Abacus Daily Debt News

The nation’s total credit card debt has increased by £4 billion between February 2009 and 2010, research has shown.

Statistics have been provided by Unbiased.co.uk after the elapse of the year’s first 50 days and indicate that money owed has now risen to £54 billion.

The website declared February 20th Debt Freedom Day, the end of the period at the beginning of a year when people earn enough money to satisfy the interest on their debts.

It means that the actual money borrowed is not yet being paid back.

Karen Barrett, chief executive of Unbiased.co.uk, noted the significance of the event.

She said: "Debts can quickly mount up to a considerable sum and this date demonstrates that debt is something that we need to take control of and actively manage."

Last week, figures released by Moneyfacts.co.uk showed that average credit card rates had hit 18.8 per cent, a 12-year high.

By Joe Shervin

F&C Asset Management (F&C) has announced it is to help those aged between 35 and 45 resolve their debt and other financial problems by publishing a Financial Life Guide that is formed as a 12-step plan.

According to the organisation’s research, conducted by OnePoll, just below 50 per cent of those in this age demographic feel in control of their cash, while 14 per cent admit to not being in control at all.

The guide - which can be obtained through the body’s investor services team and on its website - comes with a range of suggestions regarding financial planning, including investments, pensions, savings and protection.

Head of global wholesale and marketing at F&C Investments Scott Stevens said: "There is a real need for people in this age group to sort their financial lives out."

It follows the recent launch of a helpline by consumer watchdog Which? that offers callers product comparison tables, an advisory service and other guides regarding money.

By Sarah Adie

While the unemployment rate in the UK appears to be in decline, the number of those claiming unemployment benefits climbed in January, suggesting that people are still experiencing potential debt and other financial difficulties.

Official data has shown that, at the beginning of 2010, the claimant count jumped by 23,000, following two months where it dropped and Mark Bolsom of the UK Trading Desk with Travelex noted "this … is unexpected".

However, he went on to say that the stability of the unemployment rate is the main concern, "which remained steady at 7.8 per cent", adding that the fluctuating benefit rates could be down to Britons "taking on temporary work as a stop gap because they can’t find a permanent position".

Mr Bolsom also recently commented on the Bank of England’s decision to keep rates at 0.5 per cent, as well as pausing quantitative easing.

He stated that this move indicates that the organisation does not have "overwhelming confidence in sustained economic recovery".

By Sarah Adie

Those in debt may find their situations exacerbated if their bank cards are either lost or stolen, as it has emerged that the technology is not foolproof.

According to research conducted by the University of Cambridge Computer Laboratory, the system itself is flawed and it is possible for someone to trick the card into believing that it is conducting a chip-and-signature purchase, with the terminal thinking it is chip and pin.

Transactions can be completed both in-person and online but Jemma Smith of UK Payments - an information portal for making payments in Britain - noted that, while this is possible, it "doesn’t necessarily transcribe to something which is applicable for fraudsters in the real world".

She went on to note that fraud is decreasing and, for lost and stolen plastic, it has fallen to its lowest level in 20 years.

"Chip and pin is not broken," Ms Smith asserted.

By Sarah Adie

The Financial Services Authority (FSA) and the UK Treasury have announced that the Consumer Credit Directive (CCD) will not be extended to include mortgage loans.

Such practices will continue to be addressed in the FSA’s Mortgages and Home Finance: Conduct of Business guidebook and a statement from the body noted that the refusal to incorporate the CCD into its practices "does not mean that such mortgages are unregulated. Rather, this form of credit is subject to a regime that is better attuned to the issues it poses", OpRisk & Compliance reports.

This was made clear in a letter to the European Commission (EC) from both the FSA and the Treasury, in response to a questionnaire from the EC which stated that some member states have made the CCD apply to secured loans.

It recently emerged that the FSA intends to offer greater protection to borrowers through strengthening measures that help people who have mortgage-related debt.

By Sarah Adie

Those affected by possible repossessions will be able to continue to go to the government for help.

According to housing minister John Healey, support for homeowners has been extended and the Citizen’s Advice Bureau is also to receive funding so that it can hold local events around the UK to offer those in difficulties with in-person counsel.

Mr Healey urged anyone in such situations to contact the government’s helpline and website.

"We’ve pulled out all the stops over the last year to help struggling homeowners take control of their finances and it means thousands of families have not faced losing their homes," he said.

Those in need could be offered assistance through backstop initiatives such as the Mortgage Rescue Scheme and the Homeowner Mortgage Support system.

This comes after the UK Insolvency Helpline’s Ian Boden-Smyth predicted that debt helplines in the country are likely to be fairly active at the start of 2010, although they may quieten around Easter and other holiday periods.

By Sarah Adie

Britons may be at increasing risk of debt and other financial difficulties because of hikes in oil prices, it has been claimed.

According to a report entitled The Oil Crunch - a wake up call for the UK economy, published by Sir Richard Branson and other businessmen, shortages and price increases have been predicted for as early as 2015.

It noted that the poorest families are those most vulnerable to such climbs and added that the government must create contingency plans for infrastructure.

"Fuel price unrest could lead to shortages in consumer products and the UK’s energy security will be significantly compromised," the paper continued, with Sir Richard saying that "viable, affordable and secure long-term sources of alternative energy" must be developed.

This follows a recent report from uSwitch.com suggesting that, taking pricing trends and required investments into account, annual energy bills could reach £4,733 by 2020, a fact described as a "big wake-up call" by director of consumer policy Ann Robinson.

By Sarah Adie

Many people in Britain are experiencing financial difficulties, in spite of the fact that interest rates have reached record lows.

This is according to director of personal insolvency at KPMG Chris Nutting, who noted that the company’s research has revealed that more than 223 people are opting to petition for bankruptcy each day.

"The harsh reality is that many people are still living beyond their means," he said, adding that history has shown that this statistic is going to climb for some time after the recession is over because of tax hikes and decreased public sector expenditure.

"A lot of people will need to take drastic action to resolve their financial problems," Mr Nutting continued.

And recent figures from R3 indicated that 916,000 people in the UK are handling their debt issues by themselves, without seeking professional help, while a further 574,000 have been in informal contact with creditors for assistance.

By Sarah Adie

The number of insolvencies in Britain looks set to climb throughout 2010 as those in debt begin to take their financial situations more seriously.

This is according to This is Money’s Alan O’Sullivan, who noted that insolvencies are expected to reach "historic highs" this year, despite the fact that a slight dip in official figures is likely.

He observed that the statistics will be boosted by the fact that debt relief orders and bankruptcy proceedings are easily available and the majority still appear to prefer to "wipe the slate clean" through such actions.

However, Mr O’Sullivan did state that the "onerous repercussions" of choosing bankruptcy may be avoided by many through arranging formal debt plans as an alternative.

And Louise Brittain of Deloitte predicted that insolvencies will total 145,000 in 2010.

The news source recently considered the benefits of entering into individual voluntary arrangements, suggesting it as one path that can be taken should debts amassed become "truly unmanageable".

By Sarah Adie

Britons struggling with debt management may like to contact a debt adviser and consider entering into an individual voluntary arrangement (IVA).

According to This is Money - in a checklist of ways in which to handle new year debt - opting for an IVA is one path that can be taken once it has become clear that any debts amassed "are truly unmanageable".

This, the news source observed, is a "formal debt payment plan" and will see any interest on the amount owed frozen.

However, it was also noted that advisers could recommend a debt management plan - which is more informal than an IVA - or even bankruptcy, "if you have debts so large that you do not have a hope of paying them and you do not have major assets like a home that could be seized".

Those in such situations may also like to consider the words of Nick O’Reilly of Vantis Business Recovery, who stated that IVAs may be the better option for those with regular incomes, as bankruptcy can still come with some stigma attached to it.

By Sarah Adie