A recent survey conducted by one of the UK’s leading debt advice sites has discovered that the identification of a practical solution to the countries current debt crisis, is of paramount importance to Brits in today’s modern society.

Reportedly, over 35% of UK residents consider our nations debt problem to be more case sensitive than active threats of terrorism, practical healthcare reforms or changes in CO2 production in order to curb damage to the environment.

In addition, a staggering 85% of people believe that certain forms of credit such as credit cards, personal loans and overdrafts should be approved more sparingly, and around 10% of people believe that serious debt solutions such as IVA’s and Bankruptcy are also entered into to easily by the indebted.

Numerous representatives from different sectors of the debt industry are currently in talks with Government officials, in an attempt to reach an amicable solution in order to defuse the bomb that is consumer debt.

More Brits than ever are opting to declare themselves bankrupt due to the increasing simplicity in the orchestration of the process.
 
Studies have revealed that UK residents are less embarrassed to admit Bankruptcy status than they were a decade ago and are said to be adopting a more “American” attitude towards the procedure.

In addition, IVA’s have also soared in popularity over recent years, which have in turn caused insolvency practitioners to dramatically change the way in which the procedure is conducted in order to speed up the process i.e. skipping the formal meeting altogether in favour of written or verbal voting.

It is difficult to comment either way on the finding’s as many analysts are of a split opinion. The most obvious reaction to the news can only be one of negativity; increased bankruptcies can only mean increased debt, which can’t be a good thing. However, on the other side of the coin some experts feel that British business could greatly benefit from the change, as fewer would-be entrepreneurs will be discouraged from taking the plunge into business due to the potential stigma.

According to a new study, large numbers of indebted Brits do not fully appreciate the severity of their problems and are having hard times coping with the facts.

As a national average, UK citizens are balancing personal debts worth around £10,000 pounds. However, a recently conducted study amongst indebted consumers has revealed that the public’s perception of our national debt level equated to almost half of its true value. Analysts have suggested that although the survey was presumptive in its nature, it still accurately portrays Britain’s ignorance towards personal debt commitments, which is obviously worrying.

However, what did come as quite a surprise was the fact that very few homeowners were far wrong when guesstimating their current mortgage balance. Accordingly, around 85% of homeowners correctly guessed their outstanding balance to a tolerance of £5000. It would appear that people in the UK instinctively prioritise their mortgage commitments, pushing any other debts to the wayside.

The sheer scale of a mortgage coupled with the implications associated to missing payments is thought to be the ultimate reason why consumers are so attune to this particular debt, although missing or misbalancing other credit commitments can be just as detrimental to ones finances.

Consumers must realise that all debt should be treated equal, and should be accounted in the same vein as a mortgage. Problems tend to arise when people presume to know their total debt balance and account for that presumption, only to find out how off they were when the bills roll in.

A Lib Dem spokesperson has recently commented that Gordon Brown must make reducing personal debt levels in the UK, one of his government’s top priorities.

Gordon Brown was officially announced as the UK’s new prime minister at the back end of June 2007, and was welcomed by an almost instant challenge from opposing members of parliament, with regards to tackling the national debt problem.

Statistically, consumer debt has risen by almost 75% over the last ten years, and has seen a dramatic rise in the number of people turning to IVA’s as a solution to their problems.

Government opposition have blamed Mr Brown for not acting quickly enough when acting as chancellor, and have suggested that resolving the situation must be his number one objective whilst In his new role.

Experts suggest that a number of UK households and families will not be able to cope if interest rates continue to rise, however there is already evidence that previous rises are affecting households, as demonstrated through a sharp increase in the number of bankruptcy and IVA cases.

The sub prime home loans market will continue to grow over the next few years, in response to the alarming amount of consumers who are sinking under the weight of personal debt.

The UK’s mortgage body has recently announced that Britain’s economic climate is having a serious effect on the housing market. One of the most obvious examples of this can be seen through the increasing number of FTB’s who are having to source mortgages up to 4 times their annual income. The sub-prime market had grown by more than 25% in the last year and is said to be valued at around £25 billion, however analysts expect market value to reach £32 billion in as little as 5 years.

Healthy economic conditions over the last decade have fuelled 80% of total sub-prime growth. The housing market has been particularly rewarding for homeowners and interest rates have remained relatively low, this is turn had increased consumer confidence which had spurred consumer spending. As a natural outcome of increased spending, consumer debt has also skyrocketed which has pushed many people into the sub-prime band.

Analysts fear that the UK sub-prime market is running the risk of becoming unstable and possibly following a similar course to the US. British based sub-prime lenders have snubbed such fears, stating that their qualifying criteria are far more stringent.

According to a recent study, a great many indebted Brits are falling prey to low brow debt management firms, with many reporting that their financial situation has actually deteriorated, as a result of using their services and/or cohering to their recommendations.

Some consumer groups have suggested that certain individuals would be better off orchestrating their own debt management routine, rather than employing the services of a professional organisation. It would appear that a handful of unscrupulous “debt specialist” firms have given the industry a bad name at the risk of destroying consumer confidence.

Consumer groups have advised individuals seeking debt help to try and use a little common sense, in order to avoid being misled. As an example, it is reported that certain lenders are offering high interest unsecured loan plans to indebted consumers, and are making the prospect attractive by stretching the repayments over longer terms.

In this type of situation, it is important for consumers to actively research the market, in order to establish if the proposal does represent good value for money. In almost 90% of cases, if the applicant is a homeowner the fact that they have bad credit is less likely to be a detriment, and they will still be able to qualify for a good rate by choosing a home loan. Unsecured loans on the other hand, are rarely a viable debt consolidation prospect.

Indebted consumers should also remember that impartial debt advice is readily available from a number of specialist agencies…for free. However, in spite of the bad press there are still some excellent professional debt companies out there, who can genuinely offer a viable solution. It would be wise to research any prospective company before committing to a proposal; a quick search online will usually answer any doubts that you may have.

Despite recent concerns, one of the UK’s leading financial investment firms has announced that student specific credit agreements will not hinder graduates chances of attaining a mortgage.

It has been reported that a large percentage of would be students are forfeiting higher education, for fear of jeopardising their chances of purchasing a home due to student debt. However, some lenders are offering mortgage products that are specific to graduates and as such offer unique benefits whilst taking the typical graduates financial circumstances into account.

It is believed that such lenders will base their decision on non-education related credit, thus alleviating a huge weight from many a student’s shoulders. Lending institutions, which offer these types of products, will use future affordability predictions as a means to estimate the scale of their mortgage proposal, and in some instances, will offer products up to 5 times the applicants annual income.

If you are looking for any further help and advice with regards to any student related financial matter please contact your local student body. If you are looking for any debt related advice, please feel free to contact us.

Debt stricken homeowners have received a further financial blow today, as the Bank of England officially announced a further increase in the rate of interest.

The average British homeowner has been advised to expect their monthly mortgage repayments to rise by as much as 10%, as a result of the increase. Statistically, the average mortgage repayment is said to stand at around £540 per month, analysts have suggested that the rate change will push the average repayment to around £590 per month.

There have been numerous reports describing the detrimental financial effects that the last 4 rate rises have had on the average British family, however experts suggest that unfortunately the worst is still to come. It is predicted that the BoE will raise interest rates further still in the next few months, to a record high of 6%.

Numerous charities and CAB’s have been struggling to cope with the volume of calls from panic stricken homeowners, desperately seeking guidance with regards to their financial commitments. Increasing interest rates are causing mortgage repayments to skyrocket, which in turn is pushing copious amounts of homeowners dangerously close to the edge.

A number of UK banks have reported that the volume of debt that they have been forced to write off over the last 12 months, has increased by a staggering 20%.

Bad debt is also affecting other sectors of the finance industry, with the credit card sector writing off a collective debt of just over £3 billion pounds in a similar time frame. It is suggested that the UK’s debt mountain is starting to have a serious effect on our economy, as consumers struggle with increased financial pressure, opting out of some credit commitments in favour of others.

Analysts fear that the UK’s unsecured debt problem may also affect other, stronger areas of the finance industry such as the secured or even the housing market. In response to the rising trend, a number of banks and other major unsecured lenders have tightened the reigns with regards to qualifying criteria.

Experts also feel that the statistics may be paving the way for a further increase in the number of IVA cases, in the not to distant future.

According to new studies, British families in desperate financial situations are further increasing the severity of their problems through making the wrong choices.

Approximately 15% of British families have sacrificed everyday home essentials, such as keeping the medicine cabinet full, due to poor income, with a further 10% of people admitting they had skipped the weekly food shopping in order to meet pressing financial commitments.

As a bi-product of this most common of situations, families are then approaching adverse credit lenders or even loan sharks in order to attain funds as a means to make ends meet. The biggest problem however, is that a large percentage of people approaching such lenders are unaware of the extortionately high rates of interest tagged to their products, and worse still, is the fact that such people are completely unaware of just how expensive their products are, compared to the rest of the market.

It is suggested that cycles such as these are causing the common family to descend even further into financial difficulties, and the time has come for such people to be educated in order to prevent them from continuingly falling into the trap. Experts suggest that some kind of informal financial schooling would be a great benefit to many, following on from recent plans to introduce financial management classes into schools.