Worry over pensioners needing debt help

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Debt freeDebt has no boundaries and shows no respect for age and so it is not surprising that pensioners have debt. What is concerning however is that the amount of debt that pensioners owe is rising. A recent survey showed that as many as two out of every five pensioners find themselves in a position where they are struggling to meet their debt commitments.

To put the figures in perspective, twenty percent of pensioners owed over forty two thousand pounds which showed a significant increase over the previous year’s figure of thirty six thousand pounds. Increasing levels of debt is a more acute problem with pensioners as the vast majority of them are working on relatively fixed incomes that they do not have the potential to increase to any great degree. This means that in order to service their debts pensioners have to cut back on spending elsewhere.

Types of debt

The types of debt being incurred are very similar to the general debt profile of everyone else, with the main ones being loans, credit cards and mortgages. Credit cards cause a particular problem because of the high interest rates and once into the cycle of not paying off each month, it becomes very difficult for pensioners to get out of their credit card debt and unfortunately the debt tends to rise.

When you add to this some of the additional financial difficulties pensioners have faced in recent years such as declining returns on savings, reductions in pension incomes which for some has been severe and the more general problem of investments that have either failed to meet expected returns or have failed altogether, there is a cumulative and compound effect that can easily exacerbate financial problems and lead to serious debt problems.

Mortgages are also a specific problem for pensioners with more than one in ten worried about mortgage debt, describing their mortgage liabilities as a heavy burden. Extended term mortgages sold in recent years are also a part of the problem which pushed back the timescales within which people would normally have paid their mortgages off. There is also the looming problem of interest only mortgages which many pensioners have, meaning that whilst they make their mortgage payments each month, the amount that they owe does not reduce and this will have to be repaid at some point.

Popular solution

This has meant that many pensioners are pushed to enter into equity release schemes, which enables them to free up equity they have in their property which is then used to help them get out of debt and pay off their financial liabilities. Sales of equity release plans continue to rise as more and more pensioners use this as a way to clear their debt.

Professional debt advice

Seeking professional debt help and advice can sometimes be difficult for pensioners as there is a whole range of emotions they go through and many feel they should know better and should never be in the debt situation in the first place. This in an illogical and overly critical way to look at things as debt affects everybody and doesn’t discriminate and in actual fact there is an argument to say that pensioners’ incomes have been more severely affected than others.

So the message to pensioners is that you are not alone in your problems with debt and there is help available so make use of it and contact a professional debt advisor if you’re experiencing any kind of difficulty.

Will an IVA Solve my Debt Problems?

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Will an IVA Solve my Debt ProblemsAn IVA (Individual Voluntary Arrangement) is certainly a debt solution that works. Many people throughout England, Wale and Northern Ireland make use of the IVA process every year to resolve their debt problems. So it is most definitely a tried and tested option. However you need to make sure it is the right option for you. Fining out if an individual voluntary arrangement is right for you is not about trying an online ‘debt calculator’ or some other gimmick, it’s about speaking directly with an experienced debt advisor, discussing your problems in detail and finding the best solution.

Is an IVA right for you?

It really all depends on the details of your debt and your own personal circumstances. All debt problems are different and each difference can mean a different solution.

An IVA is a formal debt solution where you enter into a legally binding contract with your creditors. You have to be insolvent which basically means that you are unable to repay the debt you owe and your debt is greater than your assets. So it is not a decision to be taken lightly and you need to be fully aware of the facts and the implications on both a financial and a personal front. This is why expert debt advice is so important.

The IVA process has been devised and constituted as a legal process to help people with serious debt problems resolve their situation and make a fresh start free of debt.

How does an IVA work?

The IVA process, whilst serious, is relatively straight forward. The first thing to do is to seek experienced debt advice to enable a debt advisor to fully assess your circumstances in order to find out if an IVA is the right solution for you and whether you qualify for it.

If that is the case you would then formally apply to be considered. As this is a legal process a licensed insolvency practitioner must be used to administer the procedure. As part of the proposal you must agree a figure that you can afford that will be repaid to your creditors each month and this is usually done over a period of five or six years. After this period is over the rest of the unsecured money you owe is written off.

The proposal of how much will be repaid and how much will be written off in the IVA debt is put to your creditors and at least seventy five percent of the creditors holding the total debt must agree to the proposal.

If the proposal is agreed it can then be registered as an IVA and you then make a single monthly payment to the IVA Supervisor who then distributes this to your creditors in the agreed proportions. As long as you abide by the agreement your creditors cannot take any legal action against you and you should have no further contact from them.

How do you qualify for an IVA?

For all the information you need on this you should speak to an experienced debt advisor but in broad terms the qualification criteria is as follows.

You must be a resident of England, Wales or Northern Ireland and you need to be insolvent. Although you really need to have total debts of at least £15,000 IVA’s are processed at debt levels as low as £5,000. The IVA must be approved by your creditors. You also need a regular income so that your creditors can be confident that you can make the agreed payments.

The Psychological Effects of Debt

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The Psychological Effects of DebtThere is no doubt that money permeates into every aspect of our lives. In fact it’s difficult to think about how we would operate without money and the means to spend it such as credit cards and the use of debt. The amount of money we have not only determines what we can and cannot buy, it also dictates where we live, where we can go, the types of social circles we have and even the direction of our future.

Those who have money in our society are portrayed as having absolute freedom and appear to have it all. Whether or not that is true does not negate the fact that we need money to live, and those who are secure in that aspect are free to enjoy life to a fuller extent. Conversely, those who are constantly worried about paying the bills seem to be always bogged down and distracted by the relentless pursuit of staying on an even keel.

Differing ways of handling the problem

While most people at some point in their lives have faced financial difficulties, everyone handles these situations in a different way and with differing degrees of emotional response. Many who find themselves with money problems react with denial and choose to ignore the state of their financial landscape. This is a major reason why so many people find themselves in overwhelming amounts of debt. The irony of this situation is that debt is usually taken on to relieve anxiety over money, yet at the same time it works to cause it.

Debt can be socially and emotionally debilitating, especially if we are unable to keep up and stay on top of it. It can ruin marriages, friendships, career opportunities and our own sense of self-worth. When people find themselves in the position of being unable to pay their debts, they can begin to feel powerless over their situation and it impacts their viewpoint of their own self-efficacy. These situations all cause a damaging toll on confidence which then seeps into every area of our lives.

Positive effects of taking action

On the flip side, taking action on our debt and resolving the problems seems to have the exact opposite effect and there is a wealth of research is to support this point. Looking for debt advice can be an important part of this process and finding help with debt can be easier than people may think. When we improve our financial situation and resolve our debt issues we can suddenly feel like a contributing member of society who can stand alone and take care of ourselves. Being on a sound financial footing allows us to focus on other aspects of our lives which in turn lead us to feel more at ease with our role in society. This is easy to see because if we are able to focus less on crushing debt, than we are freer to focus on life goals.

Being able to accomplish more in life is of course going to increase our self-esteem and lead to a more positive outlook in life rather than the worry and stress of debt which can lead to a self-depreciating cycle and consequent psychological issues such as depression. Keeping our debt under control will help us towards living responsible, autonomous lives. Whether you’re just out of University or getting ready to retire, it’s always a smart idea to keep a sensible control on your debt. A little vigilance now is likely to save you pain in the future.

Face up to your debt problems

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IVAFacing up to our problems is an issue that many of us struggle with. Even though we know that it is important and sometimes urgent and even critical it is all too easy to put off doing something about it or to disregard it in the hope that it will go away. But it seldom goes away and that is certainly the case with debt when it becomes a problem. When a debt problem knocks on your door it is likely to be there to stay until you take action to resolve it.

Acknowledge the problem

The first thing we need to do if we have a debt problem or even think we have a debt problem is to acknowledge it and then decide on the best way of resolving it. A simple and effective way of finding a solution is to seek professional debt advice. This is sometimes the last thing people think about doing for some reason. If you have problems with your health the first thing you think about is to seek professional help and advice from your GP or from the hospital. And so likewise with debt related issues we should consider seeking help from a professional as there are good ones out there, you just need to have a look.

Get the right advice

Many people who find themselves in debt are not necessarily aware there are organisations that provide practical debt help and advice which can get them get back on track with their finances. These debt advice organisations provide a variety of debt solutions that are proven to help people resolve their problems and improve their financial situation. By taking your problems to a professional rather than a friend or family member, you will be giving yourself a much better chance of resolving your issues. The important part of this however is to ensure you take the action to get the advice and make use of it.

Mental distress

When people experience debt problems they can go through emotional and mental turmoil and feelings of isolation and inadequacy are common which can even lead to depression. Getting the debt advice you need and seeing that there is help available and that there is a solution can dramatically improve your outlook on life. It can often feel like a load has been taken off your shoulders. Dealing with debt can be stressful but by taking the right action you can minimise this and avoid the mental distress that many people experience. One of the biggest mistakes you can make is to allow your health to suffer whilst working through the problem.

Range of debt solutions

There is now a wide range of debt solutions available depending on the type of problem and your particular circumstances. This includes debt arrangement schemes, debt management plans and insolvency solutions such as an IVA debt solution (trust deed in Scotland) and bankruptcy.

Different debt solutions achieve different things so for example getting an individual voluntary arrangement (IVA) in place can enable a debtor not only to reduce their debt repayments but also to write off their unaffordable debt.

Learn from your mistakes

In the course of receiving what can be extremely valuable advice you should think about what caused the problems in the first place and work out a way of ensuring the same thing doesn’t happen again. Think about how to change events around you by focusing on improving spending habits, saving money, not incurring debt and generally managing your finances better. Sometimes the only way to improve your situation is to make the hard decisions.

Debt problems need immediate attention, so don’t delay

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Debt problemsDebt problems come in all shapes and sizes and they sometimes creep up on people. On many occasions it can be sometime after the problem has started before people realise they actually have a problem. It is also the case that people actually find it hard admitting to the problem in the first place and they let it sit sometimes in the hope that it will go away.

In addition to this there are many other reasons why people either won’t face up to their debt problems or just don’t do anything about them. Embarrassment is a big factor in this and many people experience feelings of shame and even the concern of being perceived as a failure because they have a debt problem.

Fear is another issue that is common when people experience financial difficulties and that fear can relate to a number of things to include a general fear of the unknown as for many people this will be their first experience of debt related problems and it can be a big unknown. We also know that people have a genuine fear of seeking advice and are worried about the reaction they may get or how they may be treated in the course of disclosing their debt problem.

Hiding the problem from family and friends is also a very common reason why people try to brush their debt problems under the carpet and hope they will go away. The perceived embarrassment and loss of face in fact can often be the main reason that people don’t take the action they should to address the problem.

The reality of modern society

The reality of the age we live in is that credit and debt are a fact of life and it is also a fact of life that people experience debt problems for a variety of reasons ranging from a significant change in circumstances such as losing your job through slowly getting in over your head to the extremes of reckless debt management.

The point here is that you are not alone and many people every year suffer serious debt problems throughout the UK many of which require expert debt advice and a formal debt solution to be put in place. The reasons for the debt problems are wide and varied and people’s intentions to resolve their problems also vary significantly.

However it’s important that you are realistic about what you can do to actually resolve the situation as the financial and emotional impact of prolonged serious debt problems can be severe.

Debt problems only get worse if ignored

Don’t let your debt problems sit unresolved as the likelihood is that they will only get worse and make things more difficult for you. The first step on the road to resolving your debt problems is to take action. Taking action may consist of sitting down in the first instance and working out what you owe and to who. This gets the ball rolling and gets you focussed on the problem.

It is always a good idea to seek professional debt help as experienced debt advisors are up to date with the latest and best solutions available for the different types of debt problems that people encounter. With some, the debt advice they give is free and as long as you deal with the professional organisations you should find the service to be of a high quality, courteous and confidential.

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