The UK is losing around fifty pubs a week, as many fail to deal with their debt management and fall prey to administrators.
The British Beer and Pub Association said that a third more pubs had closed in the first half of 2009 than during the same period in 2008.
Pubs most vulnerable of closure and in need of debt help were local community pubs that didn’t serve food – as communities were hit hardest by the economic downturn keeping numbers away.
Whilst many are now choosing to diversify and offer meals or update to swankier surroundings, for many community pubs this simply is not an option.
An association spokesman said: “Pubs are already diversifying, but unfortunately if you are a community pub, you can’t transform yourself into a trendy town-centre bar.
“The biggest impact is the recession. There are fewer people out and fewer people spending money in pubs and bars, regardless of where they are.”
The association’s chief executive, David Long, said that pub closures had cost around 24,000 jobs, placing further strain on the debt problems of many communities.
Debt advice organisations have expressed concern over the finances of those people affected.
Ivan Cooper, Chairman at the UK’s leading debt management company Chiltern, said: “For people who depend on pubs for their livelihood, the closure of so many must be cause for concern.
“When income drops, through the loss of a job or reduced wages, it places further strain on household finances which could mean that debt problems have the chance to develop.
“If the household debt management starts to suffer as a result of growing loans and credit card debts, then it’s always worth seeking professional debt help to alleviate problems.”
Debt help organisations offer a number of ways to get out of debt – from providing some simple budgeting and debt advice, to recommending and setting up a professional repayment programme.
Reputable debt advice organisations, like Hamilton Locke, The Debt People and Chiltern offer a number of ways to combat debt problems caused by unsecured balances (i.e. personal loans, overdrafts, store card and credit card debts). The debt help programmes that they offer include Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) and Trust Deeds.
A Debt Management Plan (DMP) is a flexible way of repaying multiple unsecured balances, but makes managing them much easier as there is only a single monthly payment to make. This payment is distributed to the people that you owe money to on your behalf and is calculated to always be affordable to you.
It’s flexible (and always affordable) because if your financial situation changes, your payment can be updated to reflect this – so if your income drops you can lower the monthly payment. Likewise if you start receiving more income, through a promotion perhaps, your monthly payment can be increased so your debt problems can be repaid quicker.
The amount you pay is based on your income, minus your priority payments – rent/mortgage, utility bills, council tax, food, travel to work, childcare etc. The remaining amount is called the “disposable income” which then goes towards repaying your creditors.
An Individual Voluntary Arrangement (IVA) works in a similar way but is repaid over a fixed period of time (usually within five years). Thi sdebt management solution is more formal, and therefore requires the services of a qualified Insolvency Practitioner. A legally binding agreement between you and the people you owe money to is drafted, which protects you from them changing their payment demands.
Once the IVA payments have been maintained for the full term, all remaining unsecured debts are written off and you can walk away debt free.
Trust Deeds are in essence an IVA but for people living in Scotland. They are usually repaid over three years.
For immediate debt advice, or for further information on debt management solutions, please call the number at the top of this page.
