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Insolvency and UK’s Battle Against Debt

The credit crisis that currently grips the UK shows no sign of abating and the sheer size of debt in the country is astronomical. Insolvency numbers are expected to rise as debt levels have tripled over the last decade. Licensed insolvency practitioners are preparing to help thousands of struggling people solve their debt problems.

The current financial state of the UK doesn’t make pleasant viewing and it is affecting consumers up and down the country. Insolvency levels are fully expected to reach record highs this year and a report has shown that young people are amongst the most financially vulnerable in the UK due to the level of debt that they have accrued.

Insolvency – The debt cycle

Financial experts often suggest that an individual voluntary arrangement is a good way for people with high levels of debt to tackle their problems. Debt problems in the UK are getting to the stage where the threat of insolvency or bankruptcy looms large over a vast proportion of the population. The studies conducted by building societies discovered that apart from rent and mortgages, interest upon debts has become the largest single outgoing for those under 35. This invariably leads to spiralling debts and insolvency may occur for many who find repayments impossible. However, those within the financial industry have seen individual voluntary arrangements successfully guide many away from the precipice of debt.

The credit card culture of consumers in the UK has seen levels of debt reach unsustainable levels. The financial fallout from this will be record numbers of insolvency in 2012 as people struggle to stay on top of their finances and become unable to meet the repayments demanded by their creditors. In many cases, individuals will opt for an individual voluntary arrangement (IVA) in order to solve their monetary woes and stave off the threat of insolvency.

Insolvency – A Numbers Game

The sheer scale of debt in the UK is testament to the spending culture of Briton’s and has reached a point at which it becomes impossible for the lending to continue in such an unrestricted manner. By the end of the second quarter of 2007, the size of consumer debt in the UK was an unprecedented £1.345 trillion, which outstripped the annual gross domestic product by some £15 billion. This financial discrepancy will have the effect of increasing the number of insolvency cases in the UK as people can no longer sustain their spending levels. An IVA is often utilised by those in debt as it can ward off the threat of bankruptcy and it is a legally binding contract between the individual and their creditors to pay back their debt at a level within their means.

Insolvency – Taking Financial Risks

The levels of debt in the UK and the way in which people spend at a level beyond their means is causing a massive debt gulf which will swallow a record number this year as insolvency levels are set to skyrocket. Speaking to the Daily Mail, Mark Allen, a financial expert spoke of the precarious situation of people’s personal finance, “It's not uncommon these days to see some individuals with unsecured debt upwards of £50,000 spread across four or five credit cards and a mortgage on top of that. These people are balancing on a perilous tightrope”. As insolvency levels reach record levels, the numbers who see an individual voluntary arrangement as the ideal solution to their debt woes is likely to increase exponentially and many will return to financial security as a result.

Younger borrowers turn to reverse mortgages

According to recent reports, a large number of young homeowners are turning to reverse mortgages as they’re experiencing a huge increase in their unsecured debt levels. Reverse mortgage loans are the best financing options for the seniors who live on a fixed income level and need immediate cash for home renovation or any other purpose. Studies suggest that the previous borrowers of the reverse mortgage loans used them to improve their home, their biggest asset, but now the younger borrowers are taking resort to the reverse mortgage loans in order to meet their pressing financial needs. No amount of professional debt settlement advice can aid the young borrowers get out of debt.

The reverse mortgage loans are actually tailored to meet the need of the seniors above 62 years of age. The government issues all reverse mortgages to the seniors through the HECM or the Home Equity Conversion Mortgage program and through this the senior can access the cash that he has accumulated as equity in his home and receive regular monthly payments from the lender. The reverse mortgage program is usually considered as the most exotic product for the seniors but the recent study shows that the borrowers of this kind of loan are those who are about to enter the retirement age and they all are taking out such loans in order to control their soaring household debt burden. It isn’t a far-fetched fact that the close-to-retirement-aged people are considering reverse mortgages as most of them have grown up managing their financial debt and according to them reverse mortgages give them the chance to facilitate their monthly repayment structure.

Are reverse mortgages cheap products?

The fees and the interest rates that are associated with reverse mortgages that were there in 1999 made such mortgage programs prohibitive to the mortgage programs and it is since then that the US Department of Education and the HUD or the Housing and Urban Development stepped in to make these cheaper and affordable for the seniors of the US who are suffering financially. This made the HECM saver the ultimate product for all those who are looking for a reasonable mortgage to repay their soaring debt obligations.

The HECM has a few disadvantages for the younger borrowers as the young people may expect less cash or lower monthly payments than their older counterparts. According to a survey by MetLife, one in four baby boomers seeks reverse mortgage loans when they have subsequent amount of debt. All those belonging to the “sandwich generation” may find themselves in dire financial straits when they don’t take out a reverse mortgage to meet the needs. They can stop running to the debt help companies if they’re sure about the reverse mortgage program.

Myrina Stein is a regular writer for various finance related Communities including Oak View Law Group and CDFA. She is a Post Graduate degree holder in Finance from a reputed University in California and right now working in a Finance Consultancy as a Project Manager. She is well equipped to write articles on debt consolidation , debt settlement advice, bankruptcy, credit problems etc

Find the Cheapest Car Insurance

With the struggling economy, you might find yourself needing to find ways to save money. One way that you can save money is with the cost of insurance. All of us need insurance; however, you do not need to pay a fortune for your insurance needs. Here are five tips to find cheap insurance.

1. Increase your Credit Score:

You should ask for a copy of your free credit report and make sure that it is correct. If you have any unpaid bills, make sure you get them paid, and start making payments in a timely manner. You should also try to lower the amount of debt that you have. This can save you lots of money on insurance premiums.

2. Shop Around:

One of the best ways to find cheap insurance is to compare different companies. Insurance companies are very competitive, so you should shop around for the best rate. You might even have the power to negotiate and get a better rate. Most insurance companies will give you free quotes, so it is a good idea to request at least three quotes and compare prices.

3. No Deposit Car Insurance:

Car insurance companies are very competitive; many are now offering no deposit car insurance. You will not fact a penalty for making monthly payments instead of one lump sum. Your car insurance payment will be divided into 12 months. If you are strapped for cash, this is a good option.

4. Increase your Deductible:

You can lower your monthly payments if you increase your deductible. By increasing your deductible, you can save as much as 30 per cent on insurance. However, you want to make sure that you can cover the cost before your deductible is met.

5. Consolidate Policies:

You can save money by combining your life, health, car and home insurance into one policy. Many people think that they do not need life insurance; however, the cost of a funeral and burial can really be a burden to your loved ones, so it is imperative that you have life insurance. Health and home insurance are also important for you to have, so you will not be stuck with huge bills. By combining policies with the same provider, you can save thousands of dollars.

My name is Patrick and I’m guest blogging for www.carinsurancewithnodeposit.co.uk.

Top 5 Best Finance Websites For You

Keeping up with the world of finance can be difficult with all of the information that is available out there. If you are interested in finance, there are several websites that you can check regularly to stay up to date with what is going on in the world. Here are five of the best finance websites for you to bookmark.

CNN Money

CNN Money is one of the most well-known finance websites out there. It is updated throughout the day with contributions from experts in their respective fields. They get content from Fortune, Money, and of course, CNN. They have information about the stock market, banking, bonds, real estate, insurance, and a lot more.

Investopedia

Investopedia is one of the best finance websites online. It has a plethora of information about anything that is related to investing. You can get definitions of terms that you understand. You can find articles from investment experts that provide you with tips and strategies. They also provide up-to-date market analysis articles that help you figure out exactly what to do with your portfolio. If you have any questions about investing, this is one of the places that you need to go.

The Motley Fool

The Motley Fool is perhaps the most entertaining finance website in the industry. They take a lighthearted approach to analyzing the financial markets and distributing news. Their writers are very knowledgeable, but they also have a good sense of humor. If you don't like the straightforward manner that comes with most of the other finance websites out there, this is definitely one that can keep you interested. They have updated news articles daily, and they also have columns from regular contributors throughout the week.

Mint

Mint is a finance website that makes it possible for you to stick to a budget for once. Many people have problems tracking their finances and sticking to a specific budget amount on a regular basis. With Mint, you can set up an account and tie it to all of your other financial accounts online. For example, you can tie it to your checking account, your savings account, credit card accounts and your mortgage. It will update all of your financial accounts regularly so that you can see exactly where you stand. You can set budgets, and then when you make a purchase, it will be deducted from the appropriate spending category in the system. This allows you to see exactly how much you have left at any given time.

Kiplinger

Kiplinger is another well-known site in the financial realm. It provides information about investments and recent news events. It also has a section specifically designed for beginners who need to learn the basics of finances.

Sharon Dyer is the Morgan Law Firm Outreach Director and a frequent blogger on a variety of subjects. See her recent article on Travis County divorce on the firm's divorce blog.

How to Dispute Discrepancies on Your Credit Report

Your credit report is one of the most important documents in determining your financial standing. A good credit report can help you achieve your financial goals, purchase valuable assets, and qualify for competitive interest rates on new lines of credit. A bad credit report can keep you from purchasing a new home or car, as well as preventing you from qualifying for credit at low interest rates. This makes it essential to know what’s in your credit report and what you can do to improve your credit by reviewing your credit file regularly.

According to a study released on Bankrate.com, a startling 70 percent of all credit reports contain serious errors or discrepancies which can affect an individual’s credit rating. These include having accounts listed twice, incorrect account statuses, discrepancies on the date penalties were incurred, and even the assignment of incorrect aliases that aren’t the same person. Each of these mistakes can cause decreases in your credit rating and affect your ability to borrow at competitive rates.

By Federal law, every U.S. resident is allowed a free copy of their credit report each year. You can get your free reports by going to annualcreditreport.com and following the instructions to get each of your reports. Keep in mind, your free credit report actually includes the three different variations since you get a different report from each of the three main credit bureaus. Each of the three bureaus—Experian, Equifax, and TransUnion—has their own credit reporting system so they maintain their own version of your credit file. If you want to improve your credit, it’s important to check all three reports.

Once you receive copies of each of your reports, the next step is to carefully review the information included therein. Here are some tips of what you want to look for if you’re trying to find discrepancies:

• Check your contact information, paying special attention to any aliases the report indicates are you. In most cases these will be variations of your name, but in some instances the credit bureau will incorrectly assign an alias that’s not actually you.

• Check the status of each credit account. Make sure current accounts are showing current on your credit report. For delinquent accounts or any penalties incurred from delinquency or litigation make sure the date the penalty was incurred is correct.

• Check to make sure your accounts are only listed once, since double listed accounts increase your total debt load. Total debt owed is a major determining factor in FICO credit scores, so a mortgage listed twice can cause serious damage to your credit.

If you find any errors or discrepancies, submit your request for correction in writing to each of the three credit bureaus. It’s important to send the correction to all three agencies, since they’re not required to communicate with each other. Always submit disputes in writing and keep copies of all correspondence. Keep your explanations brief and to-the-point, and you’ll also want to provide copies of any proof or documentation you have.

Once you submit your corrections, the credit bureaus will communicate the disputes to all of your relevant creditors. They will have an opportunity to confirm or deny your dispute. If the dispute is confirmed as an error, your report gets corrected and you must be notified if the correction gets rejected or changed at a later time. If you are denied a correction, you are allowed by law to present a summary of your side on the dispute in writing to be included in your credit file.

Even after you correct any errors in your credit reports with the three credit bureaus, you may not have the credit scores you had hoped to see. The credit history listed in your credit report is a main determining factor in your credit scores, but it is not the only piece of your credit puzzle. Total debt owed is another major determining factor. In this light, if correcting discrepancies doesn’t deliver the result you want, your best bet is to find ways to improve your credit history and pay off your debt as quickly as possible. If you need help, contact a non-profit credit counseling agency to allow a certified credit counselor to assess your debts and provide recommendations to help you improve your situation.

Connie Solidad has been writing about finances and debt consolidation for years. She's an expert in the industry and writes about debt incurred from credit cards, debt management options and credit counseling. When Connie is not working, she loves playing with her two dogs in Tampa, Florida. To learn more about debt management refer to ConsolidatedCredit.org.

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