Recently in Debt Management Category

The Office of Fair Trading released a report yesterday on how to tackle the ever growing problem of high cost credit in the UK.  The 57 page document sought to find out how best to help consumers who face paying the high APR's associated with payday loans and other high cost credit markets.

The report has been criticised for not recomending a price cap on the high cost credit industry - with some lenders advertising 2300%+ APR.  The report suggests that capping the cost of the loans may lead lenders to withdraw or restrict their products, resulting in a negative impact for the consumer. 

Those that have read the whole report though, will understand the wider implications of the reports recomendations.  The report took in a large amount of information, and found itself addressing issues that are not within the remit of the OFT.  The report suggested that the government work with the industry, along with price comparison websites in order to give consumers the ability to make more informed decisions about where they apply for credit. 

The report also suggested an industry wide code of practice would also have a positive impact on the current situation. 

Ray Watson, OFT Director of the credit group said:

'Our report has found that the people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal.  This means that competition between suppliers is less effective than it might be.  The recomendations we are making today would deliver worthwhile improvements to these markets but more radical approaches, outside the remit of the OFT, need to be examined by the government if the fundamental and longstanding issues of lack of consumer power and limited supply are to be tackled.'

Experian revealed figures this week on the numbers of insolvencies being declared in 2010.  The figures mirror statistics from the Insolvency Service showing a rise in the number of professional families, retired couples and young city workers that are feeling the pinch. 

The Insolvency Service figures show the highest numbers of people declared insolovent since records began in 1960.  The figures show 70 people an hour being declared insolvent, a total of 35,682 for the first quarter of 2010.

James Jones, manager at Experian said of the figures "People on £40,000 salaries were spending like people earning 6 figures and when the house prices started to fall and the employment market weakened it all ended quite dramatic style."

If you are struggling with repayments on any of your debts, call MRA Debt Help on 01424 777156

An Office of Fair Trading press release yesterday showed real progress in its quest to ensure that all consumers have current accounts that work well for them.  The OFT has said that there is a long way to go, but they are expecting 'significant developments' over the next 2 years.

The improvements seen by the OFT include:

A reduction in the average unpaid item charge from £34 to £17

Unarranged overdraft charges falling from an average of £30 to an average of £22.

These are important improvements for consumers struggling with debts, as often it can be the cost of banking charges that can prevent them from being able to make their repayments. Debts can often snowball when faced with unexpected banking charges.

Other improvements shown by the OFT include an improved uptake of the 'Faster Payments' system for standing orders and one off payments. 

The OFT is still campaigning for improved conditions for consumers, such as those needing debt help.  They are looking to tgive consumers the ability to opt out of unarranged overdrafts, and their associated charges.  They are also looking towards the banking industry to provide more tools to help debt ridden consumers that are having problems with banking charges, and provide better treatment for consumers who do go overdrawn.

They are also looking to see an improvement in current account conditions following this weeks introduction of best practice for credit card and loan payment procedures.

If you are struggling with credit card, loan or overdraft debts, call MRA Debt Help on 01424 777156 or use our debt calculator to get free debt advice from MRA Debt Help.

You may remember my blog post from 20th January regarding new changes to the way credit card companies treat their customers.  The government and the UK Cards Association reached an agreement on how to improve the standard of service for Credit Card companies in the UK.

The new regulation can be broken down into five sections - all of which would prove helpful for consumers needing debt management advice.  The sections are:

Right to repay

Right to Control

Right to Reject

Right to Information

Right to compare

The 'rules' are voluntary, but if lenders don't comply then Gordon Brown has said he will consider maikng them statutory.  The UK Cards Association expect the rules to come into effect by the end of the year. 

Right to Repay

The first 'right' for consumers is the right to repay.  This is one of the biggest benefits to debt ridden consumers as it targets the practice of lenders paying off the cheapest debt first.  In the new rules, lenders will put customers repayments towards paying off the highest cost debt first.  There is also a change to the minimum payment structure, which should now cover capital as well as interest. 

Right to Control/Right to Reject

Lenders have caused some consumers considerable stress by raising their interest rate, even if they have been up to date on their payments.  The new rights give consumers the option to reject the new interest rates, and also to reject raised credit limits.

Right to information

Lenders are being encouraged to offer more guidance to consumers on the penalties for paying back too little.  Lenders should provide more information to consumers on late payment charges and other penalties.

Right to Compare

Lenders are to produce a comparison statement annually.  This is to ensure that consumers are aware of how their credit card interest rate compares with others available. 

If you are struggling to make your credit card or loan payments then call MRA Debt Help on 01424 777156 to speak to one of our debt counsellors

In a worrying statement, Provident Financial revealed to the Daily Mail (my favourite harbinger of doom) this week that they are now receiving 2700 applications every day for their Vanquis Credit Card. 

The Vanquis card is a sub prime credit card, aimed at consumers with bad credit ratings, and potentially high existing debts.  The Vanquis card has a 'typical' APR of 39.9%, nearly double that of the uk average.  This however is their 'headline' rate, with APR's rising to 59.9% if they think you're particularly risky to lend to. 

Provident have approximately 426,000 customers on Vanquis cards and has rejected around 830,000 applications.  The fact that consumers are that desperate for more cash is the worrying factor.  It would be quite reasonable to suggest that many of these consumers would be better off tackling their existing debts and getting free debt help, than taking on more credit.

If you are considering applying for a Vanquis card or even a Payday loan to keep up repayments with other debts then call MRA Debt Help for free debt advice.  MRA can offer you the best solution to your debt problems, whether it be Debt Management, Bankruptcy, or even just better budgeting!

The Bank of England collates figures on the amount of debt that is written off by Lenders.  This year has seen the figures reach a record high with nearly £10bn of lending to individuals written off over the course of 2009.

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.

A recent consultation document by the Ministry of Justice could make some important changes for debtors in the UK, including debt management clients.  The document centres around charging orders, specifically the order for sale that may follow.

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.

It has been widely reported that the numbers of people seeking free debt advice has continued to rise over the past few months.  The CCCS, CAB and National Debtline have all reported an increase in the numbers of people waiting to see their advisers, leading to an increase in waiting times.

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.

Moneyfacts have revealed this week that the average credit card interest rate is at its highest in over 10 years.  This comes despite the Bank of Englands base rate being at its lowest ever, and staying at this rate since March 2009.

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.