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Archive for March, 2010
Wednesday, March 31st, 2010
The two main things you need to think about when buying something on credit is how much is the cost of borrowing going to cost you and how long is going to take you till you pay the debt off? The cost of borrowing, the annual percentage rate (APR) on the loan and the length of time (Term) you borrow the money for.
The higher the APR and the longer the term, the more you may have to pay back – and there can be a huge difference in the rates you pay and the overall cost of the loan. At DebtFC based in Scotland we find that many people don’t take into consideration the APR they only look at how much their monthly payment is before deciding if they can afford that new car, sofa’s or whatever.
Don’t be fooled into 0% interest deals as many Scottish salesmen that have used our services have advised DebtFC that the price of the item is hiked up to cover the so called 0% deal.
We would advice:
- Don’t borrow for longer than the life of the item you buy
- Plan ahead and shop around and use the internet comparison sites when choosing products
The examples below shows the effect of APR and term on the cost of borrowing:
£10,000 over 5 years (APR of 7.5%)
Monthly repayment of: £200.38
Interest: £2,022
Total Repayment £12,022
£10,000 over 10 years (APR of 7.5%)
Monthly repayment of: £118.70
Interest: £4,244
Total Repayment £14,244
£10,000 over 5 years (APR of 15%)
Monthly repayment of: £237.90
Interest: £4,273
Total Repayment £14,273
As you can see doubling the APR and the term more than doubles the cost of the loan. An extra 40% loading on the cost of the item.
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Wednesday, March 31st, 2010
If you have been made bankrupt (sequestration in Scotland) but feel you could have avoided it. One reason might be
that you overlooked the petition or the court summons. Or perhaps you offered to pay the petitioning creditor too late
for the court to be notified. In other words, if you are not really insolvent as you can pay your creditors.
Being made bankrupt is a very serious situation to be in.
The sequestration can be recalled but the process is not straightforward and if a petition for recall is to succeed, it is essential to go about it in the right way.
In most cases the debtor petitions for recall. The procedure is complicated and you must instruct a solicitor. Few solicitors are expert in this field and the procedures will be unfamiliar to many.
The Law Society of Scotland can give you the name of a solicitor who specialises in insolvency matters or we at DebtFC based in West Lothian Scotland can arrange for one of our partner solicitors to assist you.
You must present a petition for recall of a sequestration in the Court of Session and if you employ a local solicitor, they
must instruct an Edinburgh agent. This is expensive and usually you will have to pay. The solicitor must also a place
a notice of the petition for recall in the Edinburgh Gazette. Even after you present a petition for recall to the court, the
law says that your interim or permanent trustee must continue with your sequestration. In other words, your trustee will carry on as normal in the sequestration, running up more fees, while you are petitioning for recall. At best, if they think the chances of the sequestration being recalled are good, the trustee will avoid taking any drastic or irrevocable action like selling your assets or business.
It is particularly important for you to co-operate fully with the trustee while waiting for your petition to be dealt with
because it is in the trustee’s powers to object lodge answers to the petition for recall. They can do this either on their own behalf or on behalf of your creditors. It is unlikely that the court will grant a recall if the trustee objects.
You must inform the trustee about every debt you have because usually they will all have to be paid before the
recall of sequestration. However, it is possible that one or more of your creditors may agree that you pay off your debt
after the recall of sequestration. If this happens, ask these creditors to write and tell your trustee this has been agreed.
If you are trading at the date of sequestration and decide to petition for recall, your trustee may allow you to continue
trading. They will probably set a time limit for the presentation of the petition so that the risk of trading losses is kept to a minimum. It is extremely unlikely that they will allow trading to go on indefinitely. They might also only allow trading if a third party underwrites any trading losses. Even if a petition for recall has been presented, your trustee must still place a notice of the sequestration in the Edinburgh Gazette. They must also write to your creditors telling them of the sequestration and asking them to submit claims.
If you have paid your creditors the money you owe them, you must ask them to give written confirmation as proof
of payment. Where you have presented the petition for recall because you can pay all your creditors, the money or adequate security must be lodged in advance. If this doesn’t happen your trustee will object to the petition and will not withdraw the objection until their own fees and expenses and all your creditors’ claims have been paid in full.
In other words, it is not sufficient to wait until after the recall has been granted to lodge funds for the trustee or a solicitor to pay out, you must do it beforehand. You must add to your debts the contractual or statutory interest due until the date of payment. If you don’t, some of your creditors will probably object as they will want all the interest due.
Some creditors will probably object to the recall if you have run up more debts after your sequestration. For example,
HM Revenue and Customs have insisted on all outstanding debts being settled, not just the debt due at the date of
sequestration. While the Act doesn’t specifically say you must make these payments, failure to do so may result in the petition for recall being refused. You would then need to present another petition, and that would cost you more.
In the vast majority of cases, the trustee’s fees and outlays will be paid from the funds in your estate or from any money
someone else gives so that you can petition for the recall of your sequestration.
Even if you haven’t been sequestrated for long, your trustee may still have done a lot of investigative and procedural work. DebtFC can’t give an average cost, but you (or whoever has agreed to pay) must expect that the trustee’s fees and outlays will be high. At DebtFC we have experienced couples being sequestrated for a council tax arrears debt of
£3-4,000 and the trustee’s fees being £7,000 plus. The longer a case goes on, the higher those fees will be, so you should try to get the case recalled as soon as you can. If these costs are not agreed between you and your trustee before the recall being granted, the Accountant in Bankruptcy will decide what they will be. They will charge you for this. When your sequestration has been recalled, you will get back all the assets and property left after your creditors’claims and the trustee’s fees have been paid.
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Tuesday, March 30th, 2010
HMRC have the necessary power under existing tax law to publish the details of taxpayers where it is established that they have committed ‘deliberate’ tax offences. HMRC have confirmed that they will apply this provision for tax periods starting on or after 1 April 2010 and for offences which are committed on or after this date. If you are worried about paying your tax please call us on 0800 007 5307 or email info@debtfc.co.uk for free confidential advice.
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Sunday, March 28th, 2010
You must include all unsecured debts. Such as credit cards, store cards, overdrafts, bank loans, pay day loans, log book loans, catalogue debts etc. It does not include secured debts such as mortgages, secured home loans or hire purchase. You should continue to pay secured debts in full.
Student loans cannot be included in a Scottish Trust Deed. Your employer or landlords is not contacted if you enter into a trust deed. Also there is no restriction in you being a director of a Limited Company.
This applies in sequestration.
You can also include your council tax arrears we have not experienced any difficulties from councils or objections with regard to our clients entering into a Trust Deed for more information on Scottish Protected Trust Deeds call us on 0800 007 5307 or email info@debtfc.co.uk
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Wednesday, March 17th, 2010
To become debt free
Take a list of how much you owe on credit, store cards and the minimum amount you are required to pay on each. Don’t overlook other ongoing bills such as nursery fees or Hire purchase.
Now add to that list car loans, personal loans, and any secured loans including balances and payments. Lastly add in your mortgage payments and balances.
Don’t panic. If you have never performed this exercise before, it might make you feel a little stressed out. But don’t worry. You can do this.
To become debt free
It is time to get your spending habits under control. This might mean cutting back on purchases you don’t need. Decide today that you are not going to live beyond your means any more. Once you embrace this idea with your whole heart you might be surprised how liberating it feels.
To become debt free
Referring back to your list of debts, arrange the accounts in order of their balances from lowest to highest. Most likely at the top will be your credit and store card balances, followed by, personal loans, car and secured loans, and finally mortgages.
To become debt free
Consider where you can produce even a little extra money for funds to pay off the house. It does not require a lot of planning upfront. Your vision of mortgage freedom is more attainable than it might seem.
Here is a simple example. You might want to give up one fast food meal a week. If you spend £15 less per week for restaurant meals, you can save £60 per month. £60 is all you need to begin to pay off your mortgage fast.
To become debt free
Begin your plan by taking the lowest balance at the top of your list and adding the £60 you saved to its minimum payment.
Suppose the balance is £1000 on credit card number one and the minimum payment is £15. Simply add £60 to the minimum payment for a total of £75 each month until the balance is paid in full. It is important to continue making at least the minimum payments on all other debt.
With each payment, your balance will decrease but it is instrumental to this plan to still pay the £75. You are accelerating the payoff each month.
Don’t give up because you’ll be glad you persevered when your mortgage is gone.
To become debt free
Waste no time beginning card number two once the first credit card balance is gone. Use the £75 you are paying on card one and add it to the monthly minimum payment for card two.
To become debt free
Continue the process with credit cards three and four until all credit cards and store cards are paid in full.
Then begin on personal loans, car loans, one at a time. As you see balances decreasing, keep in focus your goal to become mortgage free.
To become debt free
Now the fun really begins. Instead of eating one fast food meal a week, you took the £60 and started the ball rolling toward mortgage freedom. You added the £60 you saved to the first credit card minimum payment. Then you added the monthly payments you made on the first credit card to the second card and the second to the third and so on. After the credit cards were paid off, you added the total to store cards and then to car loans.
In a short period of time you have become entirely debt free, leaving you only with the need to pay off your house.
To become debt free
By now you have truly accelerated your plan to pay off a house. Let’s suppose by the time you finish paying off credit cards as well as all other loans that you have gradually worked up to applying £1000 per month to reducing your debt.
Remember the only additional money you began with was the £60 saved from eating out one less time per week. Now you are going to begin to use the additional £1000 to pay off your house. Let me illustrate.
If you have a £250,000 mortgage at a fixed rate of 6.5% for 30 years, your principal and interest payment would be £1,580. Take the £1000 you are using to pay down your other debts and begin to apply it to your mortgage each month.
Make certain to instruct your mortgage company to apply the additional payment of £1000 to principal.
In other words, you are going to make the regular monthly payment of £1,580 plus an additional £1000 to principle for a total payment of £2,580.
Now with the extra £1000 applied toward your mortgage payment, you will watch as you pay off the house in less than a dozen years.
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Monday, March 15th, 2010
DebtFC now has debt advisor based in Ayrshire who is available to provide free debt help and advice on all debt problems such as a Scottish Protected Trust Deed, Debt Management Plan, Individual Voluntary Arrangement (IVA), Bankruptcy, Sequestration, Payment Protection Insurance Claims and Unfair Credit Agreement Claims. Home Visits in the following areas by appointment at info@debtfc.co.uk or call us on 0800 007 5307 to arrange an appointment. Port Glasgow, Gourock, Inverkip, Wemyss Bay, Skelmorlie, Largs, Fairlie, West Kilbride, Ardrossan, Stevenston, Irvine, Kilbirnie, Beith, Dalry, Lochwinnoch, Ayr and Kilmarnock.
 Debt advisor Ayrshire
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Monday, March 15th, 2010
The measures include:
• Repayments will clear the highest rate debt first. At present, most lenders, other than Nationwide, apply payments to cheap debt first (such as a balance transfer) meaning expensive debt (such as spending) is trapped accruing interest at a rate of knots.
• Lenders will be forced to explain the impact of only making minimum payments in big and bold language.
• The minimum payment on new accounts will always cover at least interest, fees and charges, plus 1% of the debt.
• Consumers will have the right to choose not to receive credit limit increases and the right to reduce their limit at any time.
• Borrowers will get more time to reject increases in their interest rate. Even now, if your lender hikes the APR, you can refuse it, though you’ll no longer be able to spend on the card
• Lenders will send annual statements detailing all charges.
• Those in financial difficulties will be protected through a ban on increases in their credit limit as well as the ban on increases in their interest rate
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