Making Forced Bankruptcy Harder

A much needed law change happened on the Ist October 2015, that went pretty much unnoticed.

Did you know that before that date, if you owed a creditor as little as £750, they could apply to the courts to make you bankrupt?

Implications of bankruptcy

– Any assets such as your car or home could be sold to pay back the debt.
– It will remain on your credit file for 6 years, meaning you will find it extremely difficult to obtain credit, loans or a mortgage.
– You will not be able to act as a company director.

Bankruptcy was meant to be a last resort, for people or companies that were insolvent to the point of being unable to pay their debts, debts that were usually a large sum of money owed.

Unfortunately some took advantage of this situation, and the mere threat of applying for bankruptcy from a creditor to a debtor over as little as £750 was enough to cause serious implications and further financial hardship.

As of 1st October 2015, the law has now changed and the amount of debt you would need to owe before anyone can apply for bankruptcy against you, is now a more realistic £5000.

A welcome change.

For further information on bankruptcy in the UK Stepchange.org

Retired? Don’t waste your money

 

Retired? As important as savings and pensions are, how you spend your money during this time is just as important.

Living in too large a property

If you are still living in a large family home, then consider trading down to a smaller property, do you really need those extra bedrooms and bathrooms? By trading down you will save on gas, heating and electricity bills as well as general maintenance costs. Hopefully, you will also release cash equity on selling your property that can go towards your pension pot.

Eating out everyday

The average cost of eating out in the UK has now surpassed £20 per head. Eating out just once a day everyday will therefore cost you over £7300 per year! Add a partner or eat out more often and the costs really add up. If you enjoy eating out, take advantage of coupons or lunchtime specials to reduce your costs.

Debts

To retire stress free, we recommend if you can, removing debt from your life. Credit cards are only adding interest on everything you buy, therefor making purchases more expensive. If you can’t pay your credit card balance on purchases before the interest kicks in, then consider removing credit cards and store cards away from your life.

Buying a new car

Money wise, one of the worst things you could do to your finances on retirement, is to purchase a new car. Depreciation makes them one of the worst assets to own. Consider buying nearly new, when most of the depreciation has set in, this will save you thousands of pounds.

Buying a holiday home

Taking on a large commitment, like a holiday home with its added bills and maintenance is going to take out a large portion of your money. Add to this, currency volatility and the added stress of another home can make this a financial and emotional burden. Consider renting, the cost savings over a holiday term are more beneficial, plus, let some one else worry about the property, after all this is supposed to be your retirement!

 

 

Is debt holding you back?

 

According to a government survey a large percentage of adults are delaying traditional life such as marriage or a car purchase due to personal debt.

The largest group hit were people still paying off their student loans, while the amount of adults either forced back to the family home or still living with their families has also grown, the average age of the first time buyer is now 31 compared to 28 in 1995.

One of the biggest reasons debt is problematic is due to the fact that it sucks away your financial and emotional resources. When debt is hanging over you, it makes it difficult to concentrate on anything else but debt. This can sometimes lead to what is referred to as a vicious cycle of debt, when instead of going forward, it feels as if you are actually sinking.

Managing your debt without it hindering upon your life choices can be as simple as consolidating into one low interest loan, or if possible a zero interest credit card (but keep your eye on any zero interest promotional period) That way, moving forward in life can start to feel like a very real and possible reality.

Avoiding the debt bomb

In the UK alone the amount of household debt now sits at over £170 billion! Spurred on by cheap money a record number of people are being lured into splashing out on home improvements, cars, goods and services, by credit card companies and banks.

Over £41 billion is now owed on credit cards, coming from long sweetener interest free deals and credit card transfers, removing interest payments for up to 3 years.

Consumer credit on the high street is now up to £84 billion with £36 billion made up of personal loans and £7 billion in overdrafts.

New car sales are at record highs, as is the financing of new cars. Over 75% of new cars bought in the past year were financed through a loan.

With a possible rise in interest rates, many people are sitting on a ticking debt time bomb, in the past year alone Citizens Advice has dealt with nearly 300,000 cases of people struggling with debt.

If you are dealing with debt or don’t want to be caught out when interest rates go up, here are a few simple steps that can greatly help –

1 – Face your debts and make a list of everything you owe.
Remember don’t panic, there are others in the same boat, and organisations to help.

2 – Prioritise your debts into order of most importance.
Top priority debts are those that put your home at risk such as mortgage or rent, council tax etc. Low priority are credit cards, loans from friends etc.

3 – Work out a monthly or weekly budget.
Write down your income and expenses (excluding debt repayments) to work out how much you have left to pay your creditors.

4 – Speak with your creditors.
They are more likely to help if you contact them and explain your situation. Most will accept reduced payments to help you pay the debt off.

5 – Speak to professionals.
There are free organisations that are there to help you with debt advice and action, such as Citizens Advice and Step Change.