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Government Legislation

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About Your Debt

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A study carried out earlier this year claims that the average adult in their twenties plans to postpone many of the key stages I their lives, such as marriage, having children and purchasing properties.

The study revealed that the average couple back in 1985 would have spent £35,000 on property. This equates to four times the average annual salary. Today, a couple would be looking to spend £163,000 for the same property. This is eight times the national average for a twenty-something’s salary, which eliminates a huge number of people from getting a foot on the property ladder.

First Direct conducted a poll back in February of this year and of the 3,000 participants, 75% agreed that young people are, “the most financially pressured in history”. 20% either had or believed they had to postpone wedding plans, whilst 25% thought they would have to postpone having children due to lack of funds. Sadly, 1/3 of participants claimed that they were considering not having children at all because they would never be able to afford to raise a child.

In comparison, most of the parents of those questioned, never had to delay any key stage of their lives. The most significant barrier keeping many young people from planning for their futures is the difficulty of buying property. A typical parent of 45 would have married and had their first child at 26 and would have been on the property ladder by 27. Today, it is expected that the average age for a first time buyer would be more like 37, for people not supported financially by their parents.

For many people, the chances of getting a foot on the property ladder any time soon appear to be slim to none. However, there is a glimmer of hope for first time buyers, as ‘Rent to Buy’ schemes emerge. One building society in particular that has launched just such a scheme is the Saffron Building Society, which operates in the South of the country.

This particular scheme allows people to borrow if they can show that they have a record of paying rent, on time, for as little as 12 months. For Saffron Building Society, this would, in many cases, be proof enough that the borrower ids capable of making monthly mortgage repayments. In addition, the borrower would have to be able to place just a 5% deposit on the mortgage.

The arrangement would mean that someone who paid rent of £1,000 per month and was able to put down the 5% deposit would be able to buy property worth up to £155,000.

Many would-be first time buyers are unable to proceed with the purchase of property due to poor credit history. Although the borrower will still be subjected to credit checks, this scheme adopts a much more manual approach rather than the usual, automated system where you’ll be declined if there are any blemishes on your credit history.

Broker, John Charcol, has been quoted as saying:

“The common sense way affordability is calculated for this mortgage will be a breath of fresh air to any first-time buyer who has suffered from the ‘computer says no’ approach adopted by too many of the major lenders.”

Many households are paying rents equal to or more than they would pay on monthly mortgage repayments. Credit history and large deposits are the main factors keeping many people from making their way on to the property ladder. Schemes such as this make the property market far more accessible to first time buyers and will be welcomed with open arms by many people looking for alternatives to paying ‘dead rent’.


The annual audit on the UK’s PAYE records has revealed that an estimated 4.7 million people paid the incorrect amount of tax in 2010/11. Later this year, they will all receive letters detailing the amount that they owe or will be reimbursed.

This is not the first time HMRC have been publicly humiliated for taxation errors. Back in September of 2010, it was revealed that a staggering 5.7 million people had paid the wrong amount in taxes between 2008/2010. As a gesture of good will, those with underpaid tax bills of under £300 had the outstanding amount written off. However, this year the government will be enforcing tighter measures to reclaim any outstanding balances.

Worst hit by the latest blunder will be those claiming a state pension for the first time, some 160,000 people with average balances of £600. With outstanding balances of £50 or more being pursued this time around, there will be very little anyone can do to avoid these unexpected repayments.

Of those claiming a state pension for the first time, many were unknowingly continuing with their full personal allowances, meaning that underpayments in excess of £1000 were accumulated over the course of the year. Unfortunately for them, this will be deducted from an already meagre state pension. Mike Warburton of accounting firm Grant Thornton says, “I have a particular concern about pensioners, not simply because many would find it difficult to pay the tax, but because they are often caught out with underpayments”.

On the up side, a spokesperson for HMRC announced that a new computer system is now in place meaning that there should be fewer errors in the future. We shall have to wait and see.


According to consumer research group, Markit, families are continuing to feel the pinch of the recession with consumer finances deteriorating at an alarming rate. It is reported that the rate at which consumers’ finances are deteriorating is at its fastest since 2009.

The recent report states that 36%of UK households were in a worse financial situation in May than in April, whereas only 6% claimed they were in an improved situation. As a result, many households have had to resort to using savings and taking out loans just to keep up with the increased living costs. 29% of the households surveyed claimed to have spent more in June and around 50% of all households expect the situation to worsen in the coming months.

83% of households are bracing themselves for further increases in living costs as a result nof increased inflation. The current rate stands at 4.5%, more than double the Government’s target level of 2%. Increased energy costs and fuel prices are largely to blame. 20% of households resorted to credit cards or bank loans in May, the highest rate in over two years.

Job security is still an area for concern, the report suggests. 22% of people felt that their jobs weren’t secure whilst 6% felt more confidence. The East of England has been worst hit by falling house prices with all other regions also reporting drops, excluding London.


Housing charity Shelter has revealed statistics on home repossessions in the UK. The findings identified several areas as ‘repossession hotspots’, with Corby in the East Midlands recognised as the area at most risk. It is estimated that 7.56 people in every 1000 will lose their homes.

Other key areas where homeowners are considered to be at risk of having property repossessed include Harlow, Manchester, Dagenham, Knowsley and Peterborough to name but a few.

The number of repossessions in the UK saw a dramatic increase at the beginning of 2011 whilst the number of jobless increased by 3.3% in local authority areas. Unemployment levels and the number of repossessions are undoubtedly linked; areas identified as having low levels of repossession have an average unemployment rate of just 1.4%, less than half of that seen in high-risk areas.

It has been reported that in excess of 13,000 applications for repossession orders were made between January and March of this year. This figure looks set to rise as unemployment is forecasted to increase towards the end of the year as a result of public sector cuts. Experts are predicting a staggering 45,000 homes will be repossessed in the next 12 months.

Lenders have been subject to a great deal of criticism for lending irresponsibly although many fingers would point towards loss of income as the main cause of the problem, a factor out of the hands of the lenders. This, combined with rising inflation rates, increased living costs and static wages will mean the situation can only worsen.


Anyone who has had the misfortune of dealing with bailiffs as a result of Council Tax arrears will no doubt understand what a distressing ordeal it can be. Many of us at some point or another have been left in the red and have been unable to keep up with council tax payments for one reason or another. It is extremely important to keep up with Council Tax payments but in some cases, non-payment is simply unavoidable.

Before you know it, debts soon mount up and bailiffs are brought in to collect the debt. However, many people are unaware of their legal rights when it comes to dealing with bailiffs. There are many complex laws surrounding bailiffs but there are a few main points that should always be remembered.

1 – You don’t have to let bailiffs into your home. As long as you haven’t allowed entry in the past to collect for the current debt, you don’t have to allow entry to the bailiff, regardless of what they tell you. Nor can they forcibly enter your home. Keep windows and doors locked otherwise they can enter through them legally. Contrary to popular belief, bailiffs cannot get the police, locksmiths or nay other means to help them break in. If police do attend, they are there purely to keep the peace.

2 – If you do allow entry to the bailiff, there are only certain goods that they can take. It is not permitted for them to remove items that are rented or items that belong to someone else. They cannot remove goods that are essential for your employment, business or vocation (although this is quite vague and most bailiffs will have a different idea of what this entails). If you think that goods have been wrongfully taken, you should lodge a formal complaint against your bailiff.

3 – Every bailiff should have certain documentations such as photographic ID and written authorisation from their visit from the council. If they fail to produce either of these, do not allow entry under any circumstances.

4 – To avoid removal of goods, you should contact your bailiff and arrange monthly repayments to cover the amount of the debt. You should make sure that the repayments are a realistic and affordable amount. Failure to keep up with repayments could worsen the situation.

5 – Contact your local council with a proposal for monthly repayments. In some circumstances, councils will take the account back from the bailiff and you can repay them directly.

6 – bailiffs will charge for visits to your home and the amount will be added to your outstanding debt. Try to avoid this by resolving the situation as quickly as possible. By law, creditors must give 14 days warning before a bailiff is assigned to an account. In this time, contact the council and arrange repayments to avoid extra charges. For council tax arrears, bailiffs can charge a maximum of £42.50. If the amount exceeds this, you must dispute it.

There are ways of resolving debt situations other than bowing down to the bullyboy tactics of bailiffs. There are plenty of free resources available to find out more about how to deal with bailiffs.

However good you think you are with money, there are several easy mistakes that people often make, resulting in money being wasted. We’ve compiled a list of just some of the ways that people (unknowingly) waste money every day. Hopefully next time you reach for your wallet, you’ll think twice about fluttering away your hard-earned cash.

1 – Grocery shopping on an empty stomach: We’ve all done it at some point, filling the shopping trolley with lots of things that we don’t need, just because we’re hungry at that time. Have a meal before you go and concentrate on buying only the essentials.

2 – Not bothering to find the best deal: Unfortunately, not everyone is blessed with lots of spare time to locate the best deals…but that’s no excuse. Unless it’s absolutely vital that you buy the item there and then, bide your time. Check online and find where the best deals are. The savings will soon add up.

3 – Buying something just because it’s on sale: A good rule of thumb; in most cases, if you wouldn’t have considered buying it at full price, don’t buy it just because it’s discounted!

4 – Paying a dubious bill or added charge without questioning it: Most people keep mental tabs of how much they expect to pay on bills, however vague these might be. If you open a bill and there’s an unexpected charge or the amount seems higher than usual, the chances are that something’s wrong. Make a call and find out exactly what you’re paying for before you make any payment.

5 – Calling 0845 from a mobile: Sometimes, there’s no avoiding it. 0845 numbers always crop up and many of us only use mobile phones. 0845 numbers aren’t included in mobile contract minutes and can cost a small fortune if you’re left on hold. Most companies have numbers to call from overseas. These will quite often be local numbers and there’s nothing stopping you from using that number and using your monthly minutes.

Following up on an earlier post about the Olympic Games ticket farce, it has now emerged that many ticket holders could be paying off mammoth Olympic debts for up to 20 years from now. It was revealed that the average spend on tickets was a staggering £1,250 and a good proportion of those ticket sales were made on credit cards.

Olympic Games tickets have already caused a quite a stir in the headlines over the past few months and have been subject to a great deal of criticism because of their hefty price tags and the questionable fairness of allocation. However, it has come to light that many ticket holders will bear the brunt of the event long after the Olympic flame leaves the city of London.

According to uSwitch.com, the average ticket spend of £1,250 could more than double, if paid for on a credit card and only minimum monthly repayments are met. According to statistics, by the time the opening ceremony takes place, consumers will have racked up over £300 in interest. It is estimated that these debts will take in excess of 20 years to pay off and will end up costing the consumer in excess of £1,500 in interest.

The most expensive tickets are for the closing ceremony and can cost anything up to £2,012. Add this amount to the same credit card and the consumer could expect to incur costs of around £500 each year in interest alone on the average credit card. And this isn’t just the media’s usual scaremongering tactics; it’s actually happening.

Stephen Hunt, an insolvency practitioner (ironically) from Hertfordshire, managed to secure £11,000 worth of Olympic tickets after bidding for £36,000 worth. Since learning of his successful ticket application, Mr. Hunt has had to drastically increase his credit limit, landing him firmly in the red. He claims that he is willing to ‘scrimp and save’ in order to witness the sporting event.

To add insult to injury, ticket holders won’t actually find out which events they have tickets for until the end of June.


For many people, a credit rating can be the bane of their lives. But what is it, who decides it and what implications can this elusive score have on your life?

Credit rating is the score given to an individual that gives an indication to lenders as to how likely the borrower will be able to keep up with repayments. Obviously, this is important information to the lender, but this is by no means the ultimate be all and end all when it comes to approaching a lender.

Credit ratings are used when companies assess whether someone is eligible for taking out a loan, mortgage, store card, credit card, mobile phone contract, car insurance etc. The list is endless. Most of us will have had our credit ratings checked by a third party at some point, but perhaps were unaware.

IN the UK, there are three main bodies that hold information about our credit history. They are Experian, Equifax and Call Credit. Each of these credit agencies gather various pieces of important information to sell on to lenders in order for them to predict our financial behaviour when lending. So, what information do these agencies have about us?

Credit reference agencies take information largely from past credit accounts. This gives them vital information such as name, age and address. They also have access to information about when your credit report has been looked into by potential lenders. Although they do not hold information on whether the application was successful, it could be quite obvious that you have been denied if there are a number of checks over a short period of time. Each credit report check stays on the report for up to two years.

Details of your current account provider will be included on your file but information is limited. They can provide relevant information, such as if you’ve entered into an unauthorised overdraft. In addition, public record information can be applied to your report for up to six years, including bankruptcy, county court judgements and property repossession.

There are countless myths surrounding credit ratings such as the existence of a ‘credit black list’. In reality, each credit reference agency scores people differently and this score is just one factor that is considered when ultimately deciding whether you should be eligible for borrowing.

If you do find yourself being refused credit, there are ways to remedy the situation, but it will take time. The best place to start is to check your credit report with the various agencies regularly, perhaps once a year, so you know exactly what position you’re in. Go through your details with a fine-toothed comb and weed out any mistakes that could be detrimental to your report. Make sure you are on the electoral register. If you fail to sign up, you will find it extremely hard to get credit anywhere.

If you have no credit history you should start now. Find a good deal on a credit card and use it wisely. Make payments on time and always stay within your credit limit. This is also a good way to boost a poor credit rating, but the most obvious and effective method by far is to reduce your debts.

Many people struggle to get by on their salaries. Living costs, taxes, mortgages or rent can soon mount up and often exceeds the amount that is earned. This is where the problem of debt comes in. Debt isn’t always the result of people living extravagant lifestyles and failing to live within their means. For many people, working on minimum wage simply doesn’t cover monthly outgoings.

However, many people are unaware that government help may be at hand, depending on your circumstances. For those on particularly low incomes, support might be available. As you might expect from the social security system, applying for support can be extremely complicated and it can be difficult to determine who exactly is eligible for support and who isn’t. Thousands of households that are entitled to support don’t claim it, simply because they are unaware of the facts.

Income support is only eligible for those under the state pension age and over 18 years of age. People over the state pension might be eligible for State Pension Credit and in exceptional cases, 16-17 year olds may be considered for support. Entitlements are strictly restricted to UK residents. UK residents recently relocated from overseas may find it difficult to apply for support.

Eligibility is essentially determined through the amount of income you receive. This includes benefits, earnings and capital. Generally, claimants must work less than 16 hours per week and have no more than £16,000 in savings.

It is strongly recommended that you check regularly as rules and regulations change as often as people’s circumstances do. If you are unsure whether you could be entitled to income support, you can contact your local Citizen’s Advice Bureau, or visit the Directgov website.

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