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To many people, well managed debt is an acceptable and perfectly normal part of everyday life.  However, for those that become ‘over indebted’, it can become a serious problem affecting their health, relationships and often their livelihood.

The FCA's interim review published yesterday has revealed that around two million cardholders are in arrears, another two million have persistent levels of debt cardholders may struggle to repay and a further 1.6 million are constantly making minimum repayments on their credit card. That's close to 6 million card holders who potentially have debt problems.   

Triggers for falling into debt

Read more: Are we soon to see a change in minimum credit card payments?

 

In case you are not aware, I regularly appear on the LBC Money Hour Show with Clive Bull, on this show Olly Mann was sitting in the chair to enable Clive to have a week off. You listen to the show by following a  link to the timeline / topics covered with the free podcast at the bottom of this page.

Hearing about people's debt problems and seeing how it has affected their lives and being able to offer a little guidance and hope to their situation is the real driving force behind why I do what I do. I've never worked with Olly and we hit it off straight away and had some really good callers. Here are some of the calls that stood out for me.

Call one - My brother has mental health issues and borrowed £1,400 from payday lenders, what can I do?

Read more: LBC Money Hour with Olly Mann 19/10/15 blog

 

I welcome the proposed removal of the court based bankruptcy process as I feel it is an unnecessary requirement. An online procedure will reduce the stress and financial demands faced by already overstretched consumers and the time spent, especially by those living a distance from the courts, some of which only allow bankruptcy petitions by appointment and on certain days of the week. Some of my clients have not even been able to afford the cost of travel to get to their nearest court let alone the bankruptcy fee.

The consultation, in which I took part, also considered the removal of the court process for creditor led petitions, but there was understandable resistance to this as it would not be as straightforward as in consumer led cases.

The cost to administer a consumer’s bankruptcy Vs the fee

Read more: Is it good news to move consumer bankruptcy online and remove the court process?

 

Well that was another cracking show!

In case you are not aware, I regularly appear on the LBC Money Hour Show with Clive Bull and I must say that last show on 3 August 2015 was a cracker. The switchboard was full within a few minutes of starting  the Money Hour and we heard from callers with varied levels of debt and different circumstances.

Hearing about people's debt problems and seeing how it has affected their lives and being able to offer a little guidance and hope to their situation is the real driving force behind why I do what I do. Here are some of the calls that stood out for me.

Call 2 – Didn't understand bankruptcy procedure

Read more: LBC 'Money Hour' blog with Clive Bull Monday 9-10pm 3/8/15

 

This question often crops up with some people believing that when partners live together and one or other cannot pay their debts then the other one is responsible for making the payment.  Let’s put the record on that and a few other things straight.

Debts in one name only

If someone has debts in their name only then they are the only one responsible for payment.

This also includes credit or store card debts because they are only in the name of  the person who signed the credit or store card agreement, any additional cardholder is not legally responsible for their payments.

Debts In joint names

Read more: Do I have to pay my partner's debts?

 

As you might know, I regularly appear on the LBC Money Hour Show with Clive Bull and I must say that my most recent show on June 15th is one that I will not forget! We heard from a few callers with varied levels of debt and different circumstances.

Hearing about how people fell into debt, how it has affected their lives and being able to offer a little guidance and hope to their situation is the real driving force behind why I do what I do.

Call 1 – Advice to help face debt

Darren was my first caller on the show and he told me how his debt levels spiralled out of control to the point that he no longer knew how much he owed and is now sleeping on a friends' sofa because his parents live out of the country and he has nowhere else to go. He admitted that he was simply 'running away from his debts' and it was obvious that it was really getting Darren down and affecting his mental health.

Read more: LBC Money Hour Show with Clive Bull 15 June 2015

 

No one is perfect. Anyone of us could make a bad financial decision during our lifetime, but what if it leads to personal bankruptcy, is this so heinous that we have to keep it from our loved ones?

I have had numerous calls from people that have posed that very question, do I need to come clean about my bankruptcy or can I just forget it?

So what can be that damaging? You don’t have a criminal record, and okay, you may have had bouts of unemployment, most of us have from time to time but you are now working full time. So what can be wrong?

Read more: Should I tell my fiancée that I'm an ex-bankrupt?

 

093-bankrupt-businessman

Is it so surprising that bankruptcy numbers are down again? Is it because fewer people are running into trouble? In my book the answer to both questions is no.

As noted in my article from 2012 with the Daily Mirror ‘The people that are too poor to go bankrupt’ based on research completed at that time reveals that nearly half of those for whom bankruptcy is the only option are simply too poor and do not have the money to pursue it.

Bankruptcy numbers fall after the 2010 increase in fees

The cost for a consumer to petition their own bankruptcy has increased by 37% since June 2010 and in England and Wales currently stands at £705 per individual.

See from the table below that in 2009 (the year before the increase in fees) the number of those going bankrupt was near the 75,000 mark and that the number for 2014 has dropped to just over 20,000. 

Read more: Should we be doing more to help those that cannot afford the cost to go bankrupt?

 

With the spike in the numbers of borrowers receiving a County Court Judgement (CCJ), 698,166 in England and Wales in 2014, 30 per cent more than in 2013 and the highest number in any year since 2009, consumers need to be aware that any unsecured debt such as a credit or store card debt, a personal or payday loan, an overdraft or even a catalogue debt, can, if you own your own home, end up as a secured debt, just like your mortgage.

Fall behind with any of the above debts and the debt including interest is £1,000 or more then under new rules issued on 1 October 2012 the unsecured lender can easily apply to the court to put these debts on your house, a bit like a second mortgage and, at the same time, apply for a County Court Judgement (CCJ).

What the new rules mean

Read more: As CCJs surge should I be worried about a credit card debt if I’m a house owner? Err, yes!

 

It’s heartening to see that The Insolvency Service consultation with the debt management industry has been rewarded with improvements to the working of Debt Relief Orders (DROs) with the key changes being increasing the maximum amount of unsecured debt that can be included in a DRO from £15,000 to £20,000. Although many debt counsellors have been calling for a maximum level of £30,000 this is a start and welcomed news as this move alone is expected to enable an additional 3,600 more people access to the debt remedy instead of the more arduous bankruptcy process.

Read more: Good news with the proposed DRO reforms, but they still have one major fault

 

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