Skip to main content

Posts

Showing posts with the label debt

The "poverty premium"

In Scotland the poorest households are paying £1,300 a year more than their wealthier neighbours for everyday goods and services. Thereport by a coalition of churches andcharities draws on a year of grassroots research conducted in Glasgow and charts the so-called "poverty premium"; the high prices charged for everyday essentials including food, fuel, finance, furniture, and even funerals in the city's poorest neighbourhoods.
Niall Cooper, Director of Church Action on Poverty, said: “It shouldn’t cost money to be poor. It is unacceptable for companies to exploit their most vulnerable customers by charging them the highest prices.”
Peter MacDonald, leader of the Iona Community, said: “It is clear from this report, consistent with several others, that we are not ‘all in this together’. The poorest among us are paying the price of austerity. This is morally and economically just plain wrong.”
Martin Johnstone, chief executive of Faith in Community Scotland and secretary of…

Bankrupt Scots

The recent downward trend in the number of individuals and companies going bankrupt in Scotland has reversed dramatically in recent months, official figures show.

In the first quarter of 2013-14 (April to June) personal insolvencies were up 14.7 per cent and corporate insolvencies were up 28.7 per cent.

Bryan Jackson, business restructuring partner with BDO LLP, said the rise in payday and short-term lenders points to "serious financial problems among thousands of Scots".

Mr Jackson said: "Following recent falls, the increase in the number of personal insolvencies in the second quarter suggests that the pent-up indebtedness of many individuals has burst through.There is little doubt that many individuals have been living from month to month, or week to week, simply feeding the interest on their debts rather than reducing the debt itself. Until now, this has delayed some from falling into insolvency, but this quarter's figures suggest that their financial situation …

Home security?

Just a single percentage point rise in interest rates would be enough to force nearly 10% mortgage-holders to take drastic action so they could afford debt payments, such as cut essential spending or earn more income (for example, by working longer hours or a second job ) in order to afford their debt payments the Bank of England has warned – while a two point increase could affect those holding around 20% of mortgage debt.

Bank Deputy Governor Paul Tucker said: "If interest rates were to rise without an improvement in income, the debt servicing burden would increase."

Struggling Scots

It is not independence most Scot are struggling for - it is to pay their bills.

One in six Scots households are raiding their savings to pay for day-to-day living expenses as they struggle to cope with higher utility, food and fuel bills in the face of another year of frozen wage packets. Almost half of people have admitted in a new poll to regularly delving into their savings last year, with one-third unable to put any money aside in 2012.

 40% of private-sector workers were given a freeze in their 2012 pay settlements. 250,000 council workers are due to see their wages go up by just 1% in April, ending a two-year freeze.

Citizens Advice Scotland  chief executive Margaret Lynch said: "This report shows the grim reality of what life is like for Scotland's families in today's economy...The economic equation is simple: basic living costs are going up all the time while household incomes are frozen, or falling. So people are struggling just to pay for the essentials …

A bank-rupted new year for many

60 Scots a day will become insolvent this year. The total is the equivalent of almost 400 people going bust a week – or about 20,000 this year. That rate has more than doubled within a decade and increased nearly five-fold over the last 15 years. In addition, there are believed to be hundreds of thousands of others in Scotland mired in debt because they can only afford to meet interest payments.

Bryan Jackson, accountancy and business advisory firm PKF’s corporate recovery partner, said the economic slump meant the “very high” level of insolvencies was not expected to come down for some time. He said:“With no improvement in the economy, employment insecurity rife and rising living costs, there is little sign of this level of personal insolvency reducing over the next three to four years. This means that another 80,000 to 100,000 Scots will go bust in the next four to five years. Given that personal insolvencies are at the extreme end of financial distress, it should be noted that ther…

Your golden years - thats a laugh!

One in eight Scots will retire this year saddled with debts, research has claimed. The study found that 18% of those due to retire this year in the UK will be in debt. On average, those planning to retire this year with debts will face repayments of £260, around a fifth (19 per cent) of their expected £1290 a month income.

The average amount owed by those wrapping up their working life is around £38,200, with mortgages and credit cards making up the bulk of the debt. The figure is £5000 higher than the year before. The study found half of those with debts still owed money on their home loan and more than half (51%) were struggling with their credit card bills.

Citizens Advice Scotland said older Scots were saddled with "staggering amounts of debt". Its own research, published last year, found that the average unsecured debt, excluding mortgages, was £17,767. Susan McPhee of CAS said: "That's a staggering amount of debt to service, and still keep warm and put …

a new year of debt

Hundred of thousands of Scots are spiralling into debt by turning to payday loan companies or other expensive providers of credit to keep a roof over their heads, a survey has found.

The number of people turning to the much-criticised operators, whose interest charges can quickly rack up to several hundred per cent, is approaching one million across the UK, while a further six million are using an overdraft, credit cards or other loans to keep a roof over their heads, according to housing campaigner Shelter.

Shelter Scotland spokesman Gordon MacRae said: "These findings are extremely worrying and show that millions of households are desperately struggling to keep their homes. Payday loans may seem like a quick fix to pay for housing costs but with interest rates of up to 4000% annually they are completely unsustainable and can quickly lead to snowballing debt, eviction, repossession and ultimately homelessness...Every two minutes someone in Britain faces the nightmare of losing the…

A prosperous New Year ?

Accountancy firm PKF has predicted more than 20,000 people will be declared insolvent in 2012. The report claimed even relatively affluent Scots could find themselves unable to cope with the downturn. PKF also predicted an average of 25 Scots firms a week would go bust this year.

Bryan Jackson, PKF corporate recovery partner, said: "...the fluctuations in the economy, the difficulties in the eurozone, and the clear impact of public sector cuts is increasing the number of Scots facing financial difficulties." He added: "The dramatic rise in the number of more affluent Scots being made bankrupt is a further sign that the after-effects of the recession are spreading among all sectors of society, with the result that I believe all personal insolvencies will continue to rise and remain at high levels for several years to come."

Insolvency trade body R3 Scottish council member John Hall said : "Many Scots are in a situation where they simply cannot survive any …

Paying the Price

The number of people going bankrupt has seen its biggest quarterly rise in three years, up 25% on the previous quarter.

Official figures from insolvency supervisors Accountant in Bankruptcy (AiB) showed 5,319 personal insolvencies in Scotland in the first quarter of the current tax year. It is the biggest increase since 2008.

Citizens Advice Scotland chief executive Lucy McTernan said many Scots struggling with heavy debts were choosing bankruptcy as the "lesser of two evils".
She said, "If you are struggling with debt which has become unmanageable, and you really can't see a way out of it, then bankruptcy can be your only realistic course of action."

Experts warned the increase is only the "start of a trend" in the months ahead as the full impact of spending cuts and a stagnant economy start to bite.

Bryan Jackson, corporate recovery partner with accountancy firm PKF, said: "This dramatic rise in the number of personal bankruptcies in Scot…

Doom and gloom

Despite record low interest rates, falling by more than one-fifth since in 2008 the cost of owning and running a home in the UK has risen over the last year.

Bank of Scotland research found that soaring gas, electricity and main-tenance costs were the main causes of the rise. It showed that the average annual cost associated with owning and running a home rose by 1.4%, or £116, from £8525 in March 2010 to £8641 in March 2011. Utility costs were up by £102 on average and maintenance costs by £33.

Bank of Scotland housing economist Suren Thiru said: “Household finances remain under pressure with the significant drop in mortgage payments since 2008 mostly offset by increases in other household bills. Rising utility bills have been a clear driver behind this, along with increases in maintenance costs. The current strain on household finances is particularly concerning at a time when earnings growth remains weak.”

Another study revealed over-50s are suffering a drop in their quality of life a…

A warning from Shelter

Scots are having to work longer hours and even move in with friends to help make ends meet.

Shelter estimated that 9% of people in Scotland have had to increase their work hours or take on a second job, compared with the British average of 7%.

Some 4% of respondents in Scotland said they had moved in with family or friends, double the 2% average across Britain.

The survey of 2,234 people across the UK also indicated that around two million people paid their rent or mortgage with credit cards over a year. The charity said the proportion was equivalent to about 5% on average in Scotland and across Britain.

Graeme Brown, director of Shelter Scotland, said:
"A reliance on high-interest options such as credit cards to pay rent or a mortgage is a highly dangerous route to go down and is known to contribute toward uncontrolled debt, repossession or eviction and, eventually, homelessness. It is also very worrying that thousands of people in Scotland are being forced to move in wit…

A bankrupt society

A record number of Scots will be made bankrupt in 2011, according to accountant and business adviser PKF. Accountancy firm RSM Tenon also predicts that personal insolvencies in the UK will set new records in 2010 and 2011.

PKF predicts that final figures will show about 22,000 Scots were sequestrated (the Scottish term for bankruptcy) or took out a Protected Trust Deed (PTD) in 2010, or 425 a week, and that this year will see even higher levels of personal insolvency. Personal bankruptcy during 2011 will be impacted by the Comprehensive Spending Review (the full impact of the CSR is yet to be felt) , which is likely to result in higher levels of unemployment among public sector employees, and potentially by the effects on mortgage-payers of rising interest rates.

“Many people are only able to cling on to their homes as long as their mortgage payments are being kept at an historicallly low level due to the 0.5% base rate. Once interest rates start to rise, I believe we will beg…

debt rising

Research contradicts comments made by Lord Young, the Tory peer who resigned as an adviser to David Cameron after saying "the vast majority of people in the country today have never had it so good" since the Bank slashed rates to 0.5pc.A study, conducted by NMG Financial Services Consulting for the Bank of England , shows that almost half of all households are concerned about their debt – largely because soaring credit card rates are eroding savings from lower mortgage costs. Rates on credit cards have risen from 17.8pc in November 2007 to 18.7pc, according to the Bank, despite a cut in base rates from 5.75pc to 0.5pc.

In addition, NMG notes that 48pc of all households are on fixed-rate mortgages, "paying about £680 a month in comparison with about £530 a month for those on trackers or variable rates" for equivalent sized mortgages. Households with high loan-to-value (LTV) mortgages or renting are struggling the most, the survey says, with the proportion resorting t…

Families live in fear of losing home

More than half a million Scottish families are heading into winter weighed down by fears about keeping a roof over their heads, a new study has revealed.Research by Shelter showed thousands of people face serious problems trying to stay afloat.

The charity found that more than one in three homeowners are worried about keeping up mortgage payments, and one in six are already struggling to find the money each month.

“We know from the cases we see every day that it only takes one problem, like a bout of illness, or redundancy, to tip people over the edge and into a spiral of mounting debt and arrears.” Shelter Scotland director Graeme Brown said

One in every six mortgage holders across the UK was actively struggling to pay a mortgage.

Its always the poor who pay

The poorest people in Scotland are being penalised by unfair overdraft charges, according to a report by Citizens Advice Scotland.

It said the banks' poorest customers were subsidising the richest by paying a higher part of their income in fees. Despite talk about being more responsible, banks were still imposing heavy charges on vulnerable people.

Citizens Advice Scotland chief executive Susan McPhee said "...the people who are worst hit by these charges are those who can least afford to pay them.Indeed these charges mean that the poor are actually subsidising the rich, like a reverse Robin Hood effect."

One pensioner was charged £66 for going overdrawn by 60p.

buddy , can you spare a dime

A new study has revealed the top five debt laden areas in Scotland.
For the Anderston area, nearly 20% of adults had debts in excess of £15,000. The Calton area was next, with 17.4% of adults carrying debts of more than £15,000. Dunfermline South and Greater Pollok both had 16.5% and Cumbernauld North had 16.4%.

Half a million Scots have debts of more than £15,000 – half of the average salary.

Another report describes how more than a fifth of Britons lie to their partners about the extent of their debts and almost a third keep other family members in the dark over the amount of money the owe.In Scotland, 27 per cent of debtors in Aberdeen keep their debts hidden from their partners, as do a fifth of Glaswegians and 13 per cent of those in Edinburgh.

forgotten victims

Charities estimate that more than 8,000 buy-to-let properties could be repossessed in the coming year, with at least 10,000 people being made unexpectedly homeless. In some cases families are given no warning at all, sometimes returning home to find locks had been changed and their possessions out on the street.In one instance a family had to spend the night sleeping in their car, before being moved into emergency hostel accommodation.

Shelter chief executive Adam Sampson said "Tenants who have kept their side of the bargain by paying their rent are being thrown out on to the street because their landlords have defaulted on the mortgage."
Leslie Morphy, of Crisis, said "We risk forgetting that tenants of private landlords are extremely vulnerable to the recession,"

inescapable burden of debt

Up to five million homeowners could be in negative equity by the end of this year if house prices continue to fall, research has claimed Andy Thwaites, director of insight at GfK Financial, said: "The shift to negative equity has the potential to be a mammoth welfare disaster for the nation, particularly when so much of the population has recently relied on the capital appreciation in their home to supplement their lifestyle, consolidate debts and fund retirement.The reality is that if there are further job cuts, the problem will become significantly worse." The average person approaching Citizens Advice for money advice owed £16,971, the organisation said. It would take around of 93 years for people contacting a debt charity for help to repay their borrowings at an affordable rate. "Low income, combined with irresponsible lending, unreasonable debt collection practices and badly informed financial decisions are at the root of many of our clients' debt problems."

Hypocrisy by the banks

I read that David Lloyd, 62, was told he had terminal lung cancer in January 2006, his wife, Annette Edwards, contacted their bank, the Halifax, to let them know of his predicament and that he would no longer be able to work. They applied for a payout on an insurance policy, and for state benefits, but while they waited for the money to arrive they went overdrawn.
The bank and its agents telephoned the couple 762 times over seven months in what they say is aggressive pursuit of the debt . Their daughter, Stefanie Moore, 29, received 60 to 100 phone calls and two text messages .

The couple feel dehumanised .

Yes that what capitalism does to people . Socialist Courier wonders if the banks now in debt , begging for government bail-outs will ever be treated in such a shameles and heartless manner to demand repayment

Profiting from the poor

Consumer Focus said it estimated power suppliers were making up to £550 million a year in extra charges from people on pre-payment meters. Typical customers using the devices were often those on the lowest incomes . Energy firms were using customers who pay for their gas or electricity through pre-payment meters to help subsidise cheaper deals for others.

"The energy companies are making the most money out of those on pre-payment meters and often those are the people on the very lowest incomes." said CF spokesperson

Energy awareness group National Energy Action said pre-payment metered customers paid on average £359 more a year than those with normal meters. This contrasts with the extra annual cost of between £85 and £100 to maintain the pre-payment boxes - a sum estimated by energy industry regulator Ofgem.

An NEA spokeswoman also added: "Once you are in debt you are effectively blocked from switching to cheaper deals."