IVA’s accounted for a large proportion of the 132,142 people who were declared insolvent this year according to figures released today by The Insolvency Service.

50% of this figure declared bankrupt, however, 50% managed to to avoid this by signing onto an Individual Voluntary Arrangement (IVA) or a Debt Relief Order. The overall amount increased by 26% on last years figures to a record high.

IVA’s are a way to avoid bankruptcy and clear your debt in a more controlled way with less impact on your credit rating. The Debt People are IVA advice specialists and have help many people arrange an IVA every year.

Corporate and Business Insolvency

The number of companies liquidated has fallen in the last three months of 2009 to 4,566. This is a fall of 1.7 per cent against the previous quarter and down 1.1 per cent year on year.

This shows that the country has signs of a recovery beginning, however, there are a large number of businesses who may have been saved by HM Revenue & Customs’s “time to pay” scheme, which has enabled struggling companies to defer more than £4 billion of PAYE tax and national insurance liabilities.

IVA numbers rise as personal insolvencies hit record levels is a post from: The Debt People IVA Advice

News that British Gas is to cut its prices could help ease the pressure on financially strapped consumers that are relying on IVA help or a Debt Management Plan as a way to get out of debt.  The recession has taken its toll financially, and the bitter winter has left many people struggling to find money to pay their increased utility bills on time.  IVA advice is being sought by UK consumers in record numbers since the onset of the credit crunch.

The British Gas announcement confirmed that the company will cut gas prices by an average of 7% immediately.  It will be welcome news to people struggling with their finances and in need of debt advice.

According to the company, the average customer will save £55 a year because of the price cut, and they estimate that around eight million households will be better off.  British Gas added that this is the third price cut that they have implemented in the past 12 months.

In the wake of the current global credit crisis, energy suppliers have been criticised for not allowing consumers to benefit from cuts in wholesale oil and gas prices, by way of lower bills.  From February last year, wholesale gas prices have dropped sharply, and domestic prices dropped in the spring.

After pressure from consumer groups and the regulator British Gas said it had removed the different price structure for pre-payment gas meters.  This means that those who settle bills by cash or cheque pay, on average, the same for their energy as pre-pay clients.

Customers benefit to a different degree depending on which part of the UK they live in as well as what price plan they are on.  The price cuts are taken as an average.  Electricity prices will remain unchanged for now.

The news will be welcomed by debt advice providers struggling to cope with over-committed consumers that are buried under a mountain of credit card debt and other monthly bills.

British Gas price cut could help ease IVA and Debt Management worries is a post from: The Debt People IVA Advice

Debt Management and IVA help providers are concerned at reports that UK consumers are retuning to their old ways when it comes to spending money on plastic.  New UK borrowing on personal loans, overdrafts and credit cards has overtaken the amount being paid off by consumers for the first time in six months, sparking fears that reckless spending could cause an increase in the number of consumers facing financial difficulty, and in need of a debt help solution, IVA advice or a Debt Management Plan.

According to the bank of England, unsecured consumer credit rose £52m in the month of December.  This was mainly driven by credit card borrowing.

For the same period, the number of mortgages that were approved for house purchases fell slightly compared with the previous month, to 59,023.  This is still higher than the past six month’s average.

IVA and Debt Management companies have noticed a trend during the downturn where consumers have been inclined to pay off debts, however this appears to be reversing.  Some people have been reluctant to save particularly with interest rates being so low.   For five months in a row, repayments have outstripped new unsecured consumer credit.

The main cause is credit card debt which has risen by £195m.  In an effort to get out of debt, many people have enterd debt Management progarammes or signed up for an IVA.  The demand for overdrafts and personal loans has remained low, with repayments topping new agreements by £143 million.

The total amount of net borrowing by individuals rose by £1.2 billion in December, which is double the average of the previous six months.  Most of the borrowing is in the form of mortgages.

IVA and Debt Management worries as borrowing on the increase is a post from: The Debt People IVA Advice

Concern has been raised by IVA and debt management companies as news emerged that homeowners face record heating bills.  Figures have shown that energy firms are profiting from the coldest winter for 30 years.  IVA advice specialists are worried that the spiraling costs of gas and electricity could force more consumers into financial difficulty.

The news comes as the country is just emerging from the longest recession for many years.  Consumers struggling with debt problems have been approaching debt management companies in increasing numbers seeking IVA advice, or other ways to get out of debt.

Energy bills are expected to be 20% more expensive than for the same period last year, despite a fall in the wholesale price of gas.  The combined charge for gas and electricity bills for a typical household are expected to be £104 higher for the quarter.

According to figures from the Daily Express annual bills have increased from an average £543 to £1,233 since 2003.  This represents a rise of 127%.

An IVA, or Individual Voluntary Arrangement, is a debt management solution that allows consumers to consolidate their debts into a single monthly payment without the need for a loan.  The monthly repayment on an IVA is set at an affordable level and the term of the arrangement is usually 5 years.

Any remaining debt can be written off at the end of the term.  An insolvency practitioner will be required to set up and supervise the arrangement, and it is recommended that all consumers consider all of the available options before entering into an agreement.  For IVA help it is recommended that you contact a reputable company.

The debt management industry is concerned that the wholesale price of gas fell by 60% during 2008 and 2009, but the savings made by the companies have not been passed on to households in the form of lower bills.  A 30% increase in energy consumption has been estimated for this winter as a result of the freezing temperatures over this period.

IVA and Debt Management firms concern over energy bills is a post from: The Debt People IVA Advice

More and more British people may need to consider an IVA or Debt Management Plan as Research has revealed that the average person only has about £2,000 saved up.

Reports from ING have claimed that as little as £40 has been put away during 2009 and that the average saving is £2,000.

This is just over one tenth of the £20,000 saved on average of the previous few years. However, the figures may be somewhat skewed due to the wealthiest five percent accounting for over one third of the total UK consumer savings. With this section of the country removed from statistics, the average only rises to £2,205.

The Telegraph was told by ING Group chief economist Mark Cliffe;

“meagre level of readily accessible savings that most people have.

“This leaves them with a very small buffer if they run into trouble,” .

The latest Nielsen-British Retail Consortium consumer confidence survey found that more people are choosing to pay off debts in the current economic environment, compared to those who plan to increase their savings.

Brits may need IVA help after failing to put savings aside is a post from: The Debt People IVA Advice

Joanne left University with Student Loans but decided that she would work hard straight away and pay them off. She managed to do so and so she had no real fear of debt.

Free from the burden of student loans she applied for a credit card. This came through no problem at all. Then she was invited to apply for another. After a while she decided to repay both of the cards with a loan from her bank, who at the same time gave her a third credit card. Now she had a loan to pay every month and things were getting tight.

In order to simply live each month she started to use her credit cards. She had also built up other unsecured debts. She didn’t think this would be a problem because she remembered how she had managed to pay her student loan off. But this time she just couldn’t seem to find the money.

Then someone advised her to think about bankruptcy but she was horrified at the thought. Luckily another friend mentioned The Debt People.

“When I called the Debt People I really thought that my only way out was going to be Bankruptcy but I really didn’t want to go down that route. Then the Debt People mentioned an IVA. I hadn’t heard of this before. They explained it to me and sent me some documents about it. They let me make up my mind in my own time. They didn’t pressure me – unlike the credit card companies who were always sending me letters and calling me on the telephone – sometimes even at work.

When the Debt People told me that all these calls and letters would stop, that I could avoid becoming bankrupt and that they could even negotiate the debt down I have to confess that I thought where is the catch. But there wasn’t one. 6 weeks after my first call to the Debt People my arrangement was approved. Now I have really got my life back on track”.

Joanne of Sale is a post from: The Debt People IVA Advice

Irene had no real idea of how much her house cost to run. All financial matters had been taken care of by her late husband. On her own she not only had to cope emotionally but now she had to try and run her home on her own.

Irene realised quickly that she couldn’t keep her head above water and when she rang The Debt People she owed more than £60,000. Quickly we were able to advise Irene that there was a way out. We negotiated her debt down to just over £30,000 and all she has to do now is make one simple monthly payment to us.

Irene told us that her biggest fear was actually dealing with the people that she owed money.

“Whenever I rang the credit card companies I spoke to a different person. I had to explain my situation to them but they didn’t seem to listen. I was sure that some times they didn’t believe what I was telling them was the truth.

Then I saw an advert for The Debt People. During all the times that I dealt with them I only spoke to 2 different people. Most of the time they contacted me and they always knew what my case was about. They listened to what I had to say and advised me in simple terms. Now I know where I stand and I know that as long as I make my monthly payment Ill never have to speak to the credit card companies again”.

Irene of Preston is a post from: The Debt People IVA Advice

Mike had a great job and was earning a large salary. He set his life out according to how much he was earning. He built up substantial debts on loans and credit cards and none of these caused him any great concern. After all, why should they when he was taking home a lot of money?

Sadly for Mike his life took a turn for the worse. He suffered personal difficulties which meant he could no longer hold down his old job. He had to give the job up but he was left with the debts.

Mike was really at his wits end until he called The Debt People. When we processed Mike’s details we found that he owed £104,000. Even Mike couldn’t believe it and he thought his debt problems were worse than ever. However we advised Mike that the way forward would be an IVA. He accepted the advice and we were able to negotiate the debt down to £42,000, writing off over £60,000.

Mike of Northwich is a post from: The Debt People IVA Advice

Each and every family in Britain will have to pay £2,400 to help cut the debt problems caused by the nation’s huge deficit.

This figure highlights the true extent of the financial pain that families across the land will have to face, according to the Institute of Fiscal Studies (IFS).

The think-tank predicts that even families from poorer backgrounds, who may be struggling with their own debt management issues, look set to see their living standards suffer as a result of the proposed measures to be introduced by Chancellor Alistair Darling.

To protect the “ringfenced” areas of schools, hospitals and the police force, there needs to be drastic cuts in other budgets – such as housing, transport, defence and higher education budgets.

Cuts of around 7 per cent a year, 20 per cent over three years, indicate the harshest squeeze since the Second World War, tougher than anything in the austerity years of the 1970s or early 1980s.

After three years some government departments will see their real-terms budgets cut by a fifth, with subsequent job and pay cuts inevitable.

This may mean that many people working within public sector bodies, or those providing services into the public sector, see their household finances squeezed as cut-backs and other budget cuts trim available cash.

Even in the NHS – where total overall hospital spending is protected – Health Secretary Andy Burnham conceded that there will be real cuts in some hospital and GP budgets, along with a pay freeze for doctors and a slash-and-burn approach to management.

Ivan Cooper, Chairman at debt help experts Chiltern, said: “Budgets across Britain look set to be streamlined, meaning many people will need to consider their own financial position more carefully – to prevent any serious debt problems from developing.

“For people already affected by the recession, independent debt advice from a reputable DEMSA affiliated provider – like Hamilton Locke or Chiltern – is usually beneficial.”

£2,400 each to solve nation's debt management problems is a post from: The Debt People IVA Advice

Three quarters of families are at risk of developing debt management problems as research shows they are set to spend more money than they can afford on keeping children entertained over Christmas.

The additional cost of keeping children entertained over the festive season means that more than three in four parents (77 per cent) admit that they will spend more money than they can afford to on their kids, during what is an already expensive time of year.

According to research from online bank, Egg, the average family is set to fork out almost £40 a day on keeping boredom at bay from their children during the Christmas break.

Along with splashing out on toys and presents, parents are most likely to keep children entertained by spending on additional activities such as going to the cinema, going out for lunch or for buying books, comics or DVDs.

This all adds up to an average cost of approx £540 for the two-week British Christmas holiday.

Ivan Cooper, Chairman at debt advice specialists Chiltern, said: “Overstretching financially at this time of year can prove very damaging to finances throughout the rest of the year, as household budgets are squeezed to make repayments.

“With interest rates and additional tax rises expected next year, household finances are already set to be under increasing pressure, so it’s best to avoid potential debt problems by keeping spending in check over Christmas.”

Three in four parents risk developing debt problems this Christmas is a post from: The Debt People IVA Advice

Consumers have continued to repay their debts at a record level throughout October, as they continued to focus on paying down existing debts rather than taking out additional loans.

During October, people managed to repay their unsecured balances – such as overdrafts, personal loans and credit card debts – by £579m, the largest contraction since 1993 when the Bank of England started recording figures in this way.

It was also only the sixth time on record that consumer credit repayments have outstripped new borrowing.

This was driven by strong repayments on both loans and overdrafts, with additional borrowing on these falling by £713m throughout the month. However, lending on credit cards almost doubled, rising by £134m.

There was also another sharp fall in the amount of money held in building society savings accounts. October saw £1.24 billion more money withdrawn from savings accounts than was paid into them, the eighth month in a row where this happened.

Adrian Coles, director-general of the Building Societies Association, said: “There is little incentive for people to increase savings whilst the Bank rate remains at its current low level, and many may opt to repay debt instead.”

Ivan Cooper, Chairman at debt advice experts Chiltern, said: “The amount held in savings has fallen consecutively over the last eight months which is quite worrying, as it indicates that people may be eating away at them just to get by.

“But the worry is what happens when people’s savings run out? There is the possibility that they could develop debt problems if they continue to spend more than they earn.”

Consumers continue to ease debt management problems is a post from: The Debt People IVA Advice

Debt Management providers have welcomed the news that consumer borrowing has recorded its biggest fall since Bank of England records began some 16 years ago. There has been a large increase in the number of people struggling with debt problems, and having to seek financial advice to improve their situation.

Consumers have been turning to Debt Management and IVA providers in increasing numbers in an effort to avoid total financial ruin. Since the start of the current financial meltdown, there has been a sharp increase in unemployment as well as repeated falls in the average value of property.

These factors, along with wage freezes, and other influences, have left many consumers unable to cope with their unsecured loans and credit card debt problems.

Debt management and IVA providers urge people to speak to an expert before it’s too late. There are many different solutions available for people that need debt help, the important thing is to act now, before the situation gets any worse.

This news that unsecured borrowing had declined has added weight to the argument that consumers are more likely to pay off unsecured debts, instead of saving up during periods of low interest rates.

The number of new mortgages approved during October rose for the 11th consecutive month, whilst at the same time unsecured loans declined by £713 million in October compared, when compared with the previous month. The number of people applying for re-mortgages remained subdued.

unsecured loans down, but credit card debt up

There was a surprise increase in credit card debt levels, as spending on plastic increased by £134 million during October, compared with the previous month. This was more than offset by the decline in other forms of debt such as loans for cars, hire purchase agreements and unsecured bank loans.

The total of outstanding unsecured loans in the UK is around £228 billion, which is a similar figure to the beginning of last year. This shows that despite the best efforts of consumers to reduce their borrowings on unsecured loans, the figures remain more or less unchanged.

If you are struggling with your finances, and having difficulty making repayments on credit card debt and other loans, the best thing to do is contact an IVA or Debt Management provider for some help and advice. DEMSA, the Debt Managers Standards Association, have received approval for its code of practice under the Office of Fair Trading Consumer Codes Approval Scheme for advice for debt management plans (DMP) and Individual Voluntary Arrangements (IVA). A list of DEMSA members can be found on their website, demsa.co.uk.

Debt Management worries ease as consumer borrowing falls is a post from: The Debt People IVA Advice

Unemployment in the UK will continue to rise, Alistair Darling warned yesterday. In a break from normal procedures, where chancellors resist the temptation to predict future jobless figures, the Mr Darling told MPs that “unfortunately it will continue to rise for a while“. The announcement has caused concern amongst IVA and Debt Management providers that are already struggling to deal with the high level of UK debt problems.

Most commentators agree with the Chancellors remarks; however the most recent evidence shows the pace of growth in jobless numbers is slowing noticeably. Generally, the UK has been doing a good job keeping unemployment down. According to one reading of the official statistics, the number of people out of work has been falling over the last couple of months, and now stands at just below 2.5m. This represents around 8% of the total workforce.

When you take into account the 6% fall in GDP seen since the spring of last year it could be seen as a positive when you consider how modest the rise in UK unemployment has been. The Governor of the Bank of England and the Director General of the CBI have both recently pointed out that things are not all doom and gloom. Other countries have seen much higher unemployment, including the United States. Mr Darling’s remarks coincided with the news concerning the Dubai crisis.

There has been a sharp increase in the number of UK consumers that are struggling to repay their debts since the start of the current recession. Debt Management and IVA providers have had to deal with more people with unaffordable debts as unemployment continues to increase.

Ivan Cooper, Chairman at Chiltern Debt Management said: “We are monitoring the jobless situation closely and, wherever possible, we are putting in place the necessary provisions to deal with increasing numbers of over indebted consumers.

“We welcome the news from the Chancellor concerning the decline in the rate of increase in jobless numbers, as we all hope to see an end to the current financial crisis soon.”

Debt management and IVA providers worry as jobless on increase is a post from: The Debt People IVA Advice

Debt problems are nothing new to us in these times, however, there are new concerns in the stock markets across Europe courtesy of Dubai.

Dubai is a country associated with extreme wealth due to oil and hyper-tourism, but in recent times, many of the luxurious properties built by state-owned companies such as Dubai World have struggled to sell. Houses worth up to $2 million less than three years ago are still lay dormant and can be snapped up for $250,000. Granted that is still a lot of money, but the economy in Dubai isn’t geared to make a loss on these projects.

Dubai World have announced that they will have to delay the repayment of some of it’s debt, causing the markets in Asia to drop steeply. Some financial forecasters are worried that the weakened state of the European economies will allow the credit crunch to return. If this were to happen, global demand would dip again and commodities including oil would fall in value.

The anticipatory effect has caused a fall in the price of a barrel of crude across the world, down $1.26 in London and almost 5% in the US. Share indexes in Germany, France and the UK opened down 1%.

It is difficult to see exactly how we will be affected in the UK, however, chances are this will slow any recovery being made across the country and may make the debt problems of average Britons worse.

Ivan Cooper, Chairman at Chiltern Debt Management said: “This is a very worrying situation, just as the country starts to look like it is turning a corner, something seeming unrelated starts to cause such concern.

“For those whose finances are already stretched, this could be a serious worry and seeking advice from a reputable company – like Hamilton Locke, The Debt People or Chiltern.”

Share prices fall due to Dubai debt problems is a post from: The Debt People IVA Advice

The ongoing saga of reclaiming bank charges, levied on unauthorised overdrafts for poor debt management, has been dealt a cruel blow today in the Supreme Court.

Earlier rulings in favour of the Office of Fair Trading’s investigation into the unfairness of unauthorised overdraft fees, have been overturned by a Supreme Court judgement.

The case at stake, which has been running for over two years, has been welcomed by banks – it allegedly brings an extra £2.6bn of income each year for them.

Campaigners against the unfair charges have been dismayed with the ruling, and the OFT are likely to challenge the decision by using other powers, such as instigating a full Competition Commission enquiry, to attack the overdraft fees.

In explaining his ruling, Lord Phillips the Supreme Court’s president said that customers had agreed to pay overdraft charges as part of the price of having a current account, so they fell outside the scope of the appropriate regulations.

Lord Phillips added that the OFT could still try to scrutinise bank charges under other parts of the regulations and that this was not the end of the matter.

He said: “This will not close the door on the OFT’s investigations and may well not resolve the myriad cases that are currently stayed [put on hold] in which customers have challenged the relevant charges.”

In response to the ruling the OFT said that it was “disappointed” with the judgement.

In a statement they said: “The OFT will now consider the detail of this judgment before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms.”

Ivan Cooper, Chairman at debt advice specialists Chiltern said: “This is a devastating blow to consumers who believe that they have been unfairly charged for their poor debt management.

“If anything, it should kick-start people to ensure they avoid any extra charges by putting adeqaute overdraft arrangements in place.

“For people who are still struggling to manage their current finances may be best advised to seek impartial debt help from a reputable provider – like Hamilton Locke, The Debt People or Chiltern.”

People who received payments from banks prior to this test case starting will be allowed to keep their money, because the pay-outs were made as “goodwill gestures”.

Debt management misery as banks win at Supreme Court is a post from: The Debt People IVA Advice