Abacus Daily Debt News

The predicted figure for total repossessions in the UK has been cut for the second time by the Council of Mortgage Lenders (CML).

It originally stood at 75,000 but was taken down to 65,000 in June. Now, it is being reduced even further to 48,000 as a result of increased government measures and lender forebearance, as well as the effects of low interest rates.

These have helped the majority of debtors struggling to keep their homes.

Director general of the CML Michael Coogan stated that the organisation is happy to have been incorrect in its initial forecasts and that, although the economy is still in recovery, “we no longer expect a dramatic rise in properties being taken into possession unless rates rise from the low levels”.

He added that these latest findings should be cheering news for borrowers.

However, shadow housing minister for the Liberal Democrats Sarah Teather remarked on these statistics, stating that an urgent reform in mortgage law is required to ensure that repossession becomes a last resort.

By Sarah Adie

Abacus Comment: Many people with mortage arrears allow them to build up as they pay unsecured creditors at expense of their secured loans. In many cases a debt management plan is the solution as this reduces monthly outgoings,  thus making mortgage payments affordable.

Almost 40 per cent of people are not considering taking out credit cards for fear of tarnishing their credit scores, a new survey has revealed.

According to Confused.com, this trepidation is prevalent despite the fact that 12 per cent of those asked admitted that their scores have actually improved in the last year.

The price comparison site advised people concerned about tarnishing their reputations to help contain the risk by using credit scoring tools that can check which cards are most likely to accept them as customers, without leaving credit footprints.

Those aged between 22 and 30 are the most worried about leaving black marks on their records and head of credit cards at Confused.com Joanne Garcia noted: “The financially savvy young look to the future and see problems about not only getting a credit card or loan, but also to finding a decent mortgage.”

Last month, the Treasury Select Committee was pressed upon by Moneysupermarket.com to create change in the credit search market as shopping around for products is growing tougher as a result of lower acceptance rates and greater apprehension regarding credit scores.

By Sarah Adie

Abacus comment:  Many of our debt management clients have come to us after they’ve been rejected for many loan applications. Many people do not realise multiple applications for credit has a negative imact on credit score. Further unsecured credit is very rarely a long term solution to unaffordable debts.

The latest insolvency figures released by the Insolvency Service - which revealed an increase of 28 per cent in the third quarter of 2009 on the previous year - have been described as “unbelievably frightening”.

This is the opinion of Vantis Business Recovery’s director Nick O’Reilly, who observed that the number of bankruptcies in the UK was 20,000 only 30 years ago.

Remarking on the fact that such debt problems may jump to almost 150,000 in one calendar year, Mr O’Reilly noted that the change in the public’s attitude towards credit is “long overdue”.

“The problem with credit … is that it’s too easily available,” he said, adding that it is the wrong way to borrow money.

According to the Insolvency Service, there were 35,242 personal insolvencies across England and Wales in the third quarter of 2009, with a total of 98,568 throughout the whole of the year thus far.

By Sarah Adie

Abacus Comment: It’s not only the public’s attitude towards credit that needs to change - but also the credit industry’s. Unsolicited credit is still with us. Many Christmas shoppers will be sold store cards in the coming weeks without any intention of obtaining one before they entered the store. The game plan from the store is simple - allow consumers to spend more than they can afford;  many will, and will eventually need a debt management solution.

Millions of debtors could be adversely affected as banks look at different ways to raise capital, including the implementation of higher interest rates and annual fees applied to credit cards - necessary to deal with the rise in debts on such cards.

This is according to PricewaterhouseCoopers, which noted that there has been a 50 per cent increase in this kind of debt, the Daily Mail reports.

And the company has predicted that up to 1,000 people a day will be forced to seek some form of  debt management help when they find they are unable to keep up with the payments.

According to the study, Precious Plastic, “credit will become more expensive as lenders attempt to claw back revenue”.

It has been suggested that interest rates - many of which are already more than 20 per cent - may climb above 30 per cent.

However, the new lending code - which came into effect on November 1st - was recently described by Robert Skinner of the Lending Standards Board as being beneficial to consumers and will cover issues relating to good practice in credit and charge cards.

By Sarah Adie

Debt statistics for November have been released by financial charity Credit Action, revealing that repossessions occur every 11.5 minutes.

Furthermore, it was shown that while the average household debt - including mortgages - stands at £58,340, one person every 3.97 minutes declares themselves bankrupt or insolvent. So debt management is clearly an issue for many familes.

In addition, 2,553 people are made redundant every day, suggesting that the personal debt problems in the UK are only getting worse.

It was also shown that, with the numbers of new enquiries regarding debt issues to Citizen’s Advice rising by 9,300 each day, the British public are unable to prevent their situations from worsening, with £182 million in interest paid in the country on a daily basis.

Last month, it emerged that Citizens Advice bureaux in East Staffordshire had seen the amount of debt problems almost triple in the last three years, rising from £7.7 million in 2005-6 to £25 million for the past 12 months.

By Sarah Adie

Unemployed people are to be thrown a lifeline by small to medium-sized enterprises (SMEs) in the UK, many of which have admitted plans to create jobs over the next few months.

This is according to a survey conducted by the Santander Banking Group, which revealed that 17 per cent of SMEs intend to increase their employee numbers prior to Christmas.

And firms with a turnover of between £1 million and £5 million are the most likely to initiate recruitment drives, with 27 per cent stating they plan to hire new staff.

Britons struggling with debt management issues as a result of unemployment and redundancies may be buoyed by this news.

Commenting on the statistics, a spokesman from the Federation of Small Businesses said that it is a positive development, although he added that the body "would like to see the establishment of dedicated small business managers inside job centres", as well as closer ties between skills boards, Businesslink and Jobcentre Plus.

By Sarah Adie

Britons are turning to moonlighting as a way to supplement income from their full-time employment, it has been revealed.

According to a study conducted by Hirescores.co.uk - a UK-based recruitment agency review website - 46 per cent of respondents admitted to earning money outside their day jobs.

And one-third of those asked stated that they were compelled to do so because they needed assistance financially.

Managing director of Hirescores.co.uk Lisette Howlett stated that she remains unsurprised at these statistics, "with so many people struggling to make ends meet".

However, she went on to warn debtors that taking on extra work on a cash-in-hand basis is illegal and "could have serious insurance, or health and safety implications".

Last month, it emerged that debt management problems are affecting people’s abilities to work, with a survey by talkaboutdebt.co.uk showing that 20 per cent of those experiencing difficulties have taken a leave of absence of up to six months.

By Sarah Adie

Managing finances and debt has been recommended as a good option for those looking to make a new year’s resolution for 2010.

Directgov offered eight ideas for consumers to consider heading into the next decade and placed money management first, encouraging people to kick off the 12-month period by sorting out their personal balance sheets.

It indicated that confidential advice and support is available on this matter and pointed out that there are tools which can help with budgeting, as well as information about borrowing and saving, online.

"Start the new year by getting your finances in order and learn how to manage your money," it stated.

This week, uSwitch.com suggested that some consumers are already looking to cut back on expenditure, but may be doing so in the wrong areas.

It uncovered a 40 per cent drop in people taking out heating insurance policies and renewals compared to last year and warned that this could see households having to pay out far more in repair costs should anything go wrong with their boilers.

By Chris Trimble