With staggering price hikes in mortgage interest rates, gastronomical fuel prices and the rising cost of living, an award-winning debt management company has put together some money saving tips to help millions of cash-strapped homeowners.

Debt Advisory Line is welcoming news that the government has struck a landmark deal with the six big energy companies to ensure they write to customers every year to inform them of the best deal for their household. However, the award-winning company is advising customers to be proactive when it comes to their finances.

John Goodfellow, Chairman of Debt Advisory Line, says: “Why wait for the energy companies to contact you? Get in touch with them to find out if you’re overpaying or use price comparison websites to find the best offer available on your energy bills. It can save families up to £100 a year by switching to a cheaper tariff. We offer our own customers our Bill Expert switching service to help save money on every day bills” 

The advice follows other news that a range of leading lenders, including Halifax, RBS and Yorkshire Bank, will increase their mortgage interest rates from 1st May, leaving millions of homeowners really feeling the pinch when it comes to their finances. To combat these mortgage price hikes, along with soaring fuel prices and the rising cost of living, Debt Advisory Line has compiled some money saving tips and advice to help the nation cope with their finances.

Debt Advisory Line, one of the UK’s largest debt management companies, has helped thousands of people who thought bankruptcy was their only option. Through creating debt management plans, the firm helps customers reduce their monthly debt repayments

John Goodfellow says: “Many homeowners are struggling to make ends meet but once lenders increase their mortgage rates, millions of people will be finding it harder than ever. However, making simple changes in the household can really save money.”

With this in mind, Debt Advisory Line has created some simple but effective money saving tips to help the nation cut the cost of everyday living:

• Make sure you’re getting the best deal on your energy bills. There are lots of price comparison sites which can tell you where you can get the cheapest rates.

• Don’t leave laptops and mobile phones on charge unless they need it and remember not to leave appliances on standby: turn them off at the plug.

• Consider switching to a water meter and only pay for what you use.

• It’s more economical to run the washing machine with a full load as it uses less energy than two half loads.

• Do a weekly shop online and look out for special offers. You can see a running total as you shop so there are no nasty surprises at the till and you’re not tempted to impulse buy things you don’t need.

• Make the most of your food.  Many of us throw out unused food each week, but if you cook in bulk and freeze portions for another day, you save time, food and money.

• Take a packed lunch: buying lunch each day at work really adds up so prepare you food at home to save some cash.

• Cut down on fuel: Drive efficiently to conserve fuel and share journeys where possible. Sharing a lift to work with someone or fitting two trips into one can significantly lower fuel costs, which are continuing to rise.

• Switching to a more fuel efficient car would save on tax, insurance and fuel.

• Do I really need this? Review film and satellite subscriptions, cut down on phone contracts and cancel that expensive gym membership that never gets used!

• Holiday at home this summer: With so much going n this summer, there’s no need to jet far away to keep the family entertained.

• Cut back on alcohol and eating out: not only will it save you money, it will also make you feel healthier too.

• Keep an eye out for a bargain: Check voucher code websites for the latest deals and offers.

For press information please contact:

Vicky Dall or Rebecca Elvin

The Whole Caboodle

T: 01423 523000 or 07803 175191

Vicky.dall@thewholecaboodle.com or Rebecca@thewholecaboodle.com

Millions of cash-strapped homeowners in England are facing imminent increases to interest rates as lenders announce staggering price hikes to a range of mortgages.

The increases couldn’t come at a worse time for Brits as many are already struggling to make ends meet due to the rising cost of living, increase in fuel prices and the poor economic state; but award-winning Debt Advisory Line is urging people not to suffer in silence.

John Goodfellow, Chairman at Debt Advisory Line, says: “These recent increases to mortgage rates may be the final straw for many people. Alongside a rise in fuel expenses, the increases to homeowners will put many under severe strain and some may fall into a downward spiral of debt, but we are here to help.”

The property market seems to have taken a recent turn for the worse. Halifax announced it would be raising its standard variable rate (SVR) from 3.5% to 3.99%, affecting 850,000 customers. This would mean those with over £100,000 remaining would see a monthly increase of £24 and those with an interest-only mortgage should expect a 14% rise in monthly payments.

RBS will also make increases to two of its products; the Offset Mortgage and home loans from the One Account range. Both will see a rise from 3.75% to 4%, which will affect 200,000 borrowers. The Clydesdale and Yorkshire Bank are increasing prices by 0.25%, with rates rising from 4.59% to 4.95%, affecting 30,000 customers and Co-op’s SVR will also rise from 4.24% to 4.74% affecting 54,000 borrowers with the 0.5% increase.

The banks claim that the rises, due to hit homeowners from 1st May 2012, are a result of the higher costs of funding a mortgage and the weak economy. However, the Bank of England has not increased the base rate, which is currently at a historic low of 0.5%.

This added pressure on borrowers will hit the purse strings hard and could leave many homeowners in severe financial difficulty. John Goodfellow says: “With many families already feeling the pinch, these increases to monthly mortgage repayments may have a disastrous effect on their finances. We urge people to come to us if they need any advice on their finances.”

“We have helped thousands of people, who thought bankruptcy was their only option, get their finances back on track, reducing their monthly debt repayments. We can manage your case from start to finish, reducing the stress and worry that comes with financial difficulties. “

The staff offer professional debt management help and advice, including debt management plans, individual involuntary arrangements (IVA’s), and  bankruptcy advice. Debt Advisory Line aims to help people repay debts in the shortest time possible.

For press information please contact:

Vicky Dall or Rebecca Elvin

The Whole Caboodle

T: 01423 523000 or 07803 175191

Vicky.dall@thewholecaboodle.com or Rebecca@thewholecaboodle.com

Following the release of the Budget, it has been revealed that motorists will continue to face the rising costs of fuel, forcing many off the roads. But one of the largest debt management companies in the UK is offering advice to help travelling become less of a burden on the purse strings.

Award-winning Debt Advisory Line has compiled some money saving tips for the nations’ motorists, in response to news that petrol prices will continue to soar. The Chancellor George Osborne has confirmed that there will be no change to the planned fuel duty increases, meaning the price per litre will rise by more than 3p this August. This means that petrol will cost well over £1.40 per litre and diesel will cost around £1.50 per litre. This price hike doesn’t take into account any increases in fuel prices between now and August 1st, meaning the cost of running a car will only continue to increase.

Chairman at Debt Advisory Line, John Goodfellow Line, says: “Petrol and diesel prices are already at record highs and with this only set to rise, motorists will be feeling the pinch at the pumps. This can have a great impact on a family’s monthly budget, but there are many ways to save money when it comes to travelling.”

Debt Advisory Line has compiled some tips and advice for motorists, to help them save money on transport:

• Drive efficiently – the higher your speed, the more fuel is used, so if you ease off the accelerator, your fuel consumption will reduce. Also avoid over-braking - let the car slow down naturally, using stored momentum.

• Plan ahead – can you do two journeys in one? You can cut your mileage through combining trips, which will save having to fill up more regularly.

• Where possible, take public transport or walk. Not only will it save money at the petrol pumps; it will also help keep you fit and healthy.

• Don’t carry more than you need – carrying unnecessary items in your vehicle weighs it down, so lighten your load and reduce your fuel consumption.

• Car share – a great way to put pounds in your pocket. Set up a car share with a colleague who lives nearby or share the school run with a neighbour and halve your fuel costs instantly.

• Keep your tyres inflated – driving around on deflated tires increases fuel consumption.

• Operating the air conditioning on maximum can significantly reduce mpg compared with not using it. If you don’t need it, turn it off!

•  Finally, take advantage of in-store reward cards and loyalty schemes, offering points and discounts when you fill up. You could make a saving per litre on fuel or collect points to spend on groceries – either way, you’re saving money!

For press information please contact:

Vicky Dall or Rebecca Elvin

The Whole Caboodle

T: 01423 523000 or 07803 175191

Vicky.dall@thewholecaboodle.com or Rebecca@thewholecaboodle.com

To many in the UK, the prospect of a generous pension scheme has represented a safe haven within a shaky economic environment. This support system may soon come under threat, however, as more and more companies are cutting down on or entirely eliminating their final salary pension schemes. According to the Debt Advisory Line's Jim Rowley, the news, reported by the National Association of Pension Funds (NAPF), could mean that many pensioners will find it hard to get by on their pension alone: “Many generations of employees have been able to rely on final-salary pension schemes as a shield against poverty as they reach the end of their working life. The latest figures by the NAPF are casting this into doubt, with potentially detrimental effects on national debt levels.“

The annual report by the National Association of Pension Funds did not so much call into question the pensions for those already on a scheme. But it did imply that far fewer employees would be able to enter into one in the future: 23% of schemes are shut to new staff and existing staff – an increase by a full six percent compared to last year and a staggering 800% rise in relation to the figures for 2008. Not everything was bad, as Joanne Segars, chief executive at NAPF argued: “This shows the kind of pressure that pension schemes are under. But there is still quite a lot of good pension provision out there.” Still, it could hardly be ignored that many firms were either toning down their schemes or forfeiting on them altogether.

According to Segars, the downturn in final salary pension schemes was part of a wider issue and underlined the importance of pension reform in the UK. NAPF have estimated that unless the government improves on the current situation, fourteen million people in the UK may face inadequate income in retirement – a dangerous and inacceptable number. Segars particularly singled out the importance of smaller companies in the process: “Whilst carving out or pushing back the start date for small employers might have short term political temptations in the current economic climate, the longer term effects would be highly damaging to the nation’s retirement prospects. When it comes to pensions, the Government must stick to Plan A. These reforms are a once in a lifetime opportunity to help tackle the UK’s pensions saving crisis. These reforms have been a decade in the making and now is the time to press play, not pause.“

Jim Rowley echoed her sentiments: "Pension reform is of national importance. In the past, pensioners were often capable not just of supporting themselves, but actually supporting relatives as well. If they, too, become dependent on borrowed money, we could be headed for serious troubles in the future. We invite anyone wishing to discuss the potential effects of disappearing pension schemes for their debt level with us for a consultation.“

According to the Debt Advisory Line's Jim Rowley, new rules proposed by the Financial Services Authority (FSA) to reduce risky lending could mark an important step forward towards a safer housing market – and make for important indirect bankruptcy protection. Should the proposals by the FSA be implemented, a variety of currently popular but ultimately insecure financial products would be banned, eliminating self-certification loans and interest-only mortgages, among others. The FSA also stressed the need for a more detailed analysis of prospective buyers' financial status as well as their ability to cope with economic shocks. Rowley said: “We welcome the FSA's plans as paving the way for a more healthy and risk-aware housing market. Without any doubt, these rules should yield tangible results and a more controlled debt level in the not too distant future“.

Although the FSA's report takes a detailed and far-reaching approach, there are three core elements to the proposal:

1. Mortgages and loans should henceforth merely be available to those who can prove that their repayment capacity does not rely on future hikes in house prices. This is to be checked by means of an affordability assessment. Implicitly, this rules out self-certification loans, which don't require a buyer to provide documentation of his income.

2. As part of assessing a potential buyer's financial stamina, the test should include a scenario of rising interest rates. If the loan can only be repaid if rates remain stable, it should not be awarded.

3. If a buyer would like to take out an interest-only mortgage, it should be evaluated whether he or she is capable of repaying it out of capital resources without house prices having to rise. If this is impossible, the mortgage should only be offered on a repayment basis.

In a statement issued alongside the proposal, the FSA's chairman Lord Turner explained the motivations behind the new rules: “We believe that these are common sense proposals which serve the interests of both lenders and borrowers. While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return. The three key proposals are, we believe, the most effective way to tackle the problem of risky lending. But it is essential that we understand what their impact would be – how many consumers would be protected from the distress of arrears and repossessions, and, how many consumers who could have afforded a mortgage might have to take out a smaller mortgage or to delay their purchase. The estimates are inherently uncertain, but they suggest that the new rules would have only a marginal effect in current market conditions – and particularly so for first time buyers – but would act as a significant constraint if market practice were in danger of returning to the 2005 to 2007 pattern.“

Jim Rowley agreed with Turner, but he also urged the FSA not to forget about those facing the consequences of bad loans in the past: „Although the proposals put forward by Lord Turner and the FSA constitute a considerable improvement over the status quo, those who fell victim to risky loans in the past should remain a top priority. While many of them may need to apply for bankruptcy, sensible debt management plans and advice may still be able to put many of them back on the road to recovery. “

The alarming rise in youth unemployment figures could spell trouble for the UK's debt situation, the Debt Advisory Line's Jim Rowley has said. As more and more of those between 16 and 24 years of age find themselves struggling to find an occupation, not only were many of them likely to take up a credit to meet their daily needs or dole out cash for expensive education plans. More importantly, living with debt could turn into a normal condition for an entire generation: "The youth of this country are the foundation for future growth, stable economic development and a workable pension system“, according to Rowley, "This means that the problem of youth unemployment is by no means restricted to the young. If they're unable to make their contribution, everyone will suffer the consequences.“

The numbers provided by the Office for National Statics unfortunately left desperately little space for optimism. In fact, their most recent report saw significant rises in unemployment almost across the board, confirming the gloomy forecasts by many market experts. According to the Office, there were 2.62 million unemployed people in the quarter from July to September of 2011. This translates to an unemployment rate of 8.3% and represents a hike by almost half a percentage point to the highest level since 1994. Much of this burden had to be carried by the young: Youth unemployment broke the barrier of one million for the first time since the early 90s, effectively, putting one in five young people out of work.

As depressingly clear-cut as the numbers may seem, they were interpreted in a multitude of different ways. While, to the opposition, the problems reflected a neglect of domestic affairs, the UK government was quick to point the finger at external pressure. According to Employment minister Chris Grayling, the recent political indecisiveness of European nations to come up with a solution to the Eurozone's debt crisis were to blame: "These figures are bad news. They are I'm afraid the consequence of what we're seeing in the Eurozone," Grayling stated, "If you go back four months, unemployment was falling, youth unemployment was lower than 900,000. We've seen a big slowdown in the economy I think as a result of the crisis elsewhere."

Whatever the reason for the problematic levels of youth unemployment, it was essential to take them serious. "From our point of view, this is one of the most pressing political issues“, Rowley stressed, "What is vital right now is to not just come up with employment schemes for the young, but to also make them aware of the dangers of building up debt. Otherwise, we may soon not just be facing high youth unemployment, but even higher insolvency levels to boot.“

If the autumn statement by Chancellor of the Exchequer George Osborne should turn out to be correct, the UK's debt situation may quickly deteriorate. Purportedly on the account of the current Eurozone problems and stingy bank lending, the economy looked set to grow at a snail's pace and far below the estimations used as a basis for the current budget. As Jim Rowley of the Debt Advisory Line commented, "if the impending cuts in government spending go ahead, this may serve to increase the pace towards a fully-blown recession. The effects on debt levels and related bankruptcy figures could be disastrous.“

George Osborne certainly did his best to award a positive twist to his message. Still, as the Economist put it, "few chancellors of the exchequer have ever reported such bleak news to the country.“ Although Osborne and the government had counted on a healthy 2.3% surge in 2011, overall growth amounted to no more than a meagrely 0.9%. Now, his claim that the economy may still be expanding by 2.1% in 2012 looks rather optimistic. Consequences are dire: With growth sagging, more and more people could find themselves out of work, further weakening spending power and forcing the government to dole out more out-of-work-benefits. As a result, the minister's high-profile plan to drastically reduce and ultimately wipe out Britain’s structural fiscal deficit, no longer seems like a viable option.

In fact, the situation left the minister with a dangerous catch 22. If he persisted with his austerity measures, he risked sending the country into a spiral of recession, low growth and high unemployment. If, conversely, he chose to counter the disappointing downward turn with government spending, his initial plans of getting the deficit right were condemned to failure. For the moment, Osborne still upheld his theory that the current Eurozone troubles, rather than long-term structural economic problems at home, were to blame for the problems.

It will remain to be seen whether this estimation turns out to be true, but it can only be hoped that 2012 will bring higher growth rates. After all, if the upswing should end before it has really begun, the psychological impact could be devastating. As Jim Rowley put it: "We were and still are firmly in favour of the minister's austerity plans. At the same time, we also recognise the danger of an overly tight budget squeezing many out of work and into debt. Anyone fearing for his job is strongly advised to contact a debt management professional now to check out all available options as early as possible.“

The Debt Advisory Line's Craig Gedey has stated that current feedback from the housing market proved that “the hard work and close co-operation of borrowers, lenders and debt advice providers is paying off“. Although, according to a recent report on the situation in the third quarter of 2011 by the Council of Mortgage Lenders, there was still a sizable number of households with arrears on their mortgages, the number of repossessions had clearly stabilised. There had been no significant changes on these numbers over the past three months, neither in the overall repossession statistics – which were up by a mere 1% compared to the previous quarter – nor in the number of households in arrears – which fell by two percentage points. The CML has foremost credited this stability to forbearance by lenders, but there is more to the story, as general director Paul Smee was quick to point out.

"The fall in the number of mortgages in arrears, and the stable picture on repossessions, are testament not only to the beneficial effects of low interest rates, but also to effective arrears management, and good communication between lenders, borrowers and debt counselling organisations“, Smee commented. An increasing number of borrowers across the country are taking action by looking for professional help early on in a bid of finding a solution that could satisfy both sides. Smee accordingly emphasised the seminal importance of arriving at compromises: "Against the backdrop of widespread financial uncertainty sweeping both the UK and the wider European economies, it is impossible to be sanguine about the future influences that households may face. But lenders will do their utmost to help borrowers keep their homes, whatever pressures emerge. Anyone worried about their mortgage should seek early advice and talk to their lender: these figures firmly show that repossession does not have to be an inevitable consequence of mortgage arrears."

His assessment was mirrored by Gedey, who stressed that too many people were blaming the government or harsh financial conditions for debt problems and repossessions: “Really, it is the communication between borrowers and lenders which is crucial. It is here that the decision between a potentially devastating repossession and a conciliatory long-term plan is made. Rather than demonising lenders, we should be thankful for their co-operation and for allowing as many borrowers to stay in their homes as possible. From our own hands-on experience, it is always beneficial to contact creditors in case of serious debt issues to work out something together. The expertise and experience of debt management agencies in securing the success of these negotiations is vital in this regard. “

With 27,300 loans still reported as having arrears of more than 10% of the outstanding balance, there was every reason not to rest on one's laurels and to keep pursuing this collaborative approach: “The more everyone can see that we're all in the same boat, the better“, Gedey said.

Although seemingly providing a rare glimmer of hope in dire times, the Insolvency Service's recent statistics may paint a slightly too positive picture of the UK's debt situation, the Debt Advisory Line's Craig Gedey has cautioned. Although the overall number in individual insolvencies had gone down, this didn't necessarily mean that households were returning to the black again. Instead, a combination of new application criteria for alternative procedures to bankruptcy on the one hand as well as the high costs of a standard bankruptcy on the other meant that insolvency was simply being suppressed or replaced, rather than significantly curbed.

As the tri-monthly report indicated, the overall number of insolvencies in the UK had declined by eleven percent in the third quarter of 2011 compared to the same period a year earlier. Although there were still 30,219 individual insolvencies in England and Wales combined, households seemed to be finding ways to avoid fully-fledged bankruptcy. While this was a welcome feat in theory, it also meant that in many cases, individual insolvencies were simply being replaced with Individual Voluntary Agreements and Debt Relief Orders – which were severe procedures in their own right. The latter was additionally facilitated by recent government adjustments making it easier to be granted the chance to participate in a DRO scheme. Just how many of those currently participating in an IVA or DRO will prove capable of steering clear of bankruptcy in the long run still remains to be seen.

What's more, there could well be a somewhat more prosaic explanation for the recent reduction in bankruptcies: Many people may simply be too poor or indebted to cough up the upfront £700 required to pay for the procedure. “We are getting a lot of calls and personal feedback from debtors telling us that they would love to find a suitable solution for their problems – but are unable to afford it“, according to Gedey, “Right now, a huge amount of households is only barely keeping their head above water but could go under any moment in case of a financial shock. So although the numbers provided by the Insolvency Service are certainly welcome, we strongly advise against regarding them as indicators of a turnaround.“

What's more, bankruptcies were certainly no longer the 'privilege' of the working classes. If this trend should continue, Gedey said, reports might soon look a whole lot different: “The middle classes are the country's foundation of stability. If the threat of bankruptcy reaches them as well, hard times are ahead of us.“

According to the Debt Advisory Line's Craig Gedey, a report by the Aviva insurance group strongly suggests that UK insolvency figures were being artificially stabilised through significant financial transfers within families. According to the findings of the survey, a third of British families are providing their extended family and friends with an average annual monetary support of £442. Although the underlying motivations may be altruistic, they may also paint a misleading picture of the general debt situation. Aviva has also pointed towards some of the problems associated with these subsidies, noting that, within the cash-supplying families, “debt repayment, savings and pension contributions all suffer“.

The Aviva report doesn't condemn interfamilial financial support as such. As Paul Goodwin, director of workplace savings at Aviva stressed, “In the current economic climate, families are clearly willing to support members of their extended network of family and friends. However, while it’s good to see how families are pulling together, people need to ensure that they are not sacrificing their own financial wellbeing, particularly in the long term.“ To put the numbers into perspective, an annual subsidy of £442 may not seem an awful lot, amounting to just £36 each month. And yet, as Goodwin observed, if calculated over a longer period of time, these all but puny amounts actually add up to a significant chunk of money: “The stark truth is that people are not saving enough for retirement. By providing their families with £442 annually, over a working lifetime of 40 years they could effectively be giving away two thirds of the typical UK pension pot.“

Even more worryingly, according to Gedey, by turning towards family members rather than trying to find a sustainable way out of their problems, many of those in debt were compounding, rather than improving their situation in the long run: “It is more than understandable that one should be looking for help with one's closest friends. And yet, there is a problem with systematically spending too much over an extended period of time. One should never forget that many of those who are supporting their loved ones with cash injections are facing extensive financial difficulties as well.“

What mattered, according to Gedey, was that families started looking for advice on how to bring down their monthly outgoings and to improve their spending patterns. “By working closely with a professional debt management company, households will not only be able to help themselves get back on track again, but also to put some money aside for their pension and in case something unforeseen happens in the future.“

Individual Voluntary Arrangements, long held to be a tower of strength, may yet come under pressure, The Debt Advisory Line's Craig Gedey has said. Over the past decade, IVAs have seen an impressive growth and overtaken individual insolvencies in relative importance. Unfortunately, that may have lulled many into a false sense of security. While it remains uncertain whether the economy is actually recovering or sinking into a depression, those in an IVA may be faced with threatening consequences either way: Problems on the unemployment market could cause them to slide into bankruptcy. And should the economy turn out to be growing too fast, this is almost certain to send interest rates up – which, in turn, could make it impossible to pay back monthly loans as part of the IVA procedure. “People have come to expect IVAs to work wonders“, Gedey said, “They will now have to face the fact that they are no panacea after all.“

Thanks to their relatively uncomplicated procedure, IVAs are frequently described as a trouble-free way out of debt. Rather than defaulting on their debts altogether, participants in an IVA pledge to pay back a substantial part of their credit and to uphold a steady stream of monthly payments – which also means that, at the end of the term, not only is their remaining debt contained within the IVA written off, but they should find it easier to secure credits and a well-paying employment again. On the other hand, if one's IVA is accepted, this does not by default rule out bankruptcy in the future. Whether or not the scheme is a success depends seminally on the participant's willingness and ability to uphold his pledges.

This is where the dependency of IVAs on wider economic factors comes in: A sudden hike in interest rates could result in prohibitively high monthly payments, which, in turn, could force households into defaulting on their credits. Aspects like these should always be factored into an IVA application, as it is intended to provide lenders with a realistic overview of a creditor's financial capacities and his resilience to market shocks. Unfortunately, IVAs aren't always designed in a way that will allow debtors to see their payment plan through. As a result, IVAs fail, thereby destroying the hopes of debtors and causing substantial damage the overall economy.

To Gedey, the solution to the dilemma lies right at hand: “For one, we believe there should be stricter controls in terms of providing licenses for insolvency practitioners – the better skilled they are, the higher the chances for IVAs succeeding in the long run. And secondly, those who feel their IVA may be in danger should contact a serious and professional debt management agency as soon as possible to find out what steps to take to avoid an individual insolvency at all cost.“

A monthly survey conducted by Financial Information service provider Markit does not bode well for households in the UK. Not only did general macro-economic factors look weak, with disposable income sinking, expectations about future salaries depressed, job security caught in a rapid decline and households growing weary of major purchases. But household savings also fell at a sharp pace and a rising number of participants mentioned they had to resort to unsecured credit to cover their expenses. Overall, debt levels were on the rise for the sevenths month in a row – the longest consecutive period since 2008.

Understandably, Tim Moore, Senior Economist at Markit, found little to cheer about: “Household finances were once again gripped in a vice of subdued real incomes and heightened job insecurity in October“, Moore said, “Weak labour market conditions, combined with elevated inflationary pressures, have made rising debt and falling willingness-to-spend recurring themes this year. October was no exception, with these unwelcome trends especially prevalent among public sector employees and the lowest income groups. The overall balance of households expecting their finances to deteriorate in the year ahead was the largest for six months, which more than reversed the modest improvements seen in the summer.“

Despite these bleak developments, Craig Gedey of The Debt Advisory Line pointed out that the numbers merely came as a confirmation of what many in the debt management sector had long predicted: “We have always maintained that the relatively low levels of bankruptcies are by no means indicative of a healthy market. What we're seeing, in fact, is consumers searching for and taking on insecure credits and reducing their spending to ward off an impending insolvency. Underneath the nervous, but relatively stable surface right now is a highly volatile debt situation which could tilt into a dangerous crisis any moment.“ Particularly troubling, according to Gedey, was the combination of high debt levels and a weak labour market, as it carried the additional risk of a sudden steep rise in unemployment and thus of more people defaulting on their debts: “If this happens, we'll need to brace ourselves for even more worrying reports in the future“.

On the upside, however, Gedey stressed that it was by no means too late for incisive measures. Debt management plans and professional debt advice could make the situation of households in the UK manageable again – and thereby push the entire economy in the right direction.

The recent row between England and France at the EU-27 summit may be more than just a temporary blip in Anglo-French relations and herald a deterioration of the debt situation at home, the Debt Advisory Line's Craig Gedey has said. Although the UK haven't actually introduced the Euro yet, the country's economy is very much dependent on the currency's performance and fluctuations. If the Eurozone members turn out to be incapable of resolving the current crisis, the effects will, with all likelihood cross the channel and affect UK markets as well – with potentially disastrous effects on national debt levels, according to Gedey.

One of the less obvious, but very real dangers of the current Eurozone troubles is their potential impact on bankruptcies and IVAs in the UK. For the past two years, these have remained relatively stable at a high level, mostly because many households have taken on dangerous, unsecured credits to cover their expenses, saving more and delaying major purchases. The combination of declining consumption at home and decreasing exports due to similar troubles abroad could result in rising unemployment figures in the not too distant future. This, in turn, could push some of those who can just about pay their bills today, over the cliff and into insolvency.

Even more threateningly, as a direct result of an economic downturn, anyone currently in an IVA could slide into a fully-fledged bankruptcy as well. As part of an Individual Voluntary Arrangement, after all, debtors and lenders agree on a new payment plan, writing off some of the debt, but leaving a substantial part intact. The procedure depends incisively on regular monthly payments by borrowers and is thus always threatened by negative changes in the overall economic climate. Reducing their spending is frequently not an option for those in an IVA, as they have already squeezed their income as much as possible – beyond that looms only bankruptcy.

“We're watching these issues with worry“, Gedey said, “At the same time, there are solutions at hand. Debt management is not just intended to fight an impending bankruptcy; it is also a precautionary measure. Those currently facing financial difficulties and in danger of seeing their situation deteriorate over the next months are strongly recommended to seek professional debt advice as soon as possible. Although the Eurozone leaders may still be able to sort out their differences and arrive at sensible solutions to the issues at hand, consumers should be prepared for the worst.“

According to recent figures published by accountancy firm RSM Tenon, gender equality has finally reached the debt sector – albeit in a sad way. Based on the company's annual insolvency report, female bankruptcies now account for 48% of all individual insolvencies in the UK, a record since RSM Tenon began collecting related data four years ago. In 2010, almost fifteen thousand women applied either for bankruptcy or associated services like individual voluntary arrangements or debt relief orders. What makes these numbers so remarkable is that other reports – not conducted by RSM but mentioned in their press release - indicate that at the beginning of the new millennium, the division was still roughly 70%-30% in women's favour. The sharpness of the rise is alarming and points towards an important question: Is this merely a temporary hike or a harbinger of a deeper, more long-term problem?

Truth be told, female bankruptcy has already been in the spotlight for several years. Most recently, the topic surfaced when pop-stars were seemingly awarded special treatment by the Insolvency Service, who allowed them to reside in an expensive mansion and continue living their luxurious lifestyle. Since then, many fear, bankruptcy has become associated by some as an easy way out of debt or even a “soft option” without serious repercussions. Which clearly sets the wrong incentives. After all, an insolvency is still very much a last resort with heavy financial consequences for years to come.

And yet, the debate may have diverted attention from the far more urgent fundamentals of the issue. Mark Sands, Head of Personal Insolvency at RSM Tenon, had a variety of long-term explanations to offer: “The recent rise in the proportion of female insolvencies began in the second quarter of 2009 and the figures have climbed steadily ever since. So, arguably the UK’s recent financial crisis has hit women’s pockets harder than men’s.“ Sands  stressed that, in the early part of the recession, more women than men were made redundant and that many government-imposed spending cuts have hit single parents particularly hard – most of which by far are female.

In itself, the gradual levelling-out of female and male bankruptcy figure does not necessarily represent a threat, according to the Debt Advisory Line's Craig Gedey: “In a time when, commendably, more women than ever are building a career for themselves and taking on financial responsibility, the relative percentage of them being offered loans will naturally rise – and so will the numbers of them facing financial difficulties as a consequence.“ What he was worried about, said Gedey, was whether or not those in need of good advice knew where to turn to: "Women with debt problems should ask for sensible debt help before even considering insolvency. Usually, there are far better alternatives than bankruptcy available to all sides involved – including, for example, a sensible debt management plan agreed upon by both creditors and debtors.“

Recent economic developments could potentially leave their mark on the UK's insolvency figures, the Debt Advisory Line's Craig Gedey has said. While the UK held on to its triple-A rating with financial services agency Standard and Poor's – a sign of stability compared to the downgrading of the USA earlier this year – there were plenty of reasons to worry about a possible rise in bankruptcies, with the job market still shaky and the long-term growth outlook anything but promising: "Especially with regards to the uncertainty of the current situation, we strongly advise a close inspection of the labour markets as well as its impact on those who are already facing difficulties in paying back their debts“, Gedey urged, "While we welcome some of the encouraging steps the government has taken, we also feel a warning is in place: Even a minor movement in the wrong direction can tip the situation towards a serious nation-wide problem.“

Indeed, the outlook on the UK's economy by those shaping it is mostly gloomy. A report published on October 4th  by the Chartered Management Institute (CMI) outlining senior executives’ views on the state of the economy in 12 months and beyond, although offering "a glimmer of hope“, summed up the status quo as filled with "concerns held by the UK’s managers and leaders about the current eonomic situation and the private sector’s ability to provide growth and jobs in the coming months“. Few of those taking part in the survey expected growth numbers to rise over the next year, while as much as 50% suggested their organisation had either decided on a fully-fledged recruitment freeze or was anticipating a decrease in recruitment budgets between now and March 2012.

On the upside, industry leaders still saw a potential for change through incisive government actions. CMI’s Director of Policy and Research Petra Wilton said: “We echo our members’ calls for the Government to support employers in training their employees and bringing skilled people into their workforces. The extensive restructuring across all sectors over the past three years – which looks set to continue – has left skills gaps and it’s vitally important that professionally qualified managers are in place if organisations are to recover from the ongoing change and succeed in the future.”

Gedey supported these calls for more education, as additional qualifications indeed allowed those out of job a better chance of re-entering the workforce in the near future. But he also pointed out the need for pro-active behaviour before a possible crunch: “We welcome moves to improve the skills of the workforce, but what happens if more people lose their job than the market can absorb? A massive debt issue may be ahead of us, unless those facing bankruptcy start thinking about way of restructuring their debts. One of the best ways of doing that is through sensible debt management plans and debt consolidation measures.“

Debt Advisory Line takes home top award for the third time!

Debt Advisory Line was crowned ‘Debt Management Provider of the Year’ at The Insolvency & Rescue Awards 2011 held at the Lancaster Hotel in London on Wednesday 5^th October.

The company - part of the Mitchell Farrar group - has won the prestigious award for an unprecedented third time in four years. The awards recognise the efforts of outstanding individuals and businesses which operate in the UK insolvency and rescue industries. The criteria for this accolade include such things as client satisfaction and client success and it is testament to the hard work and efforts that the whole team at Debt Advisory Line has put in over the past year.

Jim Rowley, Managing Director at Debt Advisory Line, is delighted with the company’s repeated success “I am absolutely thrilled to be taking home the award for the third time! We are committed to providing transparent, trustworthy, ethical and above all supportive debt management advice to the increasing number of debt stricken UK consumers. At a time when the Government is urging consumers to ‘do their part’ and sort out their own debt, this award recognises the extreme professionalism of Debt Advisory Line’s staff, which confirms my belief that we really are the best people to turn to as clearly not all companies in our sector work to the high standards that we do.”

Since winning the initial title in 2008, Debt Advisory Line has continued to expand, and now employs almost 300 staff, who are now assisting more people than ever and increasing its market share thanks to expert advice which helps clients find the right solution for a whole host of financial problems be it an IVA, a debt management plan or bankruptcy.

The company regularly scores more than 80 per cent – and on many occasions over 90 per cent – in its customer satisfaction questionnaires.

Jim said: “One of our key company values is that we are trustworthy and reputable – consumers should be aware that not all debt management companies are the same. We are leading members of DEMSA and operate with integrity to provide financial solutions to our customers that are in their best interests.”

Jim said “We are also in advance discussions with some of the largest companies in the UK about setting up partnerships to offer our debt management services to their customers. Winning this award reinforces our strong position that customer satisfaction is at the forefront of what we do and will help to secure more partnerships”

“If you have customers who would benefit from our multi award winning service, please contact Jim Rowley on 07779 307071. Excellent referral benefits available."

ENDS.

Debt Advisory Line is part of the Mitchell Farrar group of companies. Its mission is to be the first choice provider of financial solutions in the UK.

www.debtadvisoryline.co.uk/debt-help

For further information contact Sue Flynn at The Whole Caboodle 01423 523000 or email sue@thewholecaboodle.com

Recent figures and reports paint an inconclusive, but ultimately dissatisfying picture of the state of personal debt in the UK. When the Insolvency Service issued their latest bankruptcy statistics, first reactions were ecstatic. According to the organisation, bankruptcies had encouragingly fallen to a six-year low, seemingly suggesting that a more cautious approach by the banks and, possibly, more prudent spending patterns by consumers, were showing effect. And yet, anyone looking at the details quickly discovered that this drop came at a price. For rather than pointing at a more healthy financial situation, the reduced bankruptcy-figures had been „compensated“ for by a considerable increase in alternative procedures like individual voluntary arrangements and debt relief orders. Factoring these in, there were 135,089 individual insolvencies in England Wales alone in 2010 – a record high.

Although numbers for the first quarter of 2011 appear to indicate a more favourable trend, a current report titled 'Debt and Household Income' suggests that scepticism rather than relief is still in place. Basing itself on research conducted by the Financial Service Authority, the report arrives at worrying conclusions with regards to the overall debt level in the UK. According to the authors, a staggering “6.2 million households are ‘financially vulnerable’ – 3.2 million are ‘already in financial difficulty’ either in structural arrears or are already subject to some form of debt action, with a further three million ‘at risk’ of getting into financial difficulty because they are finding it hard to make ends meet and are vulnerable to increases in household bills“. Alarmingly, those with the lowest payrolls also tended to have the highest ratio of debt to income, meaning that there is rarely any money left at the end of the month for them to pay off any arrears.

As the Debt Advisory Line's Craig Gedey emphasised, the downward trend in bankruptcies and the findings of the report did not necessarily represent a contradiction. Instead, what these numbers indicated, was on the one hand, a more complex picture in the structure of individual insolvencies, which could range from a complete inability to pay off debts to a mere need to restructure one's finances. The fact that more and more people were making use of bankruptcy alternatives like IVAs or DROs also pointed to the efficacy of these measures, which, in itself, was to be welcomed.

On the other hand, the most essential step consisted in closely watching the underlying psychology behind the official statistics. According to Gedey, “what we need aren't yet more reports and statistics or officially sanctioned alternatives to bankruptcy. What is required is a shift in awareness capable of avoiding and driving down personal debt in the first place. As one of the UK's leading debt management companies, we recognise our responsibility in this process by providing our customers with the information and advice they need.“

More and more pensioners in the UK are forced to take out an equity release on their home, the Consumer Credit Counselling Service (CCCS) have reported. The numbers are indeed worrying: Over the course of 2010, home owners from the age of 55 onward released an average of £29,983 of capital from their homes, while those turning towards debt management agencies in search of advice owed £29,772 on average on credit cards, personal loans and other unsecured debts. The rise in equity release figures are an indication of the increasing difficulties many elderly are experiencing in terms of dealing with their financial problems without taking on new debt – if you thought pensioners were free from worry, you'll need to think again.

The question of how to correctly interpret these developments is nonetheless anything but straight-forward. The CCCS's Tom Moloney, for one, saw as many dangers as opportunities: “Many clients are rightly cautious when considering equity release“, the release manager at CCCS said, “but with the right advice and guidance this is an attractive solution for some.” Undeniably, there are several advantages to equity release. And yet, as the Debt Advisory Line's Craig Gedey pointed out, it also represented a tool to be wielded carefully: “Do we think that equity release is a viable option and a possible means of creating relief for the elderly in this country? Certainly. But we also believe that before actually going down that road and significantly reducing the value of your home and what you'll be able to inherit to your loved ones, you should investigate all alternative options first.“

The numbers provided by the CCCS do, in any case indicate that equity release, which used to be considered a rather unconventional step, has today become widely accepted. To many elderly in particular, the advantages of the measure are clear, since it allows them to keep living in their home and can also be used to create an additional stream of revenue. At the same time, equity release can create the dangerous illusion of not being in debt at all, which can turn into an issue when the borrower doesn't arrive at a healthy long-term balance between his or her expenses and income.

Which is why, according to experts, a first step should always consist in searching for ways of reducing one's debt through incisive measures, slashing fixed costs and working towards sustainable spending patterns. Gedey: “Equity release is a complex and intricate matter, which requires careful deliberation and advice. Consulting a debt management company on this is highly advisable. “

A novel technique labelled “The Island Approach” is offering a promising new approach for anyone facing seemingly insurmountable credit card debts. And it is coming at just the right time, too: For years, UK citizens could safely assume that credit card debts were the “privilege” of their American counterparts. Today, with six million credit card holders across the country in debt, things no longer look quite that bright anymore.

The term “Island approach to credit card debt” was coined by well-known specialist credit card resource “Card Hub” in a recently published article and is based on the concept of compartmentalisation. Essentially, the approach assigns a single credit card to each category of your purchases. Which means that, for example, you'll be carrying a credit card for everyday items like food and clothes, a credit card for business expenses and so forth. By treating these different categories as separate entities, the island approach to credit card debt achieves three significant benefits:

• It minimises the portion of payments consumed by finance charge. After all, if the credit card you're using for business expenses is carrying debt, but you're debt-free on the card used for daily purchases, your overall interest payments are reduced compared to a situation where both charges are on the same card.

• It ensures fiscal predictability for those with credit card debts. This is mainly of interest to US citizens, where credit card companies can, almost instantaneously, considerably increase interest rates on credit card debt. But even in the UK, the increased transparency of the Island approach makes it easier to determine and analyse your exact credit card debt.

• Since it isolates the precise areas where credit card debt is created, the Island approach trains those with credit card debts to spend within their means.

Of course, the island approach will not eliminate credit card debt overnight. But it does offer a welcome addition to the catalogue of potential measures for those with credit card debt. As Craig Gedey, Marketing Manager at Debt Advisory Line put it: “Tackling your credit card debt always begins with obtaining a precise overview of just how much debt you have and identifying the exact structure of the debt. The Island approach to credit card debt is not a panacea, but definitely a useful tool in this regard. It can be considered a first step towards debt consolidation, which should then be complemented by advice from a professional debt management company.”

For more details, visit the credit card debt section of our website or call us on 0800 157 7254.

The Debt Advisory Line has welcomed recent plans by Business Minister Ed Davey to quadruple the threshold of debt before a creditor is able to petition for bankruptcy. According to the Debt Advisory Line's Craig Gedey, the proposal spells good news for anyone facing the threat of having to file for personal insolvency over an amount as low as £750. If Davey can garner enough political support for his ideas, the new border would be drawn at a far more significant £3000. The move is intended to counter tendencies designed at threatening those in debt with personal insolvency over a disproportionally small amount of money. As the minster pointed out, "While it is clear that stakeholders have strong concerns about some aspects of the personal insolvency framework, no strong case has been made for a radical shake-up. However, I am convinced that there is more that can be done to improve the delivery of debt advice to the most vulnerable and intend that Money Advice Service take up this work.”

Debt management companies have, in the past, repeatedly criticised the adverse effects and potential for opportunism caused by the low threshold. While the interests of creditors undeniably need to be taken into account, bankruptcy is rarely the best solution for either side, after all. It should, also with regards to the harmful long-term implications of insolvency, only be considered as a last resort. Gedey said: "We have long considered the current threshold as inviting abuse by impatient creditors, which is making the already stressful consequences of a bankruptcy even more painful for borrowers. Raising the limit to £3000 would ensure that those with financial difficulties can focus on the most important thing – paying back their debt – rather than having to worry about being unnecessarily forced into bankruptcy every single day.“

His comment was mirrored by Davey's plead for more constructive solutions to existing debt problems. As the Minister put it, he wanted to see "creditors, debtors and particularly providers working together to improve standards in debt management, so that debtors are directed only to those operating the very best service, leaving no place for the rogue providers who are only in it to make money for themselves." Gedey supported these words, stressing that, "as a member of DEMSA, we have pledged to uphold ethical standards in debt management and to find solutions which will benefit both sides of the equation. We feel that the recent proposals by the Minister would significantly support us in these aims.“

The Debt Advisory Line has already helped thousands in danger of bankruptcy. If you would like to speak to one of our professional advisers, please call us on 0800 157 7254 or follow this link for more information on bankruptcy.