving free debt advice from companies such as MRA Debt Help and organisations such as CCCS. MRA Debt Help can offer you free debt advice and aid you to make the right decisions to get out of debt.
]]>The current level of credit card interest rates has not been seen since 1999, at a time whrn the Bank of England base rate was 6%. Average credit card rates are now a whopping 18.8%.
Customers with £5000 of credit card debt would, on average, be repaying £2289 more than 3 years ago if they only maintain the minimum payment. The renewed tightening of lending criteria has meant that customers have not been able to switch to 0% offers in the way that they were used to.
The news also comes a week after Capital One sent letters to their credit card customers informing them of a doubling in their interest rate - from 8.01% to 15.31%.
Customers who are struggling to make repayments on their ever increasing credit card debt should seek debt help asap. Free debt advice from MRA Debt Help can offer solutions to your debt, and help you work towards becoming debt free.
]]>Unsecured debts, such as mortgages have serious repercussions if the payments are not met. It is possible that not keeping up with repayments on a mortgage or other secured loan can lead to your property being repossessed. The number of Britons facing repossession over the last quarter of 2009 dropped, and was lower than the Council of Mortgage Lenders (CML) expected.
10,200 properties were repossessed by lenders in Q4 2009, showing a 13% drop from Q3 2009. The numbers of voluntary repossessions - where the homeowner has given back the keys, also dropped - from 3400 to 2500.
The Ministry of Justice cover legal proceedings to repossess homes, and according to their figures not only did the number of mortgage possession claims reduce, the number of claims that resulted in an order being made reduced too.
The increase in Britons seeking debt management plans may have contributed to this drop. Tackling your unsecured debt, and spending time creating a proper income and expenditure form can help you to prioritise your expenditure - and keep up to date with your mortgage repayments.
Debt management plans are one of the debt solutions available from MRA Debt Help. For more information call 01424 777156 to speak to one of our debt counsellors.
]]>Moneysupermarket.com's article in question is an unbiased and highly educational one, and one that MRA Debt Help support fully. The CCCS press release touched on a couple of comments by the price comparison site, without acknowledging the entire story.
The original article provided a structured and informed breakdown of the pros and cons of free debt management vs fee charging debt management. The article highlights the obvious benefits of dealing with a free debt management company, whilst also reminding consumers of the different benefits of using a fee charging debt management company.
Moneysupermarket say -
"Unfortunately, many of the free advice agencies are facing significant backlogs as debt problems mount, with CAB claiming to deal with an average of 7,241 new debt problems every working day and people in some areas having to wait up to three weeks for an interview.
By contrast, fee-charging debt management companies can often deal with problems quickly and the advantage they offer is that they administer payments for you - you pay your money over to them and they pass it on to your creditors. You will be charged a fee for this service - typically in the region of 15% of your regular payment. However, some debt management companies may be able to negotiate better terms with your creditors which could mean the fee is worth it."
MRA Debt Help do charge a fee for administering your debt management payments, and maintain that our services are a worthwhile investment. Our negotiation rates are an indicator of our worth to our debt management clients. It is not uncommon for us to achieve a discount of over 50% to make a full and final settlement towards our clients debts.
MRA Debt Help would NEVER recommend a debt management plan to a client who would not benefit fully from our services, and as such have referred many clients to the CCCS, National Debtline and local CAB offices when their services would be better suited.
There are fee charging debt management companies in the industry that sadly take huge sums as upfront fees. MRA Debt Help take one initial monthly payment to cover our costs in setting up your debt management plan, and 1.765% of your debt per year, spread over your future monthly payments. MRA Debt Help fully support moneysupermarkets warnings to steer clear of debt management companies that wish to charge more than this.
Other unscrupolous debt management companies may try to charge you for debt advice. MRA Debt Help will NEVER charge for debt advice. All of our debt help and advice is FREE, we only make administration charges for our debt management plans.
You can be assured that if MRA Debt Help are prepared to help you, then we firmly believe we can offer you the fastest, most effective way to become debt free.
]]>In the report, the National Audit Office revealed that some Britons struggling with their debts are waiting up to a month for debt advice from the charities, leading to opposition MP's calling the government led initiatives "a triumph of bureaucracy over practicality".
MRA Debt Help are proud of our speed and skill at providing debt advice, and our unique position in being able to negotiate early settlements. Unlike the free debt management charities, we are able to offer you free debt advice from the very moment you contact us, whether it be online, by telephone or face to face.
Very often when people come to us with debt problems, we have to act as quickly as possible in order to offer the best possible solution for them. Waiting a month for debt help is often a luxury our clients do not have!
If you are struggling with debts and want free debt advice NOW then call MRA Debt Help on 01424 777156 or fill in our budget form.
]]>Thats where the sensible comments stop though! All the time I've been writing this debt management blog, I never would have thought I'd see a supposed debt consolidation advice website suggest that someone go and buy a BMW, and remortgage their house, just to take advantage of the car scrappage scheme!!!
The first thing that struck me was that a debt based informative site would suggest spending money on a new car. I di some research, and the cheapest 3 series BMW is currently £22155 otr. So, they are suggesting that people suffering with debt problems, paying off debt management plans or living with IVA's should go and blow £20k on a car. Brilliant.
I then looked at the 'benefits' of spreading the cost of the car by adding it to your mortgage. So, to start with you've got your £2k scrappage money, so we'll take that off. £20155 to add to your mortgage then. Lets have a look at how much that would cost If we remortgage over 25 years, and get a pretty good rate at the Nationwide at the moment of 4.5% APR.
Borrowed - £20155
Timescale - 25 years
APR - 4.5%
Monthly repayment - £112.03
Interest - £13453.41
Total paid - £33608.41
In a nutshell, it would cost you £13453.41 over the period of your remortgage to save yourself £2000 in scrappage.
Doesn't sound so brilliant now, does it! Most of our debt management clients, and people that come to us for debt advice understand that when times are tough, and the debts are building, buying a brand new BMW isn't really on the agenda. But there are some that would fall for this ever so slightly flawed advice.
If you are struggling with debts - don't buy a BMW, call MRA Debt Help to speak to one of our debt
]]>Credit Cards, personal savings and loans from friends have all been used by small businesses to keep their company afloat. This has lead to a rise in personal insolvencies, due to the business owners being unable to keep up repayments on the personal debts taken out for business reasons.
41% of those surveyed by the Federation of Small Business said that they had used personal savings to fund their business, with 43% using overdrafts and 21% using personal credit cards.
15% of business owners had sacrificed family holidays, and many have raided pension funds in order to make their debt repayments. Free debt advice from MRA debt help would point business owners in the right direction, and offer a suitable means of getting out of debt.
]]>Debt Write-Off companies claim that under sections of the consumer credit act 1974 they can prove that your debts are unenforcable and have them written off. Unfortunately, this is not the case. The wild claims are simply untrue, as stated by the Office of Fair Trading - and the High Court!
Recent cases in the High Court have shown that if a customer requests a true copy of their credit agreement, it does not have to be an original, or even a photocopy. Debt management clients should be aware that any compnay claiming that they can write off your debts based on the copy of the credit agreement may be misleading you.
The OFT have also reinforced that if a credit agreement is deemed unenforceable, then the lender will be restricted in the activities it may undertake. It may still request payment and or record any arrears or default with a credit reference agency.
If you are struggling with your debts then a debt write off company may charge you a large proportion of your debts for a service that may or may not be legal. MRA Debt Help can offer free debt advice, and inform you of the best debt solution for your circumstances.
]]>There have been many opinions banded about on financial and debt blogs over the last 24 hours as to the accuracy of these figures, but we wont go into that now! The economy rose by 0.1% in the last quarter of 2009 according to the ONS, but this was not enough to stop the Gross Domestic Product (GDP) figure dropping by 4.8% over the whole of the year.
But how should debt ridden Britons react to the news? One thing we shouldnt be doing is scrapping those debt management plans and running out to spend our credit card limits! We may be officially out of recession, but if you are currently unemployed it is not necessarily a white light at the end of the tunnel. Some analysts are still even predicting unemployment to rise throughout 2010.
You also might think that the end of the recession could make things cheaper; improving your disposable income. Unfortunately this may not be the case. Taxes such as VAT and Income tax could still rise in 2010, affecting consumers across the UK. Seeking debt advice is crucial for 2010 if you are currently struggling to make your debt repayments.
Inflation is another potential hazard for our debt management clients. It is already above the official target, and if it continues to rise then it could lead to people with debts they cannot afford to pay due to increase in living costs.
In summary then, the end of the recession may not be as rosy as Gordon Brown would want us to believe, but with free debt advice from MRA Debt Help, and some sensible budgeting it could work for you.
]]>Credit card fraud, among other types is on the rise. Without wanting to sound like a Daily Mail columnist, there are instances where fraudsters have been able to take out credit in their victims names and run up large debts.
Keeping track of your credit reference file can highlight any irregularities, such as new debts, unauthorised credit checks etc.
It's not just debt management clients that can benefit from this though, with fraud being a potential problem for anyone.
Its not all doom and gloom though! You're credit file is available from the 3 main credit reference agencies - Experian, Equifax and CallCredit.
Experian also offer the 'CreditExpert' service, which is an extension of your credit report. The CreditExpert service offers free ID fraud alerts by text or email.
CreditExpert also has a section offering advice on your credit report and how to improve it. CreditExpert is a subscription based service, however they are currently running a 30-day free trial!
]]>This may sound long winded, but the report, and susequent reply hold some very important proposals for Credit Card customers, whether they are involved in a debt management plan or not.
The UKCA replied to all four points discussed in the report, and gave some encouraging answers.
The four main points were:
The UKCA responded with pledges to ensure an imporvement on all four points.
Allocation of Payments to Credit Card Debt
The UKCA has proposed that any payment towards credit card debts above the minimum payment be directed towards the most expensive debt first.
For example, currently a credit card company can make the payment towards a 0% APR part of the debt first, letting the portion of the debt that has a high interest rate (say 14.9% APR) increase. This would mean that the total debt may not decrease at the highest rate possible.
The new proposals would put an end to this, and hopefully decrease the number sof people looking for advice on debt managment plans.
Unsolicited Credit Limit Increases
At the moment, a credit card company can increase your credit limit without telling you. "But that sounds good to me!" I hear you say. Unfortunately not.
There are many cases where the customer has been struggling with their debts, and the increase in their credit limit has encouraged them to 'rob Peter to pay Paul'. This is a common problem that we have found among people asking for debt advice, and we call them 'revolvers'. The customer pays off one debt with another and their debt snowballs!
The new proposals would again put a stop to this practice and hopefully reduce the number of revolvers! Customers will be offered a 30-day opt-out period for any credit limit increase.
Minimum Repayments
Paying off your credit card debts with the minimum payments is expensive and long winded. Credit Card companies don't like telling you this because it increases their income. Under new proposals, the credit card companies will have to tell you this as well! Making payments above the minimum payment will make a bigger impact on reducing your debt. If you are struggling to make the minimum payments then contact MRA debt help and one of our debt counsellors can give you free debt help on the most suitable way out of debt for you.
Repricing of existing credit card debts
Some customers, even those with an enviable credit rating and payment history, have found that they have had their interest rates hiked up - even though the base rate has dropped! Under the new proposals, Credit Card companies will not be able to do this.
Hopefully these proposals will make 2010 alot easier for customers on the cusp of needing a debt management plan!
]]>The ABI took a positive approach to debt management for the start of 2010, saying that 42% of people struggling with debts intend to pay off their unsecured debts faster than before. This figure is up from 34% this time last year. This was an encouraging statistic, especially when in the same report over 30% of people thought that the current economic conditions would worsen in 2010!
If you are intent on becoming debt free as soon as possible then contact MRA Debt Help, where one of our debt counsellors can offer you free debt advice.
In contrast, Shelter have found that up to 1m homeowners could be using their credit cards to pay their mortgage payments. This is not only an expensive way of keeping up with your mortgage payments, but in extreme situations not meeting your credit card payments could end up with you facing a charging order on your property.
In some circumstances a debt management plan could help, by reducing your outgoings to unsecured creditors and helping you to budget properly. This in turn can help you meet your secured loan and mortgage payments.
]]>Over half of the illegal loans by loan sharks are taken out over the Christmas period. The research found that more than 100,000 of the poorest families in the UK will struggle to pay back a combined debt of £82m to illegal loan sharks.
The total amount borrowed by people with debt problems from loan sharks is £29m, but the high interest rates - an average of 825% - mean that they will end up paying nearly 3 times that.
It is often people at the end of their tether, with poor credit ratings that use illegal loan sharks. They often already have a large amount of unsecured debt and are trying to make repayments towards it. If you have found yourself in this situation, then call MRA Debt Help, where one of our debt counsellors can find a cheaper, easier (and legal!) way of managing your debts.
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