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3 things not do do if you’re in debt this Christmas

picture of a pill with debt relief on itAs Christmas looms, many people will be looking forward to putting a smile on their loved one’s faces. Making those peoples faces that?you really love light up as they open that special gift is for many a highlight of the festive season.?Also for?many?it is the last payday before Christmas and this weekend in the local shopping centres the tills will be no doubt red hot. Did you know that within Nottingham City Centre one in every two retail pounds is spent within the Victoria Centre! No doubt this pattern of spending will be mirrored across the country.

However, on the flip side, as many as 1 in 3 people will be worrying about the financial hangover, how will they pay for Christmas when the credit card bills arrive at the end of January. How will they deal with Christmas debt? I know our debt advice centres at AMS get inundated with calls for help in the New Year where our clients can no longer afford full contractual payments. Many people, due to Christmas spending, are looking to reduce payments and freeze interest and stop charges.

Three pleas from the heart to every reader of this?blog who is in financial hardship this winter. Number one; Do not take out a payday loan! The average payday loan client will end up taking another 5 loans on top within the first year to balance the books and this cycle of very expensive borrowing will become habitual.

Number two; Do not take out a store card to get a discount unless you are absolutely certain you can pay the balance off in full in the New Year without incurrring interest. Store cards are generally restricted to one retailer or a small group and the interest rates are astronomical. Credit cards are not great but they should be used ahead of a store card?on the vast majority of occassions.

Finally, number three; What really is more important, a material gift or some quality time with loved ones? We all know the answer, lots of life’s best gifts are Free. If you’re worried about over spending please TEXT MONEY to 66777. Until next time.

Will £1 a month get you out of debt?

picture of dog sleeping in deckchairAccording to the latest on-line personal debt statistics published by www.creditaction.org.uk outstanding personal debt on unsecured credit has gone down from this time last year. This is good news on the surface but let’s not celebrate just yet , if you dig a little deeper the picture is not quite as rosey. If you look at the situation with regard to secured credit for the same period (Sept 30th 2011 to Sept 30th 2012) borrowings have gone up by more than the rise in the level of unsecured credit, the total now owed by me, you and your neighbours is £1.415 trillion pounds .

Now let’s say we see ourselves out of recession and lines of credit are opened up by the banks and people start to flex their plastic, this could be according to one of the speakers I was listening to at a major debt conference in Manchester a few days ago, potential for a new spike in those seeking debt problems. Anyone trapped into a mortgage with a lender increasing its SVR (Standard Variable Rate) as we have discussed in this column back in the Summer,  and coming to the end of a fixed or discounted period could see themselves in difficulty. Now add in a change of circumstances such as a relationship breakdown or loss of income and the problem quickly escalates, compound that by delaying taking action or asking for help by getting quality debt advice and we have another major personal debt problem on its way.

According to Credit Action one of the countries leading money education sites there are around 700,000 people in a debt management plan, however there are over 900,000 people that should be seeking help and have buried their heads in the sand for now.
 

8,465 people a day went to the Citizen Advice Bureau each working day over June 2012 for help with personal debt. Although some CAB’s are able to see those needing help the same day, this is often purely to set a date to see a counsellor, this can be as much as 9 weeks ahead.If your one of these 8,465 people facing issues that’s a long time, particular with aggressive creditor action in the form of letters, late night phone calls and debt collectors, often trying to pass off as bailiffs.

The CAB’s are staffed in almost the vast majority of cases by unpaid volunteers, they do a commendable job but due to the vast numbers of people seeking help are not able to always look as in depth as possible at a clients situation. If you need help make an informed choice, by all means go to the CAB for sure, we recommend you do, go to the “fee free” debt advice charities like the CCCS but also look at a range of “fee charging” debt management companies and consider all options available.
Although paying £1 a month to a creditor might be an immediate short term fix to make the debt affordable, but will it get you out of debt, the point is the debt will never be cleared and the debtor is then potentially trapped in a permanent state of “poor credit” and cannot move on with their life. Most people with debt issues want to pay back their debts, they know they had the money and they are decent people who want to repay their debt but now need help to reschedule the way that debt is repaid.

Take away peoples goals and hope for a positive future by remaining in a permanent sate of debt and bad credit, by paying £1 a month, and that is a sad situation. I remember a line of an American motivational speaker I follow that said “where there is hope in the future there is power in the present”, the meaning being that where there is hope this spurs on the individual to take action NOW in the present. Procrastination is a killer of dreams, wealth, happiness and sometimes life itself, have you ever heard “I wish he would have gone to the Doctors sooner”, I am sure you have , I know I have.Alternatively without hope you literally have “no hope” and the reality is EVERY debt problem has a solution, the debtor may not want to face that solution, BUT there is always a solution! So if your thinking about money and its in a negative context then its time to go and seek debt advice and remember make your choice an informed one. You could see 5 providers in one day.
Remember if you want to talk about any issues or questions you only need to text MONEY to 66777.

 

 

PPI…..and there’s more !

Well a couple of weeks ago Barclays announced another £700 million of provision for the on-going PPI mis-selling scandal. At the time I said there would be news from the other banks and as Duncan Norville would say “and there’s more”.

Since then Lloyds have announced 1 Billion in extra provision, RBS £400 million, HSBC $331 million (I will allow you to do the Sterling conversion) and this won’t be the last. Some analysts at Investec predict well over another 1 Billion to be announced from Lloyds alone.

The current bill is 13 Billion, don’t forget the banks a couple of years ago told the public and its shareholders that the total bill would be around 3 Billion. That’s some under estimation, hope they sacked their forecasters. The actual bill according to some could now eclipse 20 Billion pounds.

The banks have been trying to blame claim management companies for “inciting” people to complain. I find this argument personally quite laughable as the original sin was the mis-selling and also the lenders as a result of their defeat in the High Court had to identify 12 million policy holders who had ppi and had not complained to see if they felt they should complain, so nothing to do with claims companies for that one, that was the verdict of the court and the lenders regulator, the F.S.A.

On top of this if there were no mis-selling in the first place there would be no complaints to “incite”. We are talking about the abuse of trust by banks against their clients for over a decade, the banks prefer to call it a “legacy” issue, sounds softer me thinks!

The absolute worst scandal in all of this is the fact that legitimate complaints (which are around 85 per cent of anyone that was ever sold one of these ppi policies) are still being rejected on the flimsiest of reasons and against everything Lord Justice Ousley ruled on in his High Court verdict which was supposed to add finality on the matter. That was April 2011 and still the banks hold out and hold on to money which they then loan out at upto 28% and payback redress to the mis-sold at 8%, they did their maths on this one.

The Financial Ombudsman has upheld 98% of complaints in favour of the client against Lloyds and 93% against Barclays…..since the juidicial review. Bearing in mind Barclays announced a no quibble guarantee in the National Press backed by Which magazine and Martin Lewis this is plain wrong. The banks have had 8 weeks to investigate the complaint, how can they get it wrong on 98% of occasions? Is it sheer incompetence or sheer contempt for the FSA and the High Court? I will let you decide.

Don’t forget to TEXT Money to 66777 if you have any questions or points you would like to raise on this issue or anything else.

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Barclays set aside a further £700million for PPI

picture of the ppi guy in his cloakA few months ago in this column we put forward the view that you have not seen the last of the extra provisions needed to be set aside by the banks to payback for the scandal of payment protection insurance. Then just last week Barclays announce a further £700 million provision that shocked the City, it means that the other major banks could quickly be following suit.

Ian Gordon at Investec Securities believes that Lloyds banking group may have to set aside a further £2.1 billion pounds in ppi provisions !However if you think about this it makes total sense, banks were mis-selling PPI from before the turn of this century and making an estimated 5 billion a year from the sale of policies that often were not worth the paper the client had written (often under pressure) their signature on.

One of the vey worst practices by the bankers was the sale of incredibly expensive single premium insurance that was often attached to secured loans against property etc. This type of policy involved the upfront sale of 5 years worth of payment protection insurance in one go, front loaded to the loan with interest attached for the whole term of the loan, even if that loan was 20 years long ! The policy only lasted for 5 years BUT you would have to pay for it with regard to a 20 year loan for 15 years with no cover  in place whatsoever ! Would you buy 5 years worth of car insurance in one go, home insurance…no neither would I. The only beneficiary in all of this was the finance company who received 5 years worth of commission upfront ! Often with these policies the second signatory was not even covered for unemployment cover, so if they lost their job the joint income would not be enough to pay back the loan premiums and hence the policy was not fit at all for purpose.

 

Furthermore it was often sold to people that worked within the public sector who had extensive sickness benefits, the policies were often 30 day deferred policies meaning that they would not pay out for the first 30 days of sickness, however when the client came to claim they were often excluded from making a claim. Of 100 claims for accident, sickness or unemployment cover these scandalous ppi policies only paid out for 15 of them. So you were basically sold something that was overpriced sometimes by as much as 1000% compared to the open insurance market,did not pay out and did not cover you.

 

Accident , Sickness and Unemployment cover sold specifically in line with a detailed fact find and suitable to a clients needs is a good product but the vast majority of the policies the bankers profiteered from for years was mis-sold. In Barclays case they have just set aside £450 million pounds for the mis-selling of interest rate swap policies to businesses. Single premium insurance was sold by most of the major lenders and secondary lenders, if you were mis-sold this type of policy you could be due back over five figures in redress. My advice to you is get back your money, it’s your money and it’s time for the banks to pay back for all their previous wrong doings whether or not that occurred in the 20th or 21st Century and Lord Justice Ousley at the High Court agrees !

Are the bankers trying to u-turn over PPI?

Photo of Nic in front of AMS logoThis week I was going to take you through how to run a PPI claim yourself, including top tips, letters and timeframes. HOWEVER recent events mean there are bigger things to discuss and alert you about !

Over the last 8 weeks we have spoken to a lot of people who have tried to run their own claim ,with what may I add look like bona finde reasons for mis-sale such as sales pressure,policy not required due to employment status, no diligent process followed by lender etc.   They have then only to be knocked back with what I can describe as a “pre judicial review” shoddy templated denial response from the bank or credit card company with phrases such as ; “we had diligent processes in place at the time”,”the ppi was detailed on the statement” and various other red herrings and false barriers that were all overruled on with total clarity at the Highest Court in the Land by Lord Justice Ousley. This meant supposedly finality to the matter…….o’h I wish that was the case! It looks as though avoidance strategies PPI is firmly on it’s way again.

The banks have seemingly started to deny people again of their right to their money back. At AMS we have currently nearly 350 complaints that have over run the 8 week deadlines the banks get to issue a “final response”.

The same banks have lost 293 of our initial complaint letters. I spoke to other MD’s and CEO’s of major claims companies and they are experiencing the same things. Offers are down, denials are up, strict time frames as issued by the regulator the FSA are being blatantly ignored, FOS guidelines are also being ignored by the banks and the banks are denying many clients express wishes when it comes to obeying letters of authority and in some cases the law of the land.

If your claim has been denied by your bank then text money to 66777 and we will take a look at it for you. We are going to rattle some cages, please feel free to join us over this latest banking scandal, it’s just WRONG on so many counts.

Mansfield The Only Inland Town In Top 10 for Bankruptcy

Photo of Gloria DePiero MP with Directors of AMSSome top tens are great ! The Top 10 films ever and The Top 10 songs would no doubt throw up some brilliant nominations and lots of interesting debate. I am going for Barbarella and Space Oddity for a starter, there’s a theme there!

Last week ClearDebt published their summary of the latest published insolvency figures from 2011 which featured the Top 10 towns throughout England and Wales with regard to personal insolvency. Unfortunately one of the bleakest, in fact the second bleakest in England and Wales is in fact Mansfield in Nottinghamshire with more than twice the average of personal insolvencies at 51.09 per 10000 population compared to a National average of 27.2 people per 10000.

I was asked to comment for a news feature on a local radio station where we run a live financial and debt advice show. …Why Mansfield? Mansfield had the second lowest weekly wage, that’s got to be  a major factor  but were there other factors?

The main issues Mansfield face are economic with high unemployment and low income, with the destruction of the pits, breweries and textiles at the centre of the lack of local mass employment opportunity, but many other towns and areas are also deprived ? Was there a pride factor in taking longer to seek help? We find in Mansfield an average client takes four months just to seek debt advice. This is far too long ! If this could be cut to just one day from four months and if the client got great same day debt advice , just imagine the positive effects!

Another factor I considered was to look at the number of short term loan providers in the High St,  may they be another underlying cause? A lot of people are amazed when we tell them that a creditor can seek a bankruptcy order for as small a debt as £750 ! With many decent working families deprived from gaining affordable and accessible credit the lure of quick money to the desperate is strong. The message loud and clear is seek advice first not more debt, if you seek advice early the severity of bankruptcy in many cases can be avoided, although sometimes on the flip side going bankrupt is the most appropriate and best thing to do…but seek advice.

Critical Illness Cover and debt

Photo of Gloria DePiero MP with Directors of AMS“I wonder why I can’t move my fingers in my right hand anymore?” I asked my mate who I play rugby with. There were lots of people thinking it was probably due to a trapped nerve. I remember playing Loughborough at home for local side Paviors and I got absolutely mullered by one of their second row ,who could run faster than our backs, it was not pretty ! Trapped nerve seemed to make a lot of sense to me but I could tell from the look on my coaches face Bob that he thought it could be something a bit more sinister.

So off I trotted to the doctors who swiftly referred me to the neurologists. I had to count backwards from 100 and do a short walk. I felt I walked quite cooly as I sauntered along. It was when the neurologist asked me if I had come on my own (I had) that I started to get slightly worried. One brain scan and and another lovely neurologist later it was confirmed…..early on set Parkinson’s, just like the back to the future star Michael J Fox and Ali. The neurologist reckons I have had it for around 8 years and now it’s just a case of how quickly it develops.

Dopamine does not get replaced in a certain part of the brain and it’s this dopamine that controls mood and movement. Without dopamine your  body literally starts to seize up and eventually you can lose the ability to walk, talk or swallow. Here’s hoping those really clever people find a cure x

The point of this story though Nic? Critical Illness Insurance ! According to official statistics on one of the leading providers websites the average sum paid to critical illness customers was £73,591, the average age of critical illness customers was 44 years for women and 46 years for men ( I was 45), cancer remains the most common cause of critical illness claims at 67%, followed by heart attack (10%), stroke (7%), multiple sclerosis (6%) and benign brain tumour (2%),  critical illness claims were paid out in over 94% of cases. I don’t know how long it is before I seize up (hopefully never, I am telling my brain with a bit of “self talk” it can produce its own dopamine ;0) ; but at least the critical insurance cover has helped take away any immediate worries on the financial side and help for my family.

At AMS we see lots of people that due to personal debt have cancelled their direct debits for life insurance and critical illness cover in order to payback credit card, banks and payday loans. If my little story results in one person getting cover in place then job done. As my good friend Tony from Bulwell always tells me “It’s better Nicholas to have it and not need it ,than need it and not have it”. Too right Tony !

Can you claim PPI refunds if your in debt?

At AMS we often get asked if it’s possible to make a claim for the mis-sale of payment protection insurance if you have debt issues? There is no straight forward yes or no but on the balance of probability the scales are firmly tipping to the “yes you can” answer side.

photo of 2 dice one saying yes and one saying noMany people have been approached by claims companies via the telephone only to be told once they say they either have arrears, been or are in a debt management plan, been or are in an IVA or have ever been through bankruptcy passed or present that they simply cannot claim. This is not true!

The reason they will have been told this is more to do with some claims companies wanting to deal with the more straightforward cases or if they have heard the “no” answer from a bank it’s probably down more to a lack of knowledge of that particular fast tracked Customer Services rep or a tactic of the bank to reduce further liabilities.

If you have arrears on a loan and you have been mis-sold PPI what can happen (and not always the case) is that the lender may remove the arrears from your redress. So if you win £4000 and you have £2000 of arrears you will “probably” have the arrears written off and £2000 as a cash benefit, the bank may ask you if you want to take all of the redress off the outstanding loan balance but you definitely do not have to do this.

With credit cards the lender may attempt to take the redress won off an outstanding balance but as long as there are no arrears you do not have to do this, you can ask for a cash refund.

If your in a debt management plan the fact that they you are making reduced payments compared to your original contractual payments is not an excuse that can be used to stop you from asking for an historical wrong to be put right. If you win the case you could reduce your indebtedness and clear your debts quicker. Don’t be put off claiming your money back. You had financial issues that may have been caused through loss of your job or a relationship breakdown, why should this stop you from claiming ?

Many people that are in an IVA (Individual Voluntary Arrangement) may have PPI that is highly likely to have been mis-sold attached to secured loans that fall outside of their IVA as an IVA only deals with unsecured not secured debt, also any PPI redress can go to the trustee of the IVA and the Insolvency Practitioner can again use this to reduce the term of your IVA. We have seen cases where some secured secondary lenders were adding 30K plus to loans for insurance that was basically worthless, and their clients were so desperate for the consolidation loans that they signed anyway.

Again in bankruptcy if the debtor is fully discharged and is not subject to an IPO (Income Payment Order) which normally is in operation for 36 months following an initial 12 month period their debts are written off, so if the client has been mis-sold PPI they may be subject to redress which may come back to them in full as a cash benefit. Also you may have been mis-sold PPI for debts which fell outside of your list of creditors anyway .

As always take advice. If you have any questions with regard to today’s blog please TEXT MONEY to 66777

Why can’t I get my account numbers via a credit report anymore?

Can anyone out there answer this question? In fact if you can answer this question please text MONEY to 66777 or send myself an e-mail. So what is this question that is burning so deeply Nicholas I can hear you cry, well maybe not but you get the picture. The three major credit agencies are Experian, Equifax and Call Credit. Experian of course is a huge International success story and is based here in our great city of Nottingham. These credit reference agencies are in simple terms libraries, hard drives, storage vaults  of every financial transaction that you and me have made over the last six years. The financial institutions can use this information to check our payment history and decide whether or not they are prepared to lend to us OR at what rate of interest they are prepared to lend to us. (LIBOR aside ;0)

On the flip side it is your right and my right to understand what financial informaion is being stored about us, we have this legal right and this is set in law, and the Data Protection Act is there to protect us all (and is often used as a smoke screen by institutions that don’t want you to have access to your data but thats one for another day). This of course is very important as an incorrect record may have been filed against us stopping us from gaining access to credit, we may have had faudulent transactions registered and taken out in our name……and at the end of the day IT’S OUR INFORMATION !

On top of this knowing you have a great credit record for example could be an excellent tool for you to use the next time you are negotiating a deal, so you can see there are many reasons for gaining access to an accurate record of your credit file. BUT NIC I hear your cry what is this question that you want us to answer? Well here you go, for years and years when you accessed your credit file you could access the full credit agreement number or the full account number but that information has now disappeared, like Forest winning the Champions League, it was there but now it seems to have gone.

When I called one agency to ask them where my account numbers had dissapeared to their representative seemed very nervy and a little sheepish. So can anyone tell me? There could be many reasons, one that is doing the rounds is that allegedly the banks have been applying pressure to the reference agencies to remove this information from their systems ? Has anyone else heard this ? Why would the banks want to do this, could it be goes the rumour, so the public cannot locate details for potential ppi mis-sale claims and so the banks do not got over the 10 Billion that needs setting aside to payback the PPI that was scandalously mis-sold to approximately 85% of people who bought it? I don’t know the answer, but someone does………..do you?

How can under the Data Protection Act a member of the Public not get access to their account information?

Downsizing as a debt solution?

photograph of the outside of an ams shop on high street

So there I was driving around Nottingham and suddenly what struck me was……the amount of “FOR SALE” boards.

Literally everywhere I looked there was another board. Now it can’t be that due to Forest and County’s failure to get promoted I was witnessing a mass exodus of Nottingham;and last time I looked most people were very tightly “squeezed” by the double dip recession that we now find ourselves languishing in, so hardly the time for so many people to be moving up the property ladder.

On top of this due to the need for squeaky clean credit files, sizeable deposits and lack of mortgage deals around there is a shortage of first time buyers. Was I witnessing the start of a new phenomenon “climbing down the property ladder” ? Were people cashing in on their equity, cutting their losses and planning on buying something cheaper or smaller or both or renting?

 

When I researched this on-line I found that according to Investec a huge 4.7 million homeowners were planning on downsizing to fund their retirement over the next 5 years. That’s a lot of “FOR SALE” boards, 4.7 million of them to be exact. I suppose if you have a lot of equity and a shrinking family unit I can definitely see the benefit of it, however for most this won’t be the situation and then there are the costs, estate agency fees, renovation of new property, legal fees, stamp duty, removal fees and possibly increased transport costs when you want to visit old friends and family.

It could be a desperate act for many to repay debts when there could be some much better potential debt solutions available, we would advice speaking to one of our team and having a full financial review. If you google “downsizing your home is a stupid thing to do” you will find some very interesting articles. It could be a great solution for you, it really could BUT make sure your in full possession of all the financial facts. Next week the latest in new mortgage deals available on the market.

 

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