Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
Adverse Debt Levels Blight UK Consumers Personal Finances > NetSparsh - Viral Content you Love & Share

Adverse Debt Levels Blight UK Consumers Personal Finances

Debt levels are at an all time high in the UK. The younger generation tend to be feeling the pinch the most, but parents are increasingly being required to bail them out, often at great expense to their own limited mortgage or retirement savings.

It has become almost accepted as a fact of life that graduates will begin their careers with a considerable level of personal debt. The Association of Investment Trust Companies found that on average students expected to graduate with £7,208 of debt, while parents believed it would be nearer to £9,741, however the real average was found to be currently running at £13,501. Graduates then need to service credit cards, take out a mortgage, then cover the payments, repay university loans, not to mention the pressure to start saving earlier, and save more, for their retirement, whilst the basic state pension increasingly becomes inadequate. The government revealed in June that student debt for 2003-04 was seven times higher than they were in 1994-95 and the Student Loans Company has shown that debts owed to them has risen to more than £13bn.

It is not only students who face financial difficulties early in life. Consumer Credit Counselling Services ? Scotland, has indicated that young adults in general, under the age of 25, now account for more than 10 per cent of the estimated 32,000 people who have fallen into severe arrears on non-mortgage debts of more than £1 billion.

Malcolm Hurlston, Chairman of the Consumer Credit Counselling Services (CCCS) said, "It is noticeable that young people are accounting for an increasing proportion and the number of them seeking assistance has risen by about 25 per cent over the past two years or so."

Analysts have been bracing themselves for news of a sharp increase in adverse debt levels from the major high street banks following report figures of a 21 per cent increase in bad debts levels at Lloyds TSB. City analysts expect HBOS and Royal Bank of Scotland to declare that bad debt charges have risen by around 20% in their personal banking businesses, and Barclays, HSBC and Alliance & Leicester are all expected to tell a similar tale of rising loan defaults. Citigroup analysts are expecting bad debt charges from its retail banking division to rise about 24% in the first half of this year to £230m, while last year HBOS's provisions for bad debt rose from £1bn to £1.2bn.

Keith Stevens, of the chartered accountants firm Wilkins Kennedy, said: "Creditors profit by lending money to people and collecting interest, and the longer they can keep that cycle going the better for them. Unless borrowers own property of significant value, it's often not in creditors' interest to call in their debts." He also continued that he believed some creditors were increasingly taking a hands-off approach, allowing debtors to pile up large amounts of debt, and then collecting interest and penalty charges for as long as borrowers were able to continue paying. This has lead to an increase in the number of borrowers filing for bankruptcy themselves when previously they would have been forced into it earlier by their lenders.

House repossessions have also significantly increased over the past year, with the Council of Mortgage Lenders announcing 4,640 home repossessions during the first half of 2005, compared with 3,070 for the last half of 2004. Government figures show that there has also been an increase in the number of homeowners being taken to court for mortgage arrears.

Some of the major banks and financial service providers have taken the initiative and started to help police the growing adverse debt problems with HSBC announcing that it will share their full credit record, of both positive and negative information, on its personal customers with other regulated financial services companies through the Experian, Equifax and CallCredit credit reference agencies, in efforts to keep tabs on its consumers' debt.

Michael Geoghegan, Chief Executive of HSBC said: "It is no more in the interests of a customer to borrow more money than they can afford than it is for a bank to lend them the money." The move has been widely heralded by analysts, as Michael Geoghegan added, "It is the only way to ensure that lenders properly understand the full financial exposure of customers before they let them sign up to debt that some simply can't afford."

This all comes amidst media pressure for financial firms to become more responsible. One case widely featured in the news concerns a couple who took out the £5,740 loan at 34.9% APR for house improvements, but they were already in arrears on two prior mortgages, and became unable to keep up the loan repayments. Over the course of the 15 year loan term the amount repayable had escalated to £384,000. Attempts by the loan company to still enforce the huge debt, eventually had to be fought off by the couple through the law courts.

The couple urged others considering taking out a loan to seek advice and to, "obviously read the small print and ask the questions that perhaps you don't think about at the time, and just make sure you know exactly what the consequences are should anything go wrong".

There are currently many sources of information to help consumers make decisions regarding their finances and debt levels. Financial comparison sites like Moneynet can provide impartial information on loans, mortgages, adverse credit, etc, to find the best product for individual circumstances. Consumer help sites like the National Debtline provide free confidential and independent advice on how to deal with debt problems, and the Citizens Advice Bureau are there with trained volunteers to help with legal, monetary and other problems, through a free, independent and confidential advice service.

The more help and information that is available to consumers and the more responsible the lending agencies become, the safer finance will be for the most vulnerable who are looking to borrow money, to prevent them getting into un-repayable levels of debt, however these services can only be of help if people actually use them.

Malcolm Hurlston of CCCS said, "We are advising about 4,000 people in Scotland and I would estimate that our figures represent only about one in eight of those who need help".

Financial education is something needs to be provided at an early stage to make people realise the importance of taking on the accountability for their own finances, as well as highlighting where to access help for when it is required. Budgeting is a subject many school leavers have little practical knowledge of, but one which they desperately need to be made aware of before they start to control their own finances.

Where there is existing advice or help, this must be made available and known to all in order to prevent more people getting too deeply into debt, or falling prey to loan sharks like the recent case of Mark Washington Johnson who has been jailed in Birmingham for nearly four years. Mr Johnson was found guilty of charging up to 8,000 per cent interest on loans, taking Social Security benefit books or National Insurance numbers as "security" for the unauthorised loans and then piling on default charges for missed payments. If we are to prevent this sort of abuse occurring to the weakest members of society then public awareness needs to be raised and the most vulnerable people given the assistance best suited to understand and control their own money.

Resources:

Financial and legal advice - Citizens Advice Bureau

Mortgage and loan comparisons - Moneynet

Richard lives in Edinburgh, occasionally writing for the personal finance blog Cashzilla, drinking too much coffee, and considering the possibility of there being intelligent life on Earth.

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

USA TODAY

5 personal finance books to read this year
USA TODAY
by Vicki Robin and Joe Dominguez with Monique Tilford. “Everyone should read 'Your Money or Your Life,' a book that encompasses savings, paying off debt and how ordinary people can achieve financial independence. It's especially helpful for people who ...


Forbes

Forbes Fintech 50 2018: The Future Of Personal Finance
Forbes
The way we manage our money is changing: We can buy car insurance based on the miles we drive, withdraw money from our paycheck before payday rolls around and apply only for credit cards and loans we know we are likely to be approved for. The personal ...

and more »

The Sanatoga Post

Pottsgrove Provides Personal Finance Lessons
The Sanatoga Post
LOWER POTTSGROVE PA – Although Pennsylvania is among 33 states that does not require personal finance to be taught in its high schools, students at Pottsgrove High will have a series of opportunities this week and next to learn how to spend money ...


Salon

Develop personal finance skills and learn to invest smarter
Salon
Do you get overwhelmed when trying to figure out your financial future? We don't blame you: personal finances can be messy and confusing to handle. How do you balance what you own versus what you owe — and how do you invest for your future in a way ...


Richmond.com

Kiplinger's Personal Finance: Make sure you have proof to support charitable tax deductions
Richmond.com
It's important to keep the right records from a charity to deduct contributions when filing the 2017 taxes, so you don't lose the deduction if you're audited. The records you need depend on the type and the size of the gift. “The IRS is unforgiving on ...


Forbes

Seven Things You Need To Know About Money
Forbes
Financial Finesse We provide workplace financial education. Opinions expressed by Forbes Contributors are their own. Liz Davidson , Contributor. Shutterstock. How much do you really know about your money? With all the financial stress we encounter, it ...


USA TODAY

15 ways to benefit from rising interest rates
USA TODAY
You've heard the saying, “what goes up, must come down.” This is true of interest rates, which means that interest rates must also go back up now that they've dropped down. We're just coming out of a period of historically low interest rates, and the ...

and more »

Bloomberg

Goldman Is Close to Buying Personal-Finance Startup Clarity ...
Bloomberg
Goldman Sachs Group Inc. is in discussions to acquire personal-finance startup Clarity Money, with plans to fold it into its Marcus online lender, according to people familiar with the matter.

and more »

MyHighPlains

Frank Phillips College Donates Personal Finance Curriculum To Borger, Dalhart And Perryton ISD
MyHighPlains
Frank Phillips College is donating Ramsey Solutions' Foundations in Personal Finance curriculum to Borger, Dalhart and Perryton ISD. Foundations in Personal Finance is the premier curriculum for teaching financial literacy to students. “Frank Phillips ...


Yahoo Finance UK

4 Personal Finance Rules You Should Know by Heart
Yahoo Finance UK
There are tons of personal finance tips, tricks, and rules that can greatly improve your financial well-being. However, some are more important than others. Here are four personal finance rules in particular that are extremely important to your ...

and more »
Google News

Do You Really Need the Power of Money Management Software?

I have been a loyal user of Quicken(R) for more... Read More

UK Graduates Looking Short-Term At Their Long-Term Financial Responsibilities

With almost two thirds of university entrants from England and... Read More

Personal Loans For Homeowners ? One Of The Numerous Rewards For Being A Homeowner

You no longer look at the pictures of homes cause... Read More

Money Saving Tips. Maximize Savings on Everyday Items!

Frugal living is more than a lifestyle. It's a passion.... Read More

Budgeting the Key to being Financially Stable

Single Mother's in need of Financial GuidanceBudgeting is key to... Read More

How To Place an Online Order for Checks ? It is Easy as 1-2-3

If You Have an Existing Account and 5 Minutes, You... Read More

Debt Management ? More Ways to Save on Gas Consumption

The price of gas continues to climb, and with continued... Read More

Risky Business: You May Not be as Daring as You Think

I thought I was through with exams when I finished... Read More

The Wright Place - Finances

Women have a love/hate relationship with money. Most of us... Read More

Reduce College Debt with Scholarships

Six Scholarship judges were sitting around an oval table. Forms... Read More

Budgeting Your Way to Financial Freedom

Financial freedom cannot be achieved without budgeting. Budgeting involves tracking... Read More

How to Save Money in a Grocery Store

Now there are ways to save money in the grocery... Read More

Developing a budget? Watch out for Those Budget-Bursting Gremlins

If you've developed a household budget to get your spending... Read More

Want Your Savings to Earn a Higher Rate of Return? Try Internet Banking

Doesn't it seem like the only impressive numbers we've seen... Read More

University: A Course in Personal Finance

Recent findings from the Educational Policy Institute indicated that the... Read More

Budgeting is Bothersome

It doesn't take much for you to get behind on... Read More

Tips To Save Money At The Supermarket

Are you interested in saving money off your grocery bills?... Read More

Do You Know What Tomorrow Will Bring?

I've been sharing the following idea with people for a... Read More

Save Money Off Your Home Utility Bills

Many don't realize that our basic utility bills provide the... Read More

Budgeting Before Buying

With interest rates being at an all-time low, I can... Read More

The Good and the Bad of Money Management

Good money management needn't be difficult. In fact, there a... Read More

Personal Finance - Have Consumers Had a Belly Full of Personal Debt?

For months, we were trigger-swipe happy, putting our groceries, clothes,... Read More

Save On Food - Ten Tips

To save on food, be an opportunist. Buy what you... Read More

Creating A Household Budget

Creating a budget can be a very difficult task. Although... Read More

Simple Ways to Save Money

Things are so expensive these days. We seem to be... Read More