Living in Britain can have its upsides, but then again it can also have it downsides. One of the biggest, age-old gripes that many people have with our country is unsurprisingly, the weather. As sad as it may seem, statistics suggest that the average Brit will complain approximately 260 times per year about the frequent lack of sunshine. Is it any surprise then, that when asked the question “what are you most looking forward to doing this year”, over 70% of respondents replied “a well deserved holiday in the sun”.
  
Holidaying abroad has become a mandatory part of many people’s annual routines, however according to a new report it is also a primary contributor to personal debt. Accordingly, over 10 million people admit to becoming indebted as a result of their annual vacation. Holiday’s have become an expensive luxury (especially if you have a large family), and many people have no other option than to turn to credit in order to fund their excursions. Worryingly almost 10% of people admit to struggling with holiday-induced debts for sometime after they return.

It has been suggested that people who do suffer financially as a result of a holiday, could have avoided the situation by planning the trip a little more thoroughly. As with many other aspects of personal debt, planning ahead and avoiding the temptation to over stretch the purse strings is the best way to avoid a negative situation.

According to new studies, the number of newly issued CCJ’s (county court judgements) has rose at an alarming rate over recent months. Experts suggest that the rise is further testament to the UK’s increasing debt problem.

For those not in the know, the courts issue county court judgements to borrowers on behalf of their creditors. Under usual circumstances, CCJ’s provide a means for lending and credit institutions to reclaim any lost monies owed to them, by making the debt known to the courts. In extreme circumstances, either due to an inability or blunt refusal to pay said debts, creditors may be entitled to reclaim their loss through bailiff action or even repossession of the persons assets (such as a home).

The number of active CCJ’s for the first half of 2007 is estimated to be at around the 900,000 mark, which represents a 30% rise faired against Q1 & 2 2006. Analysts suggest that there are a number of reasons to explain the rise although many believe it’s simply due to a change in approach by creditors. It is likely, that in light of our current financial condition (bad debt rising as a whole) creditors are less inclined to run the risk of a mis-payment transpiring into a bad debt, and as such are becoming more proactive towards late payers, for fear of not being paid at all.

Desperate times unfortunately call for desperate measures and indebted consumers (particularly over stretched homeowners) are likely to suffer as a result. The biggest concern for those who are genuinely unable to meet their creditor commitments is that such tactics can actually worsen their situation, forcing them to turn to more serious forms of debt control as a result.

“Its official” combined borrowings totalling in excess of 1.5 Trillion pounds have cemented the UK’s position as Europe’s most indebted country.

A special debt awareness event organised in part by the Citizens Advice Bureau has made the claim to visitors as part of its opening gambit. Personal debt is reaching dangerous levels and the event has called for both consumer groups and public service officials to combine their efforts, in order to identify the root of the problem. Visitors to the event have received a thorough briefing on the UK’s current debt situation including the exact “height” of the debt mountain, plus the rate at which it is growing.

One of the more surprising revelations to come from the event relates to the rich/poor divide and the effects of debt accumulation. Accordingly, those who live beneath the poverty line are spending up to 4 times more on repaying their debts than those who live above it. The fact that personal debt is weighted more towards those who are already financially stretched is an issue in need of urgent attention.

Delegates to the event include some of Britain’s (and Europe’s) most astute economical experts. Event delegates hope to identify a practical way to regulate and control credit acquisition in the UK, as a means to relieve both individual and national financial stress.

One of the UK’s best known home loans lenders, has released a document claiming that consumers in the UK are comfortable with their borrowing levels as shown through a rise in the number of new home loans, as a means to manage personal finances.

According to their survey, many consumers rely on this type of finance as a solution to “ease the reigns” with regards to daily financial pressures. Of those who responded, over 60% were happy with their current debt and borrowing levels, procuring home loans to “grease the financial wheels” of daily life. However, in spite of some positive feedback, the organisation was still keen to voice its ethical opinions to consumers, stating that it is the lending industries responsibility to ensure customers “do not” over borrow and become indebted as a result.

A number of independent surveys have revealed that many people are misguided into signing loan agreements, only to find the terms are beyond their financial remit. Experts believe that ignorance could be a major cause of personal debt in the UK, as consumers simply don’t understand what they are agreeing to. In our opinion, it is absolutely paramount; that consumers have an exact understanding of any type of potential credit agreement and that lenders ensure their customers are able to meet their terms.

Despite wide spread optimism; consumer debt was still “on the up” for the latter part of Q2 2007.

Details from a new report indicates that the combined effects of interest rates and the increased cost of living is pushing people further into the red. The suggestion is visualised through the amount of people entering into IVA agreements and attending Bankruptcy hearings, which has topped the 35 thousand mark. Bankruptcies have rose by almost 11% during the period and IVA’s have increased by a staggering 50%.

Analysts suggest that an increase in the IVA procedure is almost certainly due to increased consumer awareness of the procedure. Although the IVA has been around for the best part of 20 years, very few people (if any) we’re familiar with the term, let alone understood its usage. As a result of increased commercial presence from organisations specialising in the procedure, the IVA has become more visual through widespread promotion.

However, the IVA itself is not the cause of increased consumer debt but its presence does supply a more accurate indication, to the severity of the problem. The fact that more and more people are choosing insolvency as a means to cope with their debt problems suggests that more and more people are allowing their debts to spiral out of control.

A large amount of people have borrowed themselves into very sensitive situations and shifts in the economy, like the ones we are witnessing at the moment, brings such people and ultimately the reality of the problem to the forefront of society.

One of the UK’s best-known and largest debt management and IVA specialists has recently announced its acquisition of Scottish debt specialists AFS Ltd, to the tune of £1.6 million.

The deal, which took place early this week, is reported to have been partially funded through the issuing of new shares with additional funds raised through existing stock. The move will strengthen the company’s presence in Scotland giving them a greater share of the lucrative Trust Deed market (Scottish IVA equivalent).

The company has also announced that the number of completed IVA arrangements for Q3 is up by almost 18%, and that they are confident of meeting quarterly projections, in spite of media condemnation and consumer group criticism towards the industry as a whole.

A number of publicly traded IVA companies have suffered recently at the hands of sliding share values. However, the number of people entering into IVA’s further increased throughout April. The industry has been heavily scrutinised by professional and consumer bodies with regards to how the procedure is orchestrated, with many calling for the introduction of new industry guidelines to abide by.

In response to the numerous enquiries we have received from individuals who are struggling with debt, and need some good advice. We have decided to list (what we feel) are the best ways to combat debt, depending on your situation. For your convenience the list is in a hierarchical order (less serious first).

• Review your finances

One of the simplest and most effective ways to manage debt is by reviewing your current financial situation with the intention of pinpointing where it is, that you’re going wrong. Our advice would be to keep a log of your spending habits and to make a note of each purchase and withdrawal that you make.

A lot of the time people are unaware as to how much money they actually spend until they conduct an exercise of this type. It is then important to analyse your log and make changes to your spending routine wherever possible, in order to save. It is almost guaranteed that you will find someway of saving, usually through the elimination of unnecessary purchases.

• An informal Debt Management plan

Depending on your level of debt, debt management can be a very effective remedy. There are two ways to go about conducting a plan, you can use a professional company to put the plan together on your behalf or you can do it yourself. In either event, your creditors will be contacted and a proposed payment structure will be presented to them.

If they agree to the plan, you will only need to pay back what you can realistically afford. However, a DM plan is not legally binding and your creditors can reject your proposal at any time should they decide. More than often, your creditors will allow the plan to run for a pre-determined amount of time and review the process at a later date.

• The Individual Voluntary Arrangement or IVA

If your financial conditions are more serious and the terms of a debt management plan are unrealistic or ineffective, you could consider an IVA. IVA’s differ from debt management in a number of ways, notably they are legally binding for both yourself and your creditors (if its agreed).

The IVA is similar to debt management in that you make a proposal to your creditors, however, unlike debt management your creditors will agree to write off a percentage of each pound of debt owed. You are also required to cohere to the terms of the IVA for a fixed amount of time (usually 5 years); failure to cohere to the terms can result in unwelcome consequences, namely Bankruptcy.

• Personal Bankruptcy

The very mention of the word strikes fear into the heart of those struggling with debt, however on some occasions Bankruptcy can actually be the best option (circumstances permitting of course).

It is important to realise that their are many drawbacks associated to Bankruptcy, which include the possibility of loosing your home, social stigma (publicity) and the inability to attain further credit. Generally speaking, Bankruptcy is only considered as a last alternative, in severe situations.

• Summary

Regardless as to how you view you debts, it is always practical to seek professional advice. You should never suffer in silence, (which is very common among people in debt), as there is always help available. If you are unsure as to how to combat debt, you can contact any of the available debt charities, that will be more than happy to offer advice and support, or of course, you can contact us.

Should education for younger people regarding the effects of serious debt be the responsibility of society, or is it up to our government to lead the way?

Numerous sites (including this one) have reported that one of the most apparent causes of debt in the UK can be rooted to a lack of knowledge on behalf of the average consumer, when it comes to managing personal finances. However, the number one “hot topic” at the moment is the debate as to who is ultimately responsible for dishing out this most valuable of knowledge?

The easiest and most common answer to this question is the Government. Many people believe that practical money management and the perils of debt should be taught to our children in schools, at an early age. It would certainly seem to make sense that money management should form part of the annual itinerary, as a major part of comprehensive education is geared towards preparing young people for their adult life. But how practical is education of this type if taught in schools?

We’re not saying that financial education shouldn’t be taught in schools “far from it”, but more that it should only form a percentage of their “worldly education”. The responsibility to teach any type of practical skill or trait should really come from the parents, and ultimately that is the exact category that money management falls into. Research shows that very few children are encouraged to save, which leads to a large majority being unable to appreciate the value of saving once they have reached adulthood. One of the primary reasons for our current debt predicament stems from this problem, as many people are living their lives “hand to mouth” with no real savings to speak of.

Many charities and consumer groups are urging parents to discuss money related matters with their children. However, in a confusing twist money and debt are considered to be the most taboo of subjects, with many parents preferring to discuss relationships, careers and even drugs before touching finances. It appears that older generations are passing ignorance onto their children through feelings of shame and embarrassment.

A recent report on the current state of our economy suggests that the national debt level is increasing at a phenomenal rate and if effective measures aren’t put into place soon, we run the risk of a possible financial collapse. The national debt crisis will not fix itself and can only be rectified through the combined efforts of everyone.

Following on from yesterday’s report re “financial institutions pushing IVA firms to cut fees”, the UK’s main body for IVA practitioners has responded to lenders, describing certain comments as being “badly timed” and “unreasonable”.

The trade body has defended IVA firms stating that industry representatives are working together and have been for some time, in an attempt to improve the IVA procedure for both consumers and creditors. The IVA procedure has experienced unprecedented growth due to record levels of consumer debt, and the way in which the procedure is conducted is currently under review.

Members of the body have accused one lender in particular, of attempting to make the procedure financially unviable, thus forcing IP’s to withdraw from the market completely. Such a move would mean considerably less choice for the consumer and would force many to turn to Bankruptcy. IP’s have also stated that if the IVA were no longer available to consumers, many lenders would be far worse off in respect of recouping their losses.

The IVA allows an indebted consumer to make a formal proposal to their creditors in respect of payment. Essentially, the arrangement enables the consumer to wipe off a proportion of their debt, only repaying what they can realistically afford. Many Banks and other lending institutions have criticised IVA firms, saying that the procedure is being mis-promoted and ultimately mis-sold. In response to such claims, new rules and regulations relating to promotion, fee’s and ethics are soon to be introduced.

A number of leading debt specialist firms have experienced a sharp decline in share value over the last few months, in advent of new rules designed to limit fee’s associated to IVA’s (Individual Voluntary Arrangements).

The number of people entering into IVA’s has grown tremendously, as individuals seek a viable way to escape the harsh realities of serious debt. Numerous consumer groups and lending institutions have scrutinized debt specialist firms, suggesting that fee’s associated to the set up of IVA’s are to high. The new set of rules, which are expected to come into effect in the not to distant future, will reduce the overall set up charge by almost a third.

As it currently stand’s, IVA specialists are likely to charge anywhere between £6-8000 per individual case. Industry analysts believe that once the new legislation takes affect, debt firms are likely to see fee’s restricted to around £4,000 per case.

Lending institutions are also lobbying with a number of debt firms in an attempt to formulate a code of practice, as the industry looks to self regulate its activities. In wake of the new fee structure, four of the UK’s leading debt companies have seen share value’s decrease, with one in particular experiencing a drop of almost 50%.