"The latest research into the state of households' finances also showed the average debt among people experiencing bankruptcy, a debt management plan or an Individual Voluntary Arrangement is £25,115.
But nearly a quarter of those in debt do not know how long it will take them to pay it off.
The study also highlighted the problem of borrowers failing to discuss their financial woes, with one in seven refusing to seek any help at all due to the social stigma of admitting they cannot manage alone.
Nine out of 10 said the impact on their credit rating is a key reason for not declaring themselves bankrupt, while almost two thirds cite long-term credit issues as being the most frightening aspect of serious debt.
Jessica Bown, of Talkaboutdebt.co.uk – the debt help website which carried out the research – said: "The main concern is that while the fear factor is preventing people from talking about debt and seeking help, their debts continue to mount.
"By seeking advice early, they can stop the problem from escalating, and prevent the stress caused by serious debt taking over their lives. People get stuck in a vicious circle of fear and inaction, which in reality only makes the problem bigger."
The article shows that getting help early is crucial. If you are currently experiencing debt problems then see how an IVA could help you.
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( 3 / 253 )According to an article in the Guardian Provident Financial have seen a big increase in their profits. However there has been much criticism over their interest rates.
"Doorstep lender Provident Financial today reported a rise in profits as the credit crunch continues to squeeze household budgets – but was attacked by children's charity Barnardo's for charging "extortionate" interest rates.
The company, known as "the Provvy" to many, agreed some of its customers were being charged annualised interest rates of up to 545%, but said it played a valuable role in improving people's living standards – and keeping some of them out of the clutches of loan sharks. Its business practices have certainly impressed some City analysts. Numis Securities today hailed it as "probably the most profitable bank in the world".
Provident Financial, whose consumer credit arm sells small loans door to door, said pre-tax profits rose 3.5% to £53.1m in the six months to 30 June. It has more than 2.1 million customers, 400,000 of whom hold its credit cards. Peter Crook, chief executive, said that despite the challenging environment, the company expected to deliver "continuing quality growth" during the next few months.
His firm has seen a big rise in loan applications since the high street banks began to tighten lending criteria. The home credit industry is where rejected applicants from the high street lenders – some with poor credit histories – can turn for loans.
Barnardo's today called on the Office of Fair Trading to investigate the practices of lenders that "prey on the poor". It was concerned about the pressure on people to take out "punitively high-interest" loans. The charity said the firm's "extortionate" interest rates "are typical of many doorstep lenders which will continue to flourish unless the government steps in".
Barnardo's chief executive, Martin Narey, said many low-income families were forced to "take what they can get" because banks did not want their custom. The charity cited examples of Provident loan calculations, claiming that, for a £500 loan over 31 weeks, the total repaid would be £775, an interest rate of 365% APR. For a £500 loan over 23 weeks, the total would be £747.50 – an interest rate of 545% APR"
If you have found yourself in debt then why not have a look and see if an IVA can help you.
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( 3 / 252 )There are always stories about credit card companies and how they can be very selective over who they will give credit too. Often they will select those who are likely to be unable to meet repayments, although they tend to avoid those who have had severe debt problems. An article in the Times provides more information on this.
"The government’s consumer watchdog will be writing to the Financial Services Authority over concerns that credit card providers are refusing to offer credit to “unprofitable” customers, as revealed by The Sunday Times last week.
The Money section has been inundated with e-mails and letters after our story last week that wealthy individuals, with near-perfect credit scores, are being denied popular new credit cards. Scores of readers say they have had similar experiences and do not understand why they have been rejected.
Many assume it is because they don’t make any money for providers because they pay their bills in full each month — and so do not generate income through high interest charges.
The two most complained about providers are Abbey and Lloyds, both of which offer perks.
Abbey has been advertising its Zero card — one of the few that does not charge foreign loading fees when used abroad for purchases. However, Abbey is the only credit card provider to charge if you don’t use your card enough, according to Defaqto, an analyst. Customers who hold the Zero card for six months without using it must pay a £10 “dormancy fee”.
Meanwhile, Lloyds teamed up with Airmiles in 2007 to offer the Airmiles Duo card. The move attracted many new customers, especially those who travel frequently.
The Money section received 14 e-mails complaining about Lloyds and 29 about Abbey.
Grant Castle, from London, a partner at a law firm, e-mailed to say he was rejected by Lloyds despite having a salary “well into six figures”. He also pays his credit card bills in full each month. His wife, who does not have an income, also applied but was accepted"
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( 3 / 246 )According to an article in the Times improvements have been announced to the Financial Services Compensation Scheme (FSCS).
"Consumers will be compensated within seven days of a bank or building societies going bust under new rules announced by the City watchdog today.
At present refunds can take up to six weeks.
The Financial Services Compensation Scheme (FSCS), which ensures that deposits up to £50,000 are protected, has also been improved to ensure that savings are ring fenced and paid out on a "gross" basis, preventing the cash being used to pay-off outstanding debts owed to the same financial institution.
The new rules will not come into effect until December next year to coincide with changes to a Europe-wide directive, which requires deposits are refunded completely within 20 days.
It is hoped that the new rules will reduce the uncertainty amongst consumers about the length of time it may take to receive deposits in the event that a bank or building society collapses.
Hector Sants, chief executive of the Financial Services Authority, which runs the FSCS, said: “To help underpin confidence in our banking system, individuals and small businesses must feel confident that their money is well protected.
He added: "The new rules announced today will help deliver that confidence, build on the successful role of the FSCS to date, and aim to further minimise the potential hardship faced by depositors if an institution defaults."
The FSCS protects deposits up to £50,000 in a single financial institution in the event that it goes bust. Banks, building societies and credit unions are covered by the scheme"
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( 3 / 243 )Debt is becoming more of a problem than ever in this country with gambling being one of the easiest ways to get you into financial difficulties.
Within the United Kingdom, gambling on credit is not actually illegal. It is illegal for a gambling outlet to let customers pay later but the problem is that the law cannot be used to make sure that the debt is later repaid for money taken on credit. However, should someone lend you money and you go on to lose this whilst gambling, you should be aware that the person who lent you the money is able to use the law to regain this.
You may initially start gambling just for a bit of fun and only participate very occasionally. However if you start gambling more often and with large sums of money it can become an addiction and you may find you are low on money. Depending upon the extent of the problem you may find that it can lead you to severe financial problems, debt and possible bankruptcy.
One of the biggest pitfalls with gambling is that the more you lose the more you bet to try and recoup your losses. Sadly this often leads to even more debt. Eventually you will find yourself in a situation that you feel you cannot get out of. It is important however that you face this and seek professional help and guidance for both the debt problem and the gambling problem.
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