Credit Crunch

Citizens Advice Bureau under unprecedented demand

The number of people seeking urgent help for debt problems has doubled across the UK in the past year, placing a strain on the services offered by Citizens Advice bureaus.

In Derby recently, queues have been forming outside the city’s Citizens Advice and Law Centre at 7.30am, which is an hour and a half before the office opens.

In the period between July and September, the centre dealt with nearly 900 people who were looking for debt advice, ranging from help with credit cards to advice about making mortgage repayments. In the same period last year, the centre saw just over 400 people.

Now, advisers across the country fear that Christmas could plunge thousands more people into debt as they struggle to pay for presents and cope with the spiralling cost of living.

Peter Reynolds, operations director at the Derby advice centre said, “The number of people coming in with debt inquiries has soared in the last few months and we think this is because of the credit crunch and people worried about bankruptcy and being made redundant.

“But we feel we are still dealing with only the tip of the iceberg. On an average morning when I come in at 7.30am, there are usually four or five people waiting. That rises to 20 or 30 when the doors are opened at 9am. Of those, approximately 10 are debt-related.”

More than a third of debt worries relate to credit, store and charge cards. Loans, housing and bankruptcy are other major issues.

Gillian Bhalla, the debt supervisor at the Derby branch of CAB, said staff were no longer surprised by clients presenting with around £40,000 of debt, and that doesn’t include their mortgages.

Ms Bhalla said, “We expect the number of people contacting us to grow even more because of Christmas and the credit crunch. January and February will be busy.”

Tips on how to manage finances are available at www. citizensadvice.org.uk.

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Calls for Northern Rock to stop repossessions

Finanacial campaigners have recently called upon the Treasury to stop Northern Rock from repossessing property so readily.

Charity group ‘Credit Action’ reported that the now nationalised lender was twice as likely to repossess homes than other lenders, and added that Northern Rock wasn’t being flexible enough in its approach to borrowers who have defaulted on their mortgage payments.

In excess of 19,000 homes were repossessed in the first six months of this year and around 4,000 of those were instigated by Northern Rock. Earlier this year the bank reported that it was ‘well ahead’ of its loan repayment targets and had paid back more than half of the £26 billion it owed, leaving just over £11 billion outstanding on September 30^th.

The charity’s director, Chris Tapp, said that Northern Rock’s keenness to repay the government loans meant that it was being too harsh with customers who are in difficulty.

“As soon as people fall behind, they have moved to start repossession proceedings” he said.

“We’re not talking about people who are trying to avoid paying, but people who are struggling in the short term.”

However, Northern Rock’s chairman, Ron Sandler, said, “I refute any suggestion that our position has been anything other than commercial and consistent with the way this bank has operated in the past.

“I would deny strenuously that we have been overly aggressive in terms of repossessions”

At the same time, a spokeswoman for the Council of Mortgage Lenders (CML) said that the Financial Services Authority regulations required mortgage lenders to opt for repossession “only as a last resort.”

The CML predicted that around 45,000 properties would be repossessed by the end of this year; that’s up from 26,200 in 2007, and at a level not seen since the 90s when repossessions peaked in 1991 and saw around 75,500 properties reclaimed.

Posted in Credit crunch, Debt, Personal Finance, Property Prices | 2 Comments »

A few facts about home repossession

First, there has to be a valid legal reason for your mortgage lender to repossess your home. The most often cited reasons are mortgage arrears, failing to pay loans secured on your home and bankruptcy.

If a home owner doesn’t keep up with the mortgage repayments or a secured loan, the lender can instigate legal action to repossess and sell off your home in order to recoup their money. Even if you’ve kept up to date with your mortgage payment, you could still lose your home if you default on payments for your secured loan.

Often, just two months of arrears is sufficient for your lender to take legal action but most lenders will try to help you make an arrangement you can afford and will avoid taking proceedings if possible. That said, if the lender thinks that you won’t be able to keep up with the arrangement then they will almost certainly want to repossess.

However, your lender can’t just evict you; they must follow certain procedures and obtain a court order requiring you to leave the property. In many instances, even in the last stages and right before eviction, the repossession can be stopped so if you’re faced with repossession, talk to a free adviser or agency immediately.

Don’t be scammed by one of the companies who offer to buy your home for you or offer you a loan; often, you’ll still lose your home. Talk to people who will give you genuine, unbiased and free advice. Charity group Shelter can offer help and advice as you’re your local Citizens Advice Bureau.

Posted in Credit crunch, Debt, Personal Finance, Property Prices | No Comments »

Post office credit card

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Credit crunch drama

Literally making a drama out of the credit crunch crisis

It could easily be a real headline from any time over the past few months but anyone a website called ‘Crisis in the Credit System’ is in fact something rather different from what one might expect. Instead of yet more discussion and frightening financial facts, visitors will find a forty minute fictional drama that’s described by its makers as, “bizarre scenarios reflecting the strangeness of our situation today: life governed increasingly by abstract exchange and the accumulation of profit”.

The film is available as four free episode downloads which are designed to be like a television series. The Crisis in the Credit System story begins as five employees of an investment bank meet for a ‘brainstorming retreat’ at a country mansion. Their task is to find new ways of dealing with the credit crunch and to do so, they use role-play.

The sessions start out with scenarios of profiteering, hostile bank takeovers and share-price fiddling but their role-playing quickly escalates into ‘weirdness.’ A financial analyst goes into a trance-like state and speaks in tongues; hedge-fund managers have delusions of gradeur and humans breed with computers which ultimately causes an apocalyptic meltdown.

The drama is the brainchild of Melanie Gilligan, a Canadian conceptual artist who’s now based in London. She’s had shows at the Tate and the Serpentine Gallery within the last year and started work on this project seven months ago. She collaborated with journalists, economists and City insiders to make the drama and said, “The possibility of a financial crisis has been an important topic for me for years now” but she added that she’d been “unsettled at the speed at which life recently overtook fiction.”

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Reducing utility bills

If theres one type of bill you can never avoid its your utility bill, gas and electric are just two things you need to keep warm and cook your meals.

You can’t avoid these bills but you can significantly reduce them!

Reducing these utility bills just got a lot easier thanks to the U.K’s top consumer magazine which, which have been testing cars, washing machines, tvs and all kinds of other consumer products then telling you which one provides you with the best value for years.

Now they can save you pounds on your gas and electric bills aswell.

Switch with Which? Save £233 p.a. on average with the independent energy service you can trust.

Posted in Frugality | 2 Comments »

Government to spend its way out of credit crunch

UK Prime minister or (Sub Prime minister as he was called this week), Gordon Brown and his bushy eyebrowed sidekick the UK Chancellor Alistair Darling are to bring forward projects and spend the UK out of recession, they are planning to build more roads, schools and hospitals to get the UK Economy back on track.

Although the UK’s national debt is way over target at 37 Billion Pounds, Gordon Brown and Alistair Darling think the way forward is with yet more borrowing so they can get the economy moving, they argue that spending the money by bringing planned projects forward will boost the economy and if they don’t spend it the effects of the credit crunch will be even worse.

Many economists warn the countries current debt situation is dire and possibly one of the worst reccessions ever now looms.

What do you think?

Posted in Credit crunch, Debt | 2 Comments »

Top 10 tips to reduce debt

Most of us are struggling to balance our finances at the moment, so here are ten tips for coping with debt.

1. Don’t ignore the situation – write down how much you owe and to whom. Add in all monthly repayments and then work out how much you need for food and utility bills, mortgage etc.
2. Prioritise your money – your mortgage, food and essential expenses are the priority so ensure that they are paid first each month.
3. Talk to your creditors – if you’re struggling to pay your debts, talk to the provider and see if they will accept reduced payments until things improve.
4. Save money – cut down on anything you don’t absolutely need. Keep a ‘spending diary’ and write in it everything you spend any amount on each day then review it after a week. You’ll be surprised at just how much you do spend and what could be eliminated.
5. Review your outgoings – take a look at your home and car insurances, energy bills, home phone and broadband suppliers and use a comparison website to ensure you’re getting the best deal. You could save hundreds a year by switching.
6. Claim tax benefits – many of us are entitled to child tax credit or working tax credit but don’t claim as we assume we aren’t eligible. Pick up a claim form and fill it out. You’ve got nothing to lose if you’re turned down.
7. Cut up your store cards – they are among the most expensive form of borrowing and putting purchases on a standard credit card is far cheaper.
8. Avoid pay day spending binges – by all means treat yourself now and again, but don’t go mad on payday; you still have to get to the end of next month!
9. Pay more than the minimum – always try to pay just a few pounds more than your minimum payment on any credit accounts because doing so can cut your interest payments by hundreds every year.
10. Don’t use cash – cash is very easily spent but if you have to pay on your debit card for everything, you’re less likely to squander your money.

Posted in Debt | 1 Comment »

Pound shops are raking it in

As the credit crunch bites on the high street, there’s one retailing group who aren’t concerned in the least; Pound and other ‘thrift’ shops. Bargain stores such as Poundland have seen profits more than double this yearWhile other businesses face job cuts and slow trade this Christmas, the 200 strong shop chain is reporting profits are up by over 120%.

Chief executive Jim McCarthy, former MD of Sainsbury’s, said, “We have a single price strategy, we’ve had the same price for 18 years so you could say we are the original inflation busters.”

Poundland’s customer base has recently expanded from being mainly lower income female shoppers, students and the elderly, to include a 22% rise in the number of shoppers from the wealthiest ‘AB’ social group.

Poundland employs 4,600 staff at outlets across the UK and there are plans to open a further 30 shops next year and the year after.

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Credit crisis caused banker’s suicide

The City’s financial market was in shock last week after the apparent suicide of a millionaire financier came after he apparently told colleagues he was ‘haunted by the pressures of dealing with the credit crunch.’

Banker Kirk Stephenson, who was married and had an eight-year-old son, jumped onto tracks and into the path of a 100mph express train at Taplow railway station in Berkshire.

Mr Stephenson is believed to have commited suicide after ‘succumbing to mounting personal pressures’ as the world’s financial markets went into meltdown and his death is said to have evoked memories of the 1929 Wall Street crash in America when similar suicides occurred.

New Zealand-born Mr Stephenson owned a £3.6million, five-storey house in Chelsea as well as a home in the West Country and was chief operating officer of city firm, Olivant Advisers.

In 2007 the private equity firm tried to buy a 15% stake in Northern Rock – which was worth almost £1billion – before the bank was nationalised, bidding against other financiers such as Virgin boss Sir Richard Branson. However, since June, shares in the bank have dropped in value by about 20%, which means that the value of Olivant’s stake in UBS fell from £950million to £770million.

Before his death, Mr Stephenson appeared to have everything; a flawless 20-year City career had made him hugely wealthy and he was said to have been happy in his marriage to Karina Robinson who is a successful financial writer. Sources close to the financier said that he had ‘succumbed’ to the stress and responsibilities of his ‘taxing role’, adding that Mr Stephenson had sometimes ‘overreacted to the continuing financial turmoil.’

Mr Stephenson’s previous jobs included chief operating officer at City lawyers Freshfield Bruckhaus Deringer, group finance director of Coats Viyella and Amersham International and he was an investment banker at Warburg and Morgan Stanley.

At Olivant Advisers he earned £333,000 last year, but it’s thought that he made millions more from the core Olivant business, based in Guernsey.

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