Young pushed to payday loans

June 27th, 2012 by andydavie

Financial pressures are pushing young people into taking out payday loans with 18 to 34 year olds the most likely to turn to the high interest lenders.

These are the finding of the Scottish Widows think tank Centre for the Modern Family, released today (26 June), which looks at the increasing strain on the modern families budget.

The report found the younger generation are bearing the brunt of this strain, with 18 to 34 year-olds more likely to have resorted to selling items online in the past 12 months to make ends meet (32%), compared to the UK average (22%).

They are also twice as likely as the average person to have taken out a payday loan to tide them over.

The report finds one in ten young people taking out this high-interest form of credit compared to just 4% of all UK adults.

Lord Leitch chair of Centre for the Modern Family said: “Young people in particular face a very different kind of working life from the one that their parents and grandparents experienced.

“Affordable housing and a comfortable retirement are just two aspects that can no longer be taken for granted and as a result young people now face an increasingly uncertain future.”

Credit Today 26/06/12

House price boom

June 6th, 2012 by andydavie

Huge house price inflation means Britain’s property goldmine is worth £5.6 trillion, with almost a third of it stashed in the homes of the South East, according to a new report.
But while the paper value of our homes has barely been dented by the financial crisis, the mortgage crunch means Britons are no longer able to use them as the cash machines they once were.
Despite low interest rates, much tougher lending conditions mean families can no longer pull money out their homes as they rushed to do in the remortgage boom in the decade before house prices peaked in 2007.

Research from property website PrimeLocation claims that there is £5.6 trillion worth of residential property in Britain – although this has been calculated on estate agent asking prices which can be notoriously optimistic.
The study also fails to take into account mortgage debt, which greatly reduces the chunk of their homes that people actually own as wealth.
The PrimeLocation report delivers a much larger estimate of the value of the nation’s properties than a wider-reaching exercise by Lloyds TSB Private Banking recently, which put the total value at £3.9 trillion.

That report said that once mortgage debt was stripped out, housing wealth stood at £2.6 trillion.
Inflation-busting: The price of buying a home has hugely outstripped the rise in the cost of living over the past sixty years, Nationwide’s chart shows, with most of the property inflation delivered by the 1997 to 2007 house price boom
The PrimeLocation report highlights the vast imbalance created by the house price boom, with the south of England hit by what some see as a blessing and others a curse.
Here high house prices deliver theoretical wealth to existing homeowners, but hamper movement and lock out first-time buyers and young families from buying properties in the areas they grew up in.
PrimeLocation says the South East holds the greatest property wealth on a regional level, accounting for nearly a third (30%) of the UK’s total, with homes worth £1.65 trillion.
It pips even the capital to top spot, with London’s smaller size pushing it into second with just over £1 trillion of property wealth.

Buckinghamshire, East Sussex, Hampshire and Kent all feature in the top 10 counties by property wealth per head, while the South West completes the top three with property wealth of £488 billion.

For many the theoretical value of their homes is now an untappable resource, as banks and building societies are rationing lending and will only offer the best mortgage rates to those with big deposits or equity and a good credit rating.
The current benchmark figure for the best mortgage rates is a 25 per cent deposit or equity, a far cry from the pre-2007 lending boom when homeowners could access top mortgage deals with as little as five per cent equity.

During the house price boom many homebuyers used east credit to extend mortgages, remortgage to new lenders, or even take out second mortgages to unlock the cash in their homes.
This was a major driver of Britain’s booming consumer economy, as it was often used to boost people’s standard of living, buy new cars, invest in buy-to-let or take exotic holidays.

Simon Lambert 6th June The Mail online

Andy Davie, Debt Counsellor of the year !!!

May 22nd, 2012 by andydavie

Britons need more savings to make them happy

May 8th, 2012 by andydavie

The amount of savings Britons need to make them happy has risen sharply in the past two years, new research suggests.
The rise has been put down to rising job insecurity and uncertainty surrounding the economy.
Two years ago, 82 per cent of people were happy with savings of £5,000 but according to research by investment company Skandia, only 64 per cent today are comfortable with a nest egg of that size.
It was confirmed last month that the UK had returned to recession, following contraction in the economy in the final months of 2011 and the first quarter of 2012.

‘The rise in the cost of living, uncertainty with the economic climate and talk of recession is clearly making people wish they had a larger nest egg than they might have considered necessary before,’ said Graham Bentley, an investment expert at Skandia.

The UK’s savings ratio – the proportion of income tucked away – plummeted during the mirage economic boom of the Noughties, when growth in the economy was based on borrowing.
It went close to zero just ahead of the start of the banking crisis in 2008 but has since risen hitting 7.4 per cent last summer, according to the Office of National Statistics.
It peaked at more than 12 per cent in 1980 and again went close to 12 per cent in 1994 after the recession of the early Nineties.
Financial advisers recommend people keep aside between three and six months-worth of take home pay.

A separate report today – the Consumer Savings Monitor by ING Direct bank – revealed a surge in the amount of money in savings accounts. Bank balances surged by 18 per cent – up £284 on average – during the first quarter of 2012 compared with the tail-end of 2011.
It took the average balance to £1,858. However, it remains down on the second quarter of 2010, when people had around £2,050 put away in accessible savings, the report said.
It also found levels of unsecured debt, which includes credit cards, loans and overdrafts, were slightly – £18 – to an average of £2,242.
ING said payouts from banks for historic mis-selling payment protection insurance on credit cards and loans may have helped both the saving and debt figures.

ING said that 4.3 per cent of people it surveyed said they had either received or expected to receive a PPI compensation payout this year, which could equate to more than two million UK adults.
Around a third of them said they would put the payouts into savings while 42 per cent said they would use them to pay off what they owe.

Skandia’s research also found over a quarter of people (26 per cent) would be really happy with less than £25,000 a year and almost two thirds (62 per cent) would be really happy with an annual income of £50,000 or less.
In terms of bills, council tax and energy bills (both 14 per cent) top the list of things that people are most unhappy about having to pay, with almost one in ten (9 per cent) unhappy about the TV licence fee. Energy bills are particularly unpopular with the over 55s, with over one in five (21 per cent) saying this bill makes them most unhappy

Mail Online 08/05/2012

What can bailiffs do ?

April 18th, 2012 by andydavie

BAILIFFS collect only certain debts such as unpaid council tax, parking fines or county court judgments.
They can do so by taking some of your belongings to cover the debt. However, they are not allowed to take essential items such as cookers or clothes.

Generally speaking, bailiffs can enter your home only if you invite them in or if you leave a door or a window open. You can call the police if they try to force their way in.

If bailiffs come to your door you are within your rights to refuse them access. You are also within your rights to ask for related documents such as proof of their identity, a copy of the court order saying you owe the money and a copy of their “authorisation” to take your possessions.

That said, it is a good idea to arrange some sort of resolution, such as agreeing to contact the organisation you owe the money to, otherwise you could be taken to court for failing to co-operate.

If you hand over money, ask for proof of payment.

Debt collectors

Debt collectors chase money owed to companies and do not have the same powers as bailiffs.

They cannot, for example, enter your home or take your possessions in lieu of payment.

They can write, phone or visit your home only to talk to you about paying back the debt.

However, as with bailiffs, you can call the police should a debt collector physically threaten you.

If you feel that a debt collector is harassing or misleading you in a bid to make you pay, you can lodge a complaint with your local trading standards department against the firm in question. The Office of Fair Trading’s director of consumer credit, David Fisher, explains: “Licensed debt collection businesses need to treat consumers fairly and provide accurate information.”

You can also complain in writing to the company behind the action if the payment demand is unjustified.

And you can contact the relevant trade body should this not result in the action being dropped.

The Express online 18/04/12

Council refuses to pay out after bankruptcy

April 7th, 2012 by andydavie

A potentially suicidal debtor was made bankrupt without proper regard for his mental health and the local authority responsible has refused to compensate him, the Local Government Ombudsman ruled today (5 April).

The ombudsman took the unusual step of again criticising Torbay Council after it refused to pay the full compensation recommended by it to the man after its ruled in his favour last year.

Ombudsman Dr Jane Martin found the council’s failure caused “serious injustice” as it led to the man having to pay costs of £24,000 and she recommended the council pay £25,000 compensation – but it has so far only offered to pay £1,000.

The ombudsman, by taking the unusual step of issuing a second report, called on the council to reconsider its position and pay the man the full £25,000.

But, so far, the authority has declined to comment further than releasing a short statement on the subject saying no decsion will be made until the middle of next month.

In her original report, issued in May 2011, the Ombudsman had found a bailiff noted warning signs that might reasonably have alerted the council to the possibility that the debtor was unwell and potentially suicidal.

The ombudsman said: “There is no evidence the complainant was capable of dealing with his own affairs at the time of the recovery action, or that bankruptcy was a considered decision taken in the knowledge of potential mental illness after the due weighing of all pertinent facts.”

According to the ombudsman the man’s council tax debt was just £2,248 and the council could have reconsidered its actions at any time in the light of information on the debtor’s state of health but failed to do so, and that was “maladministration”.

A spokesman for Torbay Council refused to comment on whether the authority would now pay the full amount saying it would need to be considered by its full council meeting in May.

He said: “The ombudsman’s second report will be presented to full council on 16 May, it would be inappropriate to make further comment at this time.”

Credit Today 05/04/12

Britain’s got talent star battling bankruptcy

March 27th, 2012 by andydavie

A FORMER Britain’s Got Talent star from Tyneside is battling a bankruptcy action worth £1m.

Liam Collins, alongside his cousin David Bones Jnr, has launched a bid to stave off bankruptcy after the collapse of a property portfolio which boasted nearly 30 homes.

Mr Collins – regularly seen on Newcastle’s Northumberland Street with his ‘Faces of Disco’ act – set up business in 2002 along with his partner to attract investment for the purchase of homes to house students.

But after the property market crashed, and the company struggled to cope with spiralling overhead costs amid a series of “naive business decisions”, they decided to give creditors promissory notes on their investments against their own homes.

It meant the company shouldered the burden of nearly £1m of investments and ensured a personal guarantee for those who have ploughed cash into the scheme. During a bankruptcy hearing earlier this month, Mr Collins, originally from Longbenton, urged the authorities not to carry out a “firesale” of properties as he claims that would slash people’s investments in the company.

Instead, he has offered to give the properties to those who invested in his company and is trying to persuade a Tyneside judge to install an individual voluntary arrangement (IVA).

Under an insolvency practitioner, a formal repayment proposal would be presented to creditors.

He insists 87% of investors have backed the IVA scheme, but claims there are a group of investors – one of whom shelled out more than £30,000 – who do not want to go ahead with the scheme.

Mr Collins, who has gained notoriety for dancing on Newcastle’s Northumberland Street to fund his involvement in an Olympic bobsleigh team, said he was desperate to repay those who had lost their investments after the property market crashed in 2008.

The 33-year-old said: “There were 28 investors in the Collins and Bone partnership totalling £1m.

“We had about 30 properties that we owned between 2002 and 2006 when the market was good.

“We borrowed money to buy properties to let them in student areas, but eventually the lending was withdrawn and the market crashed.

“We are not declaring ourselves bankrupt, but one of the investors is making us bankrupt. We have between 80 and 90 testimonials on a report of people who have agreed to the IVA.” He added: “We’ve made big mistakes in business but we’ve not defrauded anyone. We can understand why people are irate but there’s no logic or common sense for people to file for bankruptcy rather than an IVA.

“If it takes me 50 years of dancing then I’ll pay back the money. We are incredibly sorry.”

Chronicle live 27/03

Fairpoint in the red

March 16th, 2012 by andydavie

Debt management group Fairpoint slumped into a loss despite making progress in the second half of the year.

The Chorley-based group posted a pre-tax loss of £1m for the year to the end of December compared with profits of £5.8m in 2010.

The group’s adjusted profit before tax was £4m, down from £6.9m the year before.

However the group incurred exceptional costs, which included £1.6m related to the non-cash impairment of the group’s outgoing IVA systems.

The acquisition of Moneyextra, a price comparison website it bought in 2010, had not met management expectations and therefore incurred a non-cash impairment charge of £2m.

There were further exceptional charges of £500,000 related to cost reduction activities.

Group revenue from continuing operations was £25.9m, down 13.5 per cent from £29.4m in 2010, with non IVA revenues accounting for 30 per cent of the result, compared to 17 per cent in 2010.

Fairpoint has also proposed a final dividend of 2.75p.

Matthew Peacock, chairman, said:”The second half of the year saw a much improved financial performance from the group.

“Against a challenging IVA market place the business realigned its cost base and grew non-IVA revenues significantly.

“A strongly cash generative business allows the board to propose an improved final dividend of 2.75p and continue to invest in acquisition activity and the development of the Group’s diversification strategy.”

Manchester Evening News 16/03/12

It’s only debt

March 5th, 2012 by andydavie

Last week I received a voicemail from a client informing me that he had just been diagnosed with terminal cancer. I felt stunned , this guy had been made redundant, hence our initial contact regarding a debt management plan, and now some two years later he has received this devastating news. What can you say ? he is in his early fifties and a genuinely nice guy. I called him and felt that I wanted to take his debt burden away for him, we agreed that I would write to all his creditors and that he would make token payments. It really does put into perspective why debt should not take over your life, put a plan in place and let someone else deal with your creditors whilst you get on with your life. Your health is the most important aspect of your life, all the money in the world won’t help you.
The week was rounded off by the sad news that long standing IVA.co.uk forum member Wizzzard had passed away, the week really brought home to me the importance of not letting debt ruin your life, if you are struggling and are worried about your debts take action now, deal with your debts and enjoy a less stressful life

Andy Davie

HMRC preventing closure of IVAs

February 27th, 2012 by andydavie

A recent VAT Tribunal has decided that Insolvency Practitioners nominee and supervisor fees should not be subject to VAT. As a result, it is now possible to claim back VAT wrongly paid over to HM Revenue and Customs over the past four years, and put it back into the IVAs from which it was taken.

The Insolvency Practitioners Association, has issued guidance for closing cases in relation to this VAT issue, saying that:

“Where possible, cases which would otherwise be due for closure should be kept open where a claim has been or is to be made either by exercising the discretion usually included in a proposal or by seeking a variation. This is because a Supervisor is likely to have more extensive powers in an open case and could therefore deal with the issue more easily. As this appears to be a proper exercise of the Supervisor’s powers, criticism would be unjustified.”

Even if everything else due has already been paid into an IVA, the VAT refund is covered by the windfall clause – which means that creditors have the right to receive it, and the Supervisor has a duty to recover it for their benefit. To do this, the Supervisor has to continue his administration of the IVA – he therefore cannot close it until the VAT refund has been received and paid to creditors.

All very well unless you are the end user, the person actually paying the IVA. Imagine the feeling that they must have after slogging through a tough five year IVA, making all payments demanded and then only to be told that they have to wait an unspecified time until the official completion.

Questions that need to be answered are

Why can’t insolvency Practitioners issue a completion certificate once their clients have made all of their payments?

Why can’t the IVA Register be updated when clients have effectively completed their IVAs (regardless of the VAT issue)

A delay on completing an IVA can affect a person’s ability to obtain both secured and unsecured credit going forward. More importantly what will happen when a person in an IVA receives a windfall after their IVA should have completed but is in this “on hold” state ? Will they lose the windfall into the IVA ?
In my opinion the VAT issue surrounding IVAs should not affect the debtor like this and should not stop IVAs completing once all agreed payments under the IVA have been made.
I hope both HMRC and the various regulatory bodies governing IPs, including the IPA, resolve this matter with the urgency that it clearly deserves.

Andy Davie