Can you afford to go bankrupt? You may think this is an odd question but many borrowers are unaware that you have to pay to be declared bankrupt, not only that but bankruptcy fees are increasing despite there being no increase in the cost of administering bankruptcy. So if you’re credit card debts are mounting up and you are thinking if it all goes pear shaped I can just file for  bankruptcy it may not be as simple as you originally thought and may take you a while to afford the  bankruptcy fees itself.

The government has announced that the cost of bankruptcy will increase in April and is raising its fees by £90. From the 6^th April the cost of bankruptcy will rise from £360 to £450, as well as an additional court fee of £150 which will be waived for those on benefits but overall the cost of bankruptcy will be at an all time high of £600. This is far from good news for those borrowers who are severely stressed and unable to afford to pay anything at all towards their credit card debts and are seeking credit card debt relief in the form of credit card debt bankruptcy.The new increase in bankruptcy fees will force borrowers to seek debt advice on alternative debt solutions such as a debt management plan or a debt relief order.  On a positive note these solutions don’t have the same negative stigma as bankruptcy and in most cases a debt management plan can help a borrower to achieve credit card debt relief and put them back on the straight and narrow, as creditors will see that the borrower is willing to attempt to pay their debts back and are actively seeking credit card debt management help.

The best thing to do is to call a free debt helpline where you can get free professional advice on the debt solutions available, then weigh up your options and choose the most cost effective solution to suit your circumstances, bankruptcy should only be your last option.

It is no secret that debt in the UK is a major problem, according to Credit Action the UK personal debt at the end of December 2009 stood at £1,460 billion. As a result of this advice on debt is becoming more available to those who have the confidence to face up to their debt and admit they need debt help advice.

However despite the debt help line available consumers are still shying away from facing up to their debt, afraid to open the red letter bills that fall through the letterbox and even reluctant to tell loved ones and friends, or in most cases are in denial that they have a debt problem at all due to the stigma of debt. Shying away from debt problems can only makes matters worse and can often result in debts being passed on to collection agencies, CCJ’s and charging orders.

A popular way of seeking debt help advice is through a debt management company who are able to offer debt help management and relieve the stress of having to deal with creditors directly. A debt management company will deal directly with the creditors and collection agencies including all telephone calls and correspondence.

Debt Plan Direct offer consumers a tailored debt help management service to suit individual needs and offer free professional advice on debt. Our professional and friendly staff can talk through your debt problems with you and advise you of the best solution to meet your circumstances.

Debt help is out there and readily available it’s just up to you to pick up the phone and call the debt help line. According to credit action 43 % of people in the UK are too scared to take action, don’t let yourself be part of that 43% stand up to debt and face it head on, it is the only way.

It can be hard to get out of debt once you have found yourself buried deep in a financial crisis. You need to prioritise what you can do to help yourself before the situation gets any worse.The first thing to do is assess your situation. Work out who’s charging what, how much interest you are being charged, and who should be getting how much. Sit down with all of your bills and calculate what you owe and what your ongoing expenses are likely to be. Get a copy of your credit report and analyse it carefully to make sure its correct.

Next look at why you are spending. Have you been unhappy and felt like buying a new outfit? If so, this is due to emotional spending. But, if you’re short because you had to buy your weekly groceries, then that is practical spending. Knowing the difference between the two could help you manage your debt quicker.You will be able to create a budget once you know your situation and why you are in that situation. Work out how much you spend on a monthly basis, and an amount of money that you will need for everyday life. 

Cutting out your expenses is a simple concept but so hard to follow. 

If you really can’t seem to get out of debt following the above steps, speak to a debt advisor who can help you. 

The Pros & Cons

Consolidating all your debts can reduce both the interest and the amount you are paying each month It can also make your debt much easier to manage. This may also mean it will take longer for your debt to be repayed, which could cost you more in the long term.

Present Market Situation

We can never be sure what the economy status will be like for the future, or even what your own financial situation will be for that matter. You may be able to afford your repayments today, but maybe not tomorrow if your salary decreases. Who knows you may change job roles and end up with a larger salary which means you can pay all your debts off even quicker. In the long run, consolidating your debts could free up the cash you need to bring your expenditure back in line with your income.

In a Credit Crunch

Today’s credit markets might make debt consolidation loans a bit less attractive than they were before. Lenders are having to pay more for the money they borrow, which means they have to charge more in return.

The Alternatives

You can consider other options for solving your debt. For example, a a debt management plan or an IVA. It’s important to speak to a debt adviser who can help you understand what’s right for your situation.

Recent research by Unbiased carried out suggests that the average UK consumer will need to work 70 days to cover the interest alone on their debts for 2008.

The numbers of consumers looking for debt help and advice has again increased this year showing that there is trouble ahead for UK consumers due to personal debt levels increasing over the last 10 to 15 years.

The 70 days consumers will need to work to pay off the interest on their personal debt levels is an increase from 44 days last year – showing the increase in the total UK personal debt levels.

The  Chief Executive, David Elm stated: “In the current economic client is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.”

Further research conducted by Credit Action, at the end of January showed that the average UK consumer owed £4,748 in loans, overdrafts and credit card bills.

A new initiative launched by the government to help educate individuals in the UK about their personal finances has been officially launched in the London.

The new personal finance programme called ‘Programme in Personal Financial Planning’ available at the ifs School of Finance has been welcomed by politicians.  The new education programme has been earmarked by a ceremony at the House of Commons.

The aim of the programme is to educate and help individuals who are struggling with their personal debts and free them from the burden of debt; in addition to educating people to avoid future financial problems. The organizers of the personal finance programme hope it will be avialbe throughout the UK in adult education centres.

Noorjahan Rashid, from Tower Hamlets in London commented: “I have only been taking this course for four weeks but have found it life changing.”

“I know about mortgages and interest rates and all sorts of financial things…it’s really given me confidence,” she added.

Many pf the UK’s indebted consumers could have been disappointed recently as the Bank of England opted not top reduce the cost of borrowing.

A new initiative launched by the government to help educate individuals in the UK about their personal finances has been officially launched in the London.

The new personal finance programme called ‘Programme in Personal Financial Planning’ available at the ifs School of Finance has been welcomed by politicians.  The new education programme has been earmarked by a ceremony at the House of Commons.

The aim of the programme is to educate and help individuals who are struggling with their personal debts and free them from the burden of debt; in addition to educating people to avoid future financial problems. The organizers of the personal finance programme hope it will be avialbe throughout the UK in adult education centres.

Noorjahan Rashid, from Tower Hamlets in London commented: “I have only been taking this course for four weeks but have found it life changing.”

“I know about mortgages and interest rates and all sorts of financial things…it’s really given me confidence,” she added.

Many pf the UK’s indebted consumers could have been disappointed recently as the Bank of England opted not top reduce the cost of borrowing.

The UK is currently going through a credit crisis with the UK’s personal debt the highest ever seen.  The stresses of debt are now starting to take their toll on employees at work- known as money sickness syndrome.  Many employers are now taking this issue extremely seriously with HR departments now dealing with personal money matters with employees.

Previously many companies have been slow with this issue but now as the UK debt problems increase employee debt can have effects on company productivity.  A recent new publication, the Thoresen Report shows that employers have a leading role to play in helping individuals and companies should do more to help their employees with any personal debt related issues.

It is arguable as to why an employer should even meddle with the employees’ personal matters but now with the ever increasing personal debt mountain building in the UK it is difficult for employers not to help and is seen as more than just a social issue. 

It has been found that the debt problems affect everyone in all classes and not just those on lower incomes or those of a younger generation.  It is only a matter of time when an employees’ debt problem start spilling into the workplace and starts having an negative impact on performance.

But how can employers help?

It is important for employers to help and educate employees on money matters as well supporting employees in financial matters.

An employer can help thorough an in-house full debt counselling service where it can offer financial management courses or work in partnership with a debt counseling professionals such as Debt Plan Direct who can help employees to ease their worries and reduce the payments. 

Employers should reach out and help their employees.

As the total number of indebted consumers in the UK increase consumers should look at all the debt solutions available to them before going with the first solution available to them such as the drastic solution of the Individual Voluntary Arrangement or further to bankruptcy.

The most debt rich part of the UK is the North East where approximately 18% of adults have unsecured debts of £10,000 or more spread over credit cards, overdrafts and personal loans.

Creditors have realized the increase in loan defaults on their books and now are tightening their lending criteria causing many more loan applications whether unsecured loan or a mortgage to be declined.  The hardest hit consumer is also getting younger in recent times with new research suggesting the average 24 year old now has debts of £16,351 on credit cards and personal loans with the brunt of the debt landing on parents’ shoulders.

Debt Plan Direct case worker, Paul Johnson believes that many people are being denied proper full debt advice and are opting for options such as the IVA, which in many cases is sold to the debtor as the best debt solution when there are other debt solutions such as the less drastic and informal debt management plan.

Paul Johnson one of the most experienced debt case workers at Debt Plan Direct advises that many people do not know where to turn and just go to the first debt solution they come across without weighing up all their options suitable to the debtors individual circumstances.

Many people who struggle with their unsecured debts take out an IVA to alleviate debt problems when there are options such as a debt management plan to help ease the debt burden and have less impact on their credit file.

As many lenders reject loan applications a debt management plan will enable an individual struggling with debts to restructure their monthly payments into a single monthly payment in line with the debtors’ income so the new single payment will be a lot more affordable and realistic.
 
Paul Johnson also advises people to seek help as soon as they feel they may be heading for trouble with their financial situation or if you are currently finding your monthly repayments difficult.

A debt management plan is also known as a DMP and is a peronalised solution to sort out any payment problems you may be suffering.  The plan is unique to your individual circumstances and takes into consideration your income, outgoings and current level of debt.  Only licensed credit counseling services are able to offer this financial management programme.

So What Does this Debt Management Plan Involve?

The counseling service will first of all ascertain your financial background and the circumstances surrounding why or how it is you got yourself into repayment difficulties.  However remember that a debt counseling agency is not there to judge you but to getter a better understanding of your overall financial situation.  Once this information has been collected a repayment plan can be put into place which would be affordable for you to make and acceptable for your creditors.  Do remember that a debt management plan does require a level of financial discipline and commitment from you if you are to discharge the debt in the quickest time possible.

An informal agreement is then put in place and the new revised offers of payment put forward to your creditors.  Once accepted the debt management plan will then allow you to repay your debts at through a single monthly payment you can afford and stop any creditors from hassling you as well as stopping or reducing interest and charges.

What to be Aware of When Entering into a DMP

Before entering into a DMP ensure you are fully aware of all the initial costs to set up the plan and what the management fee will be for the ongoing term of the plan.  In addition to this check any debts that cannot be included into the debt management plan as you will need to repay these debts yourself. 

Once the plan begins it is important to maintain your monthly payments and not to default on your plan else your creditors can terminate the reduced repayment plan and take further legal action so when agreeing the fixed monthly   payment ensure it is a realistic and affordable monthly payment for you to make and maintain for the duration of the plan.

A reputable debt management company will send out statements of all the payments being received and what payments are being made to your creditors so you know where you stand financially. As well as this an estimate of when you will become debt free should also be given.

Debt Plan Direct provide a national consumer debt counselling service providing full advice on all aspects of debt, budgeting and financial affiars.  Debt Plan Direct are one of the UK’s most prominent provders of debt management plans.