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Access to money without undergoing a credit check and at short notice may sound attractive but is it worth losing your car over?

You're behind with your council tax or the washing machine has just packed in and you need cash fast.

Where can you get money without being credit checked? You know you stand no chance with a high street bank, your credit card is maxed out and you are wary of payday loans and doorstep lenders.

Suddenly, your vehicle, parked just outside in the street, grabs your attention. I wonder... hmmm. Yes you can, you can often raise cash against your vehicle. 

Every year thousands of vehicle owners turn to companies to raise finance against their car or motorbike in an arrangements commonly referred to as a log book loan. But are they any good?

A log book loan, secured against your vehicle, can range from £500 to £50,000 depending on the value of the vehicle in question. Having a log book loan means that you will lose your vehicle if you default on the repayments to the loan company.

So what’s so attractive about this type of loan? For many people it’s that they are available irrespective of their credit history. 

To qualify for the loan you have to be over 18 and be the legal owner of a vehicle with a current certificate of insurance, a valid MOT if more than three years old, a current tax disc and which has no or very little finance outstanding on it.

Once these criteria are met and as long as you can demonstrate how you mean to repay the loan it’s time to hand over the registration certificate, formerly known as the log book. This is a document unique to each and every vehicle and without it you cannot sell a vehicle. 

Along with a credit agreement you will then be asked to sign a bill of sale, which temporarily hands over ownership of the vehicle to the loan company and gives them the right to repossess the vehicle in the event of you defaulting on your repayments.

The standard term for a log book loan is 58 weeks although you may be able to pay it off earlier. Since the annual percentage rate (APR) can be high it is advisable to pay it off as quickly as possible.

The APR includes the interest rate you pay, how you repay the loan, the length of the loan agreement, the frequency and timing of payments and the amount of each payment, and finally, the fees associated with the loan. 

By law, lenders must tell you what their APR is before you sign an agreement and it is important to remember that it can vary from lender to lender.

Don’t make the mistake a client of mine did a few years ago when he went to the lender with the highest APR because he thought it was a ranking guide as to the quality of the firm!

For the record, the lower the APR the cheaper the loan will be for you. The typical APR for a log book loan is 437.4%.

With this typical APR, if you borrowed £1,500 and paid £53.60 a week for 78 weeks, you would repay a total of £4,180.80. Although you could pay considerably less if you repay early, so long as their is no early repayment fee.

How they work:

Once the deal is done, how do you get paid?

Usually it is by cheque which takes several days to clear although some firms offer a quick cash service, but can charge as much as 4% in fees for this option.

How much can I borrow against the vehicle?

This will obviously depend on what the lender values your vehicle at. They will usually ask you to take it to an agent, in a location of your choice, together with the relevant documentation to confirm what they are prepared to lend. Even if the vehicle has existing finance against it, it is possible to account for this when they make their offer.

If you take up a log book loan it is important to remember that while you keep your car, the lender will keep your log book until you have repaid the loan.

Disadvantages of a log book loan:

  • A very high APR, possibly as much as 437.4%, making it a very expensive form of borrowing 
  • The debt quickly escalates out of control if you start to fall behind with the payments 
  • You could lose your car or motorbike if you fail to keep up the payments on the loan 


  • No credit check
  • Available to those with an impaired credit history
  • Depending on which firm you use funds can be available immediately
  • No restriction on what the money can be used for 

Read more: The truth about log book loans


Chancellor George Osborne delivered a first Budget he insisted was 'tough but fair'. But some of the policies are in danger of tipping those on the edge into greater debt.

When I was serving in the Metropolitan Police I often quipped that no matter what happened to the UK economy, the government would always want police officers: our job was always safe. You can imagine how astounded I was when I heard thousands of police officer jobs are on the line as part of the recently announced Budget cutbacks. When this happens we know matters are bad. 

The Budget was certainly a tough one and only time will tell whether the measures announced are the right call. I don’t know enough about the economy to make an informed judgment but I do know a bit about consumers and their debts and I am worried.

I help individuals and families restructure their debts and I see the pain caused through debt. My role is to offer guidance and support and provide viable solutions to help resolve those debt issues.  The reduction in disposable income - the money people have left after paying essential living costs - as a result of cuts in pay, benefits and job losses will force many thousands of people into debt crisis. Mark my words, many will freefall into insolvencies or debt management plans. 

House repossessions are also likely to rise due to the proposed cut backs on mortgage support currently paid to those on benefits, with the most vulnerable homeowners losing around £140 per month in payments. 

Over the past 15 years, morally and socially, through slick marketing and the easy availability of credit, consumers have been encouraged to spend now and pay later. From this a culture of ‘must have now’ has developed, much like it did in the state too. Now the party has ended and the hangover will last for several years.

I think everyone needs to take a close look at their income and what they are able to spend. Anyone thinking of borrowing money now must make sure they have the means to pay it back.  

As a country we lost that ability to pay back, which is why such drastic measures have been implemented to control the debt. It’s no different for families.

When I’m helping someone re organise their finances, and they are thinking of buying something, I tell them to ask themselves how it is going to be paid for and what is the cheapest way of doing it.

Always remember - if you don't need it and can't afford it then don't buy it!

Most Limited companies have finance directors to run their affairs and if things get tough they prune back with redundancies, buy cheaper raw materials and stop advertising. They have to balance the books to stay profitable or at least stay afloat and it’s a criminal offence for any director of a limited company to trade whilst insolvent. 

But isn’t this basically what consumers and the government been doing over the past 15 years or so?

As for those working in the public sector, if they earn more than £21,000 per year then they are not just getting a pay freeze, but a pay cut because with inflation, their salary will buy less over the next two years.

Then there are those who rely on benefits such as tax credits and child benefit. The former will only be available to those earning below £40,000 (joint income) reducing to £30,000 in the year 2011 -12 with the latter is to be frozen for 3 years. Why not make child benefit means tested? Is it fair that footballers like Wayne Rooney and John Terry, earning circa £120,000 per week, can still receive this benefit? Should it not be means tested and given to the poorest families?

In addition, the impact of the VAT increase to 20% - due on the 4 January 2011 – will be to penalise the poorest in society. According to the Centre of Economics and Business Research, the richest 10 per cent spend £1 on VAT for every £25 of their income whilst the poorest 10 per cent spend £1 for every £7 of income.  

What does the future hold for consumers?

I see that the budget measures will slowly squeeze any disposable income from families and individuals and belts will have to be tightened. We are all in this together, however, and the cutbacks will affect the poorest through to the richest in somehow or another.

But there are some positives. Council tax is to be frozen for two years and Housing Benefit is to be pegged to a maximum of just under £21,000 per year, aimed at saving the Country £1.8 billion and in future will be linked to the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI). The threshold for those paying income tax has increased by £1,000 to  £7,475 and is targeted to be at £10,000 by the end of this parliament.

The Citizens Advice Bureau is currently seeing just under 10,000 new debt cases every day and they will find out after the spending review on 20 October 2010, whether they are to receive a 25% or 33% cut in funding.  

Great, debt help enquiries about to go through the roof and the service helpers are about to get smaller! So, if you happen to have any spare cash, you may want to think about buying shares in a debt management company, as that particular industry is going to be very busy over the next few years.

Read more: Emergency Budget 2010: effect on consumers


Are payday loans a terrible money-making scheme that preys on the vulnerable, or do they provide a useful service?

Now the Office of Fair Trading (OFT) has backed away from recommending price controls on expensive forms of short-term borrowing, I bet the sub-prime market can’t believe its luck.  It means letting firms such as QuickQuid can continue to charge up to 2,278% interest on a payday loan. 

So why has the OFT allowed this market to continue to operate with such high interest rates and is it the right decision?

As far back as July 2009 the OFT decided to have an in-depth look at the way payday loans, pawnbrokers and home-credit worked for consumers. Many debt advisers had also called for a review because they felt, as I do, that these firms prey on the desperate and the vulnerable – people who can’t get money from a mainstream lender, so are forced to turn to more desperate measures.

The pitfalls of loan sharks - unlicenced money-lenders - are well documented by the media, in an attempt to get would-be borrowers to steer clear of them.

This means people in a fix, who have no credit rating and need to raise some cash end up going to the secondary (or sub-prime) market, which is worth around £7.5 billion, according to the OFT. That’s enormous and so are the profits.

The OFT has said that although this form of borrowing is expensive, it actually serves a purpose for those on low incomes, who need short-term borrowing, so they are wary of barring it. It also felt that intervention would not necessarily address the problems in the sector because controls may reduce competition in the area.  

The review conducted by the OFT also found many consumers were unaware of the options available to them. Advice was deemed limited and many consumers were deemed to be too focused on the easy availability of this form of credit and the affordability of the repayments, rather than its cost relative to other products.

But while it has stopped short of putting a cap on interest rates, the OFT has made some recommendations, which in my view could help consumers thinking of approaching this sector to borrow money. These include measures to aid consumers in making informed decisions by promoting best practice among suppliers, with an industry-wide code of practice, a high-cost credit loans price comparison site and ‘wealth warnings’ on loan adverts.

In my view the Government should now intervene and set about encouraging a far more competitive market for those that need to borrow from the sub-prime sector. They can do this by insisting the taxpayers’ bank, the RBS, lends to those that would otherwise have to go to the sub-prime sector. 

I appreciate there is a risk of non- payment and would expect there to be a slightly higher interest rate to cover this. 

They should also introduce a scaling down of charges by these lenders over a period of two to three years and put a similar system in place for complaints as we have for mainstream banks, where customers with a grievance can be referred to the Financial Ombudsman Service (FOS) for a final ruling. 

In their defence, most Payday loans providers claim that while their loans can be expensive they serve an important role, with the average customer borrowing money for a relatively short period of time. One thing not helping consumers is the current inability and unwillingness of the main banks to lend - music to the ears of the sub-prime market wouldn’t you say?

They also argue that in certain circumstances a payday loan can work out cheaper than a bank overdraft.

People on low incomes and with a chequered credit history need to be given a level playing field and consumers need to be made more aware of alternatives such as credit unions, which are considerably cheaper to borrow from.

It just does not seem fair or justifiable for those on low incomes to have to pay extortionate rates of interest if they fall behind with their payments, for the profits of the lenders.

Payday loans are banned in 15 states in the US because of the way lenders rack up the interest rates once a borrower falls behind with the payments. Should we think of banning them here as well?

The bottom line is that a Payday loan is really only suitable for anyone looking to pay back after just a few days. Beyond this the cost to the borrower can be obscene - miss a payment or two and it gets out of control. So the moral of the story is, if you need to use one, do what you’re supposed to do and pay it back in full on payday.

 DebtWizard guide to payday loans, door step loans, logbook loans and loan sharks

Read more: Sub-prime market rubs its hands with glee after OFT gives the green light to 2,000% plus interest...


Being in debt is not a crime, so don't let people treat you like a criminal. Here I give you advice on keeping rogue creditors at bay.

Over the last four to five years we have seen debt levels reach a crisis point for many consumers and bankruptcies hit their highest level since records began.

This means that more and more people are lying to their spouses and loved ones and turning to alcohol, gambling or even crime in an attempt to solve their problems.

Many people I see or talk to are suffering from depression and contemplating suicide. My concern is that an overzealous credit card company or aggressive debt collector could push them over the edge?

Throughout my many years of helping people resolve their debt issues one thing stands out: consumers have very little knowledge about or experience of dealing directly with debt collectors and many individuals in debt are often subject to unnecessary harassment by lenders.

In some cases this can be justified, especially where the borrower stops paying and fails to inform his/her creditors of the reasons why.

In other cases, the debt is so old that the debt collector cannot legally take the matter to court, but they still try to harass the borrower into paying.

However, in many instances creditors work under the rule of “he who shouts the loudest gets paid” and will therefore annoy, badger, disturb, exhaust, harry, jade, perplex, pester, plague, tease, tire, torment, trouble, vex, weary and worry to get paid - in other words to “annoy or trouble constantly”, reference: Collins dictionary.

There are many forms of harassment, but these are the most frequently used;

• Telephoning at work, creating embarrassment and fear of dismissal.

• Making nuisance visits or telephone calls at inconvenient times.

• Calling or writing to neighbours on purpose, knowing they are not the debtor.

• Threatening personal visits, this is sometimes detailed in letters giving the impression that creditors have greater powers than they really have.

So, consumers need to wise up to their rights, stand their ground and stop being intimidated into making payments they can no longer afford.

One way to do this is to start collecting evidence of the harassment, which is very easy to do.

• Keep a record of all telephone calls, including the ones you make.

• Note the date, time and name of the person you spoke to, what was said and the company from which they were calling.

• Mark down what day it is because it may be reasonable to telephone you early on a weekday, but 8.30 in the morning on a Sunday is not acceptable.

• Try and get a witness to the harassment such as a friend or family member.

Other useful tips:

• Consider an answer service so that you can screen incoming calls. This could be set up on your telephone line without the need to buy an answering machine.

• If your telephone number is not known to creditors then dial 141 before making calls to them as this will withhold your number

• Contact your service provider to see if they can bar specific telephone numbers to stop unwanted callers, like 'choose and refuse' with BT.

If a lender can't contact you over the phone then its only recourse is to write to you. Therefore, keep copies of all your correspondence to and from creditors for reference purposes.

There are also some useful bits of legislation that might help you:

• Section 40 - Administration of Justice Act 1970.

• The Consumer Protection from Unfair Trading Regulations 2008.

• Section 4A - Public Order Act 1986.

• Section 1 & 2 - Malicious Communications Act 1988.

The Protection from Harassment Act 1997, is another piece of legislation that could help. The provisions of this Act are quite complicated and I can't go into them fully here, but it's an interesting piece of legislation with potential repercussions for creditors. 

The Act was introduced to deal with stalking offences but Section 1 can be applied to creditors harassing debtors. A person is guilty of this offence if they pursue a course of conduct that they know or ought to know amounts to harassment of another.

The debtor would need to prove it amounted to conduct, i.e. happened on more than one occasion.

The Police will not normally get involved and will only express an interest if it concerns a serious offence such as violence, blackmail or fraud.

But in minor cases of harassment it may only require representation to be made to the creditor’s head office, with evidence wherever possible in order to stop a ‘rogue’ employee.

If this fails to stop the conduct then contact the Trading Standards Institute, or the particular Trade Association the lender belongs to.

Another contact is the Office of Fair Trading, which grants consumer credit licences to lenders and will have records of previous complaints against any such creditor.

One important point to bear in mind is that if you are obstructive and ignore all reasonable attempts of contact from the creditor/lender and do not adhere to the contractual or agreed reduced payments, then a creditor/lender will claim in their defence that their action is justified and not many people will argue against this.

Remember, the last debtors prison shut in 1869, being in debt is not a crime, so insist that you are treated properly and politely at all times.

If you are suffering from unecessary harassment from a lender or debt collection agency then to help you I have the following template letters;

Bottom of the page on this link Harassment Letter 1 'Disputed debt, a debt you do not owe' 

Bottom of the page on this link Harassment Letter 2 'Stop harassment from debt collection agencies, in whatever form' 

Read more: How to keep debt collectors at bay


I had just sat down on the train into London, newspaper out, ready to read about the formations Capello is thinking of for the world cup, when my old mate William suddenly appears and sits down opposite me.

We hadn’t seen each other for quite a few months so we were quickly catching up on things when I asked how Amanda was. He looked puzzled and said, “haven’t you heard? We split a few weeks ago”.

“Good thing you splitting or.....?”  I muttered.  I was fishing for a bit more info, and like an old trooper he spilled it out. “She had to go mate, a liability, she was hiding her debts from me, can’t put the house at risk”. There was me thinking her debts were 20, 30 or even 40 grand but they turn out to be just 16.

Well I was taken aback, could not have been much of a relationship if he dumped her over some debts, which most of us have, don’t we? And what’s this about the house being at risk? Is he liable for his partner’s debts?

If someone has debts in their name only then they are the only ones that is responsible for it.  For debts that are in joint names, then in the event that one person cannot pay then the other named person is responsible for the full amount outstanding. It is not split 50-50 just because it is joint names.

This is not the case with credit or store card debts because they are in one name only, so any additional cardholder is not responsible for the payments.

So, with that established, my mate was not liable for his girlfriend’s debts of £16,000. So why did he boot her out of the home?

Now this is the interesting bit. When someone cannot pay back their unsecured debts, lenders can take action to secure their debts on a borrower’s assets, such as a house. They can also apply for a County Court judgement and then ask the court to enforce repayment. Bailiffs can then be sent into the home or an order made for an attachment of earnings, meaning that payment can be taken from your salary before it goes into your bank.

Also the credit file of both persons could be affected because of the link on the address of one person having debts.

What worried Will was the prospect of a lender forcing Amanda into bankruptcy and then going after her share of the property, if any, to repay debts.

In Will’s case the house was in his name only and Amanda was probably not entitled to any of the equity (the difference between the mortgage amount outstanding and the value), due to the short time they were together, so the house would be safe.

It could however have been very different. What many tend to forget is that when two people are both contributing to the household expenditure, whether paying the mortgage of just meeting the food bill, they are developing over time what is known as ‘beneficial interest’.

The length of time it takes to register such an interest is not a straightforward issue as there are many factors involved. For example, if William had the property for five years and Amanda moved in three years later and they then split after being together for a couple of years, then one would not expect there to be any beneficial interest.

It would be different though if Amanda had moved in when the property was purchased and left after five years, then arguably she would have built up such an interest.

In any event, just removing Amanda from the house does not mean the end of her entitlement to any beneficial interest simply because she no longer lives there. Think what happens in a divorce - the other person still has a claim on the property even though it can take years to settle, as in any bankruptcy scenario.

So was Will right in applying his own moral standards to his relationship or did he over- react in not tolerating anyone with debt issues?  I would argue that Amanda is better off without him than be hooked up for many years with someone that comes across as uncaring or supportive.

You and your partner will be linked together if you have any financial connection, such as the rental agreement or mortgage in joint names or even a joint loan. If you have a partner who has debt problems then you may wish to disassociate yourself from their credit file. You can do this by writing to any of the main credit reference agencies.

More importantly though, how about getting some support for your loved one and start to help manage the debts. Once under control this may well improve matters and remove the risk of bailiffs calling.

According to statistics published by the Consumer Credit Counselling Service, it has been counselling an increasing number of men over the past three years. In 2007 only 44.2% of clients were men – this increased to 48.4% by 2009. If this trend continues then so will the chances of the girlfriend booting the boyfriend out of the house – and not the other way around.

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


Don't be fooled by supposed "unsecured debts". If you own your own home, there's no such thing.

Yes, you read it right, unsecured debt, as in credit and store card debt, a personal loan, an overdraft or even a catalogue debt, is not unsecured if you own your own home. You all know what secured is: your mortgage. So am I barking mad in saying there is no such thing as an unsecured debt for someone who has their own home?

The answer is simple. Fall behind with say, your credit card payments and through a relatively straight forward and uncomplicated legal process the lender, bank or credit card company can apply to the court to put these debts on your house, a bit like a second mortgage.

“No they can’t” I hear you exclaim, “Because it is unsecured, they would have told me at the time that if I didn’t pay they would put it on the house!”

Read the small print though, and at the very end of several pages I daresay there will be some reference to it.

So why isn't it made clear, like when you apply for a mortgage? When you see mortgage adverts in the press, hear them on the radio or see them on the box, they all have the same statement: your home may be repossessed if you do not keep up repayments on your mortgage. Should we not have something similar in bold text on the same sort of advert for any form of unsecured credit?

As far as I'm concerned, the reason companies don't do this is because if they told the customer what could happen if they default on their payments they wouldn't sell as many products. So, just tell the punters what they need to know, give them the credit and put the rest in the small print.

A recent report from the debt charity, Citizens Advice, states that since 2000 there has been an astonishing 733% increase in the number of “charging order” applications, which can result in the forced sale of a home through the courts for unsecured debt. At the moment, creditors can apply for a charging order only after a county court judgement has been issued on the debt.

Or, they can badger the borrower into "voluntarily" agreeing to have the charging order put on their home. This is not always in the borrower’s best interest, so they should seek further advice, because if they subsequently fall into arrears with repayments, the creditor can ask the court for an “order of sale” to force the sale of their home.

But it's not all bad news if the debt gets secured on your house. In any agreement made under the Consumer Credit Act or where the debt is less than £5,000 in total, even if it’s not covered by the Consumer Credit Act, the interest cannot be added, and so potentially becomes an interest free loan.

Defend yourself

Anyone on the receiving end of an application for a charging order on their home can try to defend it by asking the court not to grant the order.

The grounds for this could include:

• You have other debts and to grant a charging order would favour this lender in preference to the other firms you owe money.
• You or a member of your family have a disability or serious illness.
• You already have a repayment plan in place, which is servicing all your unsecured creditors.
• You have other debts that are larger and some of your other lenders have frozen interest.

You could also ask the court to enforce payment in other ways, such as an attachment of earnings, which is when any payments would be taken directly from your salary on payday. Alternatively, if your debt is covered by the Consumer Credit Act 1974, which most bank loans and credit cards are, then you can apply for a time order, which can change your monthly payments and extend the length of time you can pay the debt over.

If house prices continue to fall, there is a risk that an increase in charging orders will push many home owners further into negative equity and more house repossessions will further depress an already ailing housing market.

Under new proposals the coalition government will look to set a minimum threshold of unsecured debt of £25,000 before a homeowner could lose their home. I would like to see the threshold of unsecured debt better defined before an application for a charging order can even be made.

At the moment it can be done for a relatively small amount, sometimes even below £1,000, I think a threshold nearer the £10,000 mark would help. More importantly though, why aren’t borrowers made more aware that a missed or non-payment on a credit card debt and the like can result in the debt being dropped on your home which could eventually lead to repossession?

A case of mis-selling debt

I think this is a case of mis-selling unsecured credit on a massive scale, don’t you?

In my view borrowers have been far too exposed to the risk of losing their homes to unsecured creditors. Some lenders and debt collection agencies use the threat of a charging order followed by repossession as a tactic to intimidate desperate and vulnerable debtors into making payments they can’t afford.

This is extremely unfair to the individuals concerned, so I welcome the foresight of the coalition government in going some way in addressing this issue.

Read more: Homeowners can't have unsecured debt


It is always sad to see someone lose their home for failing to keep up with their mortgage repayments, but this happened to 9,800 families during the first three months of 2010.

On the brighter side though, the Council of Mortgage Lenders (CML) claims that this figure was down 7.5% compared to the number reported for the final quarter of 2009 and lower than the same period a year ago when 13,200 homes were repossessed.

So are we out of the woods? Will repossessions continue to fall? I’m not so sure.

I feel that, should there be further economic shocks such as rising unemployment or higher interest rates, there are many more homeowners out there who are at risk of falling into mortgage arrears and eventual repossession.

With some economists saying that rises in unemployment cannot be ruled out, and with inflation for April sitting at just under 4% (nearly double the previous government’s target), one has to be a little apprehensive.

At the moment, while exceptionally low interest rates are helping to keep mortgage payments down, some people are using redundancy payments or credit cards to meet their mortgage commitments.

If interest rates were to go up and unemployment increase, then I fear many families will struggle even more, which could well result in their homes being repossessed. Are we in the calm before the storm?

Now let’s look at the CML and the data it’s not recording:

Sale and rent back schemes

Many of these sales are conducted to allow the homeowner to stay in the property and pay rent, effectively becoming a tenant. While the home has not been officially repossessed, it is owned by someone else, so these sales are not included in the CML’s statistics.

In 2008, The Office of Fair Trading (OFT) estimated that during the previous few years some 50,000 homes had been sold this way and it is thought that up to half of these were sold in 2008 alone.

'Sale and rent back' was not an option back in 1991 when 76,000 homes were repossessed and I believe that  the  true figure  this year if 'sale and rent back' were included, would be substantially higher and perhaps getting closer to those figures back in 1991.

Second and third charge holders

The CML is only collecting the number of first charge holders (a first charge is a mortgage that has the first claim over the property offered as security in the event the borrower defaults on their contractual repayments). There is no record of how many second or even third charge holders, usually secured loan companies, are repossessing homes.

Time delay

It usually takes around 12 months to have a home repossessed from the time mortgage payments are missed and all other avenues apart from repossession have been exhausted.  It can be argued therefore that the figures released are based upon householders who experienced difficulty up to almost a year ago.

Mortgage Pre-action Protocol

The introduction of the Mortgage Pre-action Protocol - which aims to ensure that lenders take all reasonable steps to avoid repossession and only take homeowners to court over mortgage arrears as a last resort - could be delaying what could eventually be a higher repossession statistic. Under such schemes the delayed mortgage payments are added to the mortgage, which some see as just helping to build up the debt.

When you add all this into the pot you cannot help but ask, “are we getting a true reflection of the state of the repossession market? Should the house repossession figures really be higher? Are we getting the full picture?”

Advice if you are struggling to meet your mortgage payments

•    Make sure you pay your priority debts such as mortgage, council tax and utilities first, before paying your unsecured borrowings

•    Contact your mortgage lender sooner rather than later.

•     Visit the government website direct.gov.uk to see if you qualify for any of the mortgage rescue schemes.

•    If you have other debts such as credit cards or personal loans and are struggling to meet these, then visit our page of helpful organisations.

Finally, one sobering thought. Many homeowners are not aware that any capital debt still owed to the mortgage company after the repossession and subsequent sale of the property can be recovered by the lender for a period up to 12 years in the UK. This counts from the date of the last payment or written acknowledgement of the debt and applies on any sole or joint mortgage account.

Read more: Falling repossession figures not painting the real picture


Figures just released from the Insolvency Service reveal that 35,682 consumers were declared insolvent in the first three months of 2010 - this is an increase of 17.9% on the same period last year.

Insolvency involves an individual either going or being made bankrupt or successfully proposing an individual voluntary arrangement (IVA). The latter is seen as a less stringent form of insolvency. It allows a borrower to enter into a repayment programme, usually for five years, and interest and charges are frozen with the remaining debt written off upon completion of the arrangement.

Also included in the figures are the number of debt relief orders taken out. These were introduced by the government in April 2009. A debt relief order is a fast track online form of bankruptcy for consumers with debts below £15,000 and minimal assets.

Only a selected few individuals are able to propose a debt relief order because of the ridiculous and unreasonable qualifying procedure - in my view, they are totally ineffective in helping many consumers. However, they work for some as 17,475 have been issued since their inception.

Although these insolvency statistics are worrying, I wonder whether the numbers should not be higher still. Are these figures masking the true amount of unmanageable debt as record numbers of consumers battle through an over-indulgence of consumer debt coupled with high unemployment?

Supporting my theory is a recent  report by R3, which revealed that around 700,000 ‘hidden debtors’ are in long-term debt management plans, some of whom have no hope of ever paying their debts back in their lifetime and technically are insolvent. These consumers are instead, languishing in long-term informal repayment programmes with no debt, or for many, no interest relief.

I believe we are just scratching the surface as too many people have debts they have no realistic hope of repaying. Some try to offer an IVA to their creditors only for it to be rejected by a lender. There is also the issue of the cost for a person to go bankrupt, which has climbed a massive 25% from 6 April this year to £600 per person. Can this huge increase in fees payable by the person about to go bankrupt be justified and is it fair? More on bankruptcy fee increase.

I am concerned that some borrowers will not be able to cope psychologically as the pressure builds from bills in the post to harassing telephone calls from lenders demanding to be paid. These consumers often need to go bankrupt but cannot afford to pay the fee. They are no longer paying their lenders and the debt, pressure and stress is building day-by-day.

Even in a bankruptcy, the individual is still expected to make payments to their creditors if they are deemed able to afford it. This I agree with and the payment term is for a period of three years when filing for bankruptcy and five years for an IVA.

Another recent report highlighted the top two reasons that deterred consumers from going bankrupt, even though they have no other option available. The first was having to attend court to file for bankruptcy and the second to have one’s name and address inserted in the local paper for all the gossipmongers to feed on.

On 6 April last year the Insolvency Service removed the mandatory requirement to advertise someone’s bankruptcy in the local paper. This massive change in bankruptcy policy, which regrettably has received little media attention, could impact on future insolvency figures because there is no longer the need to fear having one’s name and address inserted in the local paper.

Another aspect is the option of no longer having to attend court to file for bankruptcy, which is currently under review with the Insolvency Service.

Although insolvency is a way of dealing with debts that cannot be repaid one has to remember that someone who has been bankrupt, even after discharge, has no credit facilities, no overdrafts, no credit card and no credit file. We are fast moving towards a cashless society so who gives a thought about those who have had financial difficulties and how they are meant to cope after going insolvent?

These people need support and help to manage and rebuild their lives.

Creditors in particular need to wake up and listen and support borrowers that are prime candidates for bankruptcy, as it is often their lack of support that eventually forces borrower into insolvency.

The total number of insolvencies for 2009 was 134,142, which was a massive increase of 26% on the 2008 figures. My forecast for 2010 is for insolvencies to peak at around 165,000, which dwarfs the numbers for the preceding year. Insolvency figures since 1960.

Remember, the last debtors’ prison shut in 1869, some 141 years ago. It is not a crime to be in debt, and something I insist on is that those who are should be treated with respect.

Read more: Insolvency figures only scratching the surface


Which political party is most likely to help people struggling with debt? In my blog I examine the election manifestos to see what's on offer.

Just over a year ago I had the opportunity to meet both Gordon Brown and David Cameron in the House of Commons. Although the meetings were short they gave me enough time to voice my concerns about the number of consumers suffering from unmanageable debt.

So when the Conservatives, Labour and Liberal Democrats released their election manifestos in mid-April I took time out to scrutinise them to see what help would be on offer for people struggling with debt. Unfortunately, they all made somewhat disappointing reading.

The Liberal Democrats only had three aims under their ‘consumer issues' heading.

One is to legislate against unfair bank and financial transaction charges; the second is to improve access to banking for all with a PostBank and the third, to impose maximum interest rates for credit cards and store cards.

The last proposal will involve consultation with the personal finance industry as well as consumer groups and would need to account for fluctuating interest rates - not a simple task - and all it will do is spread the cost to consumers. None of the proposals will help those already with unmanageable debt.

In the meantime, Labour says it will create a People’s Bank at the Post Office, offering a full range of competitive and affordable credit products. It will also give all consumers with a valid address the legal right to a basic bank account and a right to redress if this is refused. Most banks refuse accounts to those with fraud convictions, or those who are undischarged bankrupts.

It adds it will clamp down on the interest rates and other fees charged by instant loan companies and payday or doorstep lenders, tackling the very high cost lending that hits low-income communities hardest.

Next, Labour will introduce a single regulator for consumer finance to restore confidence and trust, with responsibility for the supervision of all unsecured lending being passed to the Financial Services Authority.

One point worthy of note, Labour will make ‘the Savings Gateway account’ for people on lower incomes available to over eight million families from July 2010, providing 50p for every £1 saved up to a limit of £300. In my view, this will encourage consumers to save and will help towards people avoiding dropping into debt. 

I put Labour’s manifesto for consumers with debts ahead of the Liberal Democrats, but still no help for those with unmanageable debts.

Now onto the Conservatives. Under their ‘Tackling poverty & inequality’, they would look to ban excessive interest rates on store cards, and launch Britain’s first free national financial advice service. But will this include debt advice? I doubt it.

They will also introduce a seven-day cooling off period for store cards, which is welcomed.

Other proposals would be to require credit card companies to provide clearer information; this is coming anyway but could be improved.

My suggestion would be to highlight the following sentence on credit card applications and monthly statements: "If you fail to pay your credit card bill and are a house owner then we may take you to court and put this debt on your house."

The Tories will also ensure that no-one is forced to sell their home to pay unsecured debts of less than £25,000. At the moment, any lender can change the status of an unsecured debt - such as credit or store card, personal loan or overdraft - and even catalogue debts to secured by applying to the court for a county court judgement, commonly known as a CCJ.

Once issued, the lender can then apply for the charging order to secure the debt. This can be contested by the borrower, but if the charging order is granted by the court then the debt becomes a priority and becomes secured on the property. Non-payment of this debt can lead to having the house repossessed, so for the time being, the Tories clinch it for this proposal alone.

Although some of the measures proposed by each of the parties will benefit certain consumers, what is worrying is there is no real help for those who need to resolve their current debts.

To give an indication of the size of the debt problem for consumers, here are some staggering statistics supplied by Credit Action early this April:

* 390 people today will be declared insolvent or bankrupt - this is one person every 3.69 minutes

* 2,000 CCJs were issued every day in the first three months of 2009

* 126 properties were repossessed every day during 2009

* 219 mortgage possession claims are issued and 185 mortgage possession orders are made each day

• 1,000 people a day are seeking to enter into some form of debt resolution with their lenders, and the Citizens Advice Bureau is dealing with just under 10,000 new debt cases every day

So what would I like to see done by the political parties? In my book, we need:

1.    More protection from debt collectors and lenders for consumers who are in debt. Upon notification from any appropriately licensed debt management company or debt adviser, including debt charities, that the debtor is seeking advice on their debts then no action can be taken for a period of two months from the date of notification. This will enable a way forward to be planned, which in the long term will benefit the lender as there will be no recovery and tracing costs.

2.    To ensure high standards and a quality service I’d like to see a requirement, similar to that in place for mortgage selling, for debt advisers to be professionally qualified.

3.    Effective self-regulation of the debt management industry under the beady eye of the Office of Fair Trading or similar body, or full regulation.

4.    Statutory debt management plans offering borrowers protection from unsupporting creditors or debt recovery agents with interest and other charges frozen and in certain circumstances debt relief on these plans.

5.    The re-introduction of Simplified Individual Voluntary Arrangements (SIVAs), which will replace the current IVA where 75% of the lenders have to agree to it, to being based on a simple majority.

Read more: Will the new government help people with debt?


Over the past few weeks I have had a number of telephone calls and forum enquiries about what happens to your debts when you pop your clogs, peg it, roll over or as most people generally say, pass on. 

What has amazed me is the extent of consumers’ complete lack of knowledge about death and debt, the majority of actually thinking that debts die with you! 

Well let’s get the record straight. Whilst this may be the case if the person who has died has no assets, savings, investments or insurances. If they did have any of these then they are likely to be sold to clear any outstanding debts. 

Some of you may have noticed that the details of a deceased’s estate are often published in the paper. How someone’s worth at their time of debt is established is simple. You add up the value of their assets, money or savings including any payouts from insurances and investments and the value of any property and possessions. 

If a will has been made then someone would often have been named as executor, usually a relative, friend or solicitor, who will take charge of the deceased's person's affairs. 

If no will had been made then the person is deemed to have died intestate. This means that an administrator will need to be appointed to carry out the same duties as the executor but in either scenario, the first undertaking is to get the estate valued and for any outstanding debts to be repaid. 

Unless any of your debts are in joint names you will not be responsible for any wife's, husband's or civil partner's debts on their death. 

However in the case of a debt in the name of more than one person, typically a mortgage held in the husband and wife's names, and any loans secured on the house or unsecured personal loans and overdrafts, each named person is liable for the whole debt. 

If the home was jointly owned and you do not have enough money to clear the deceased's debts and any claims on the estate then there is a possibility that your home would have to be sold. However your options to avoid a sale will depend on whether you owned the home as 'tenants in common' or 'joint tenants'. 

Tenants in common - This is where each of you owned a stated share of the property. The share that belonged to the person who has died will then become part of their estate and will pass on to whoever is mentioned in their will. However any debts that are outstanding will need to be cleared from this share. 

If you wish to avoid the home being sold then you will need to negotiate a settlement with the deceased's creditors. 

Joint tenants - This is where you both own the whole property and upon the death of one partner their share will automatically pass to the surviving partner. 

In effect the asset has passed from the deceased's estate to yours but this does not give you total protection and you may still have to address any debts and claims. 

Within five years of the death creditors can apply for an Insolvency Administration Order. Once granted this can divide the property in two and subsequently lead to a forced sale. In this event you will need to negotiate a settlement if there are debts and claims on the deceased's estate. 

Important check list - it is worth checking if the deceased's person's debts are covered by: 

  • payment protection insurance for personal loans or credit cards
  • mortgage protection/life cover insurance
  • death in service from a pension – if the person dies before pensionable age.

So, you are born free, taxed to death and not necessarily debt free when you pop off either! 

Further information on death and bereavement can be found here at direct.gov.uk  

Read more: Your credit card wants you, dead or alive!



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