Latest Debt News

10/04/2008 - Repossessions Increase

Repossessions of homes in the UK could double and house prices could drop by as much as ten per cent within the year, according to new figures.

Findings from the International Monetary Fund (IMF) showed that homeowners could face a financial squeeze as fixed-rate deals come to an end and rates increase by one to two per cent.

Lenders and the government were blamed for not doing enough to appreciate the potential impact of the past decade of debt bingeing.

According to the Daily Mail, the IMF's Global Financial Stability Report, stated: "Homeowners here are particularly vulnerable because cash-strapped banks are being forced to rein in the supply of credit.

"In the United Kingdom, a sizeable share of mortgage loans face interest rates that will reset to higher levels this year, just at a time when lenders are tightening standards, adding another source of stress," continued the document.

Meanwhile, chancellor of the exchequer Alistair Darling said in an interview with Radio 4 this morning that he was sticking to his economic forecasts of growth of 2.25 per cent despite the IMF predicting only 1.6 per cent.

08/04/2008 - Debt can land up to one million families in court

Up to one million families could face court judgements due to the unpaid debts made worse by the purse-tightening effects of the credit crunch, financial experts have predicted.

Over 2,700 individuals are expected to face court proceeding after failing to keep up with payments on utility bills, loans and credit card payments, showed research from accountants KPMG.

Mark Sands, a spokesman for the company, said his firm anticipates a million county court judgments to be issued this year, up from nearly 800,000 in 2007.

"Everything points to more pain for the consumer, which will translate into increased county court judgments over the course of this year," he continued.

This figure is nearly double the 538,383 judgments recorded in 2004 and would be the highest since the 1,042,720 in 1996.

According to the firm, county court judgements are often followed by visits from bailiffs, who can take property in order to enforce the courts' decisions.

Meanwhile, the Liberal Democrats estimated some 60,000 families are at risk of having their home repossessed because they cannot keep up with rising debt costs.

08/04/2008 - Credit card companies withdraw

By cutting the spending limits of their customers, credit card companies have withdrawn up to £3.1 billion, new research has revealed.

Findings from MoneyExpert has shown that up to 1.8 million credit card customers have had their limits reduced in the past six months by their provider - with the average reduction being £1,600.

Sean Gardner of MoneyExpert.com, said that struggling consumers might contemplate resorting to credit in a bid to make ends meet but they should not rely on it as a way of keeping spending.

"Credit card companies are becoming stricter in who they lend to and the amount of money their customers can borrow," he added.

MoneyExpert warned that consumers who go from card to card "without making a dent in the amount you owe" should be worried about their finances and look into setting up a repayment plan if one is not already in place.

Meanwhile, recent research from the firm showed that up to 26.3 million consumers are planning on cutting back their spending this year due to worries about over-spending.

04/04/2008 - Consumers need to be sensible

Consumers who choose to consolidate their debt through a loan need to be sensible to benefit, one financial expert has warned.

Fool.co.uk said that taking out a loan to pay off debts can be a good option but if consumers are not disciplined, they could face landing themselves in further debt.

David Kuo, head of personal finance at Fool.co.uk, said that the average size of a loan is £7,000 and four out of every ten people take one out to pay off their debts.

However, three out of five go on to run up further debts, he said.

"So while, consolidation loans can be a welcome lifeline, you need great discipline to stop it from being a noose around your neck," Mr Kuo concluded.

According to new figures from the Citizens Advice Bureau debt problems are on the increase.

The statistics showed that 73 per cent of all bureaux across England and Wales reported that they dealt with 215,000 new debt problems in the first two months of 2008 alone.

03/04/2008 - Above-average incomes are "struggling to cope"

Households with above-average incomes are struggling to cope with increasing strains on their finances, according to new research.

Findings from a study by Axa revealed that over 70 per cent of households with incomes over £30,000 per year will be taking steps to cut their spending.

Up to 15 per cent of households have had to get a second job or send a non-working member of the family to a job, according to the research.

A further one in five will either stop saving or reduce pension contributions due to concerns over the credit crunch.

Steve Folkard, a spokesperson for Axa, said it is no wonder that households with above-average incomes were finding it difficult in the current financial climate.

"A typical family in Middle Britain may have a higher than average income but millions are weighed down by high lifestyle costs and face tough choices as the strain on their finances takes its toll," he said.

Meanwhile, Axa research from March showed that many spenders were leaving it until they were in their 40s and 50s to start financially planning for their retirement.

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