Tag: debt

Sales and evictions halted during COVID-19 outbreak

Accountant in Bankruptcy (AiB) has suspended sale and eviction from property in ongoing bankruptcy administrations until further notice in response to the current COVID-19 pandemic.

New measures and greater flexibility are also being introduced by AiB – Scotland’s insolvency service – to simplify procedures to help those seeking debt relief through bankruptcy, or need more time to pay their debts through the Debt Arrangement Scheme. This action will also help alleviate the administrative burden on frontline money advisers and insolvency practitioners.

AiB deals with approximately 80% of bankruptcy cases in Scotland and it has urged other trustees to show similar leniency and flexibility.

Business Minister Jamie Hepburn welcomed the new measures, saying: “This pandemic will have severe economic consequences and we are treating it as an economic emergency, affecting everyone from the largest conglomerates to small businesses and individuals.

“The Scottish Government is working hard to respond to this and we’ve announced a £2.2 billion package of measures to support businesses.

“We’re asking banks, insurance companies and our own departments to be flexible and compassionate wherever possible, including offering mortgage holidays and extending timescales for those in persistent credit card debt.

“This will help reduce the pressure on individuals facing financial difficulties caused or made worse by the current crisis, and we are actively considering what more we can do to help.”

The full list of measures being introduced by Accountant in Bankruptcy:

  • in bankruptcy cases (where AiB is named as trustee), AiB will suspend action on division and sale and eviction from property until further notice
  • the evidential requirements for individuals seeking debt relief through bankruptcy have been amended to allow faster access, providing protection from debt enforcement
  • AiB has written to other trustees involved in the bankruptcy process requesting that similar forbearance is shown in light of the prevailing circumstances
  • the processes for AiB’s determination and audit of trustee accounts will be streamlined on an interim basis with additional detail set out in a letter to all trustees
  • electronic signatures on Protected Trust Deeds and associated documentation will be accepted, assisting continued access to the debt relief provided through this solution with a reduced requirement for face to face contact
  • AiB’s Insolvency Registrations Team will work flexibly with money advisers and clients where there are difficulties in demonstrating income and expenditure and meeting the evidence requirements associated with the debtor application process
  • AiB has asked trustees who have concerns about meeting statutory timescales for bankruptcy and Protected Trust Deeds to liaise with the appropriate AiB teams – a pragmatic approach will be taken.
  • in anticipation that the COVID-19 pandemic will exacerbate issues faced by those with fluctuating earnings, with those on zero hours contracts particularly impacted, AiB has decided not to revoke Debt Arrangement Scheme (DAS) debt payment programmes due to non-payment with a causal link to COVID-19 until further notice

Credit Card firms told to review their approach to persistent debt customers

The Financial Conduct Authority (FCA) has written to credit card firms telling them to review their approach to borrowers who are stuck in persistent debt, where they are paying more in interest, fees and charges than they are paying of their balance.

The FCA require firms to help people who have been caught in a cycle of persistent debt for three years, by proposing and agreeing plans with customers to resolve the situation.

Ahead of firms issuing letters setting out proposals to customers who have been in persistent debt for three years, and to make sure the firms’ approaches to the rules are working in the best interest of consumers, the FCA is outlining a number of areas firms need to review and ensure their approach is in line with expectations.

This includes:

  • a concern that customers may not respond to letters from their credit card provider, advising that they have been in persistent debt for three years. Firms must encourage customers to speak with them to discuss potential repayment arrangements. If customers can’t afford the options proposed by the firm, they must be treated with forbearance and due consideration, for example, by reducing, waiving or cancelling any interest or charges.
  • a concern that firms may cancel or suspend credit cards for everyone in persistent debt, including those willing to engage and come to an agreement. In these circumstances, firms are not allowed to suspend a credit card without having an objectively justifiable reason.

Jonathan Davidson, Executive Director of Supervision for Retail and Authorisations at the FCA, said: ‘Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly.

“If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.

‘My advice to consumers is don’t bury your head in the sand. If you can’t afford to meet the repayment schedule that the credit card firm is suggesting, don’t be afraid to tell them. If we find firms are not offering their customers the appropriate level of help, we will not hesitate to take action.

‘If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges.’

Gareth Shaw, Head of Money, Which?, said: “Millions of people across the UK are trapped in persistent debt, so it’s right that the regulator is taking steps to encourage banks to help their customers break this cycle.

“It’s crucial that the industry properly engages with all those identified as needing help and offers manageable plans that include reductions, waivers and even the cancellation of charges and interest.

“The effects of living in persistent debt can be devastating, so it’s important that those who are likely to be impacted by the new rules take notice of how these new measures could affect their finances.”

Consumers concerned about persistent credit card debt and/or multiple credit cards they are dealing with, can get free debt advice from a range of support organisations including Granton Information Centre and Money Advice Service.

“Broken economy” is driving record levels of household debt, warns TUC

Low pay, insecure work and austerity are feeding a growing debt crisis, the TUC has warned.

New TUC analysis published today shows that:

  • Unsecured debt per household rose to £15,880 in the first quarter of 2019, up £1,160 on a year earlier.
  • Over half of households report having unsecured debt, most commonly in the form of credit card debt (60%), overdraft (28%), personal loans (25%) and car finance (25%).
  • Young people are disproportionately likely to be in debt. 70% of 18-34 year-olds report having a type of unsecured debt. This drops to 33% among people over 65.

The TUC believes that persistent low pay is the key driver of household debt. Real wages are still lower than they were before the 2008 crisis and working families are struggling to make ends meet without going into the red.

The latest analysis also shows that of those households with unsecured debt:

  • 1 in 5 say repayments are a “heavy burden on their finances”.
  • 1 in 7 (14%) have fallen more than two months behind on repayments in the last year.
  • 45% don’t feel that they have enough money set aside for emergencies.

TUC General Secretary Frances O’Grady said: “Our broken economy is forcing working families deep into debt.

“Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.

“It’s time to reset the balance of power in our workplaces and our economy. Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”

The TUC has published new proposals to ensure that workers get the chance to negotiate better pay and conditions through trade unions. These include:

– unions having access to workplaces to tell workers about the benefits of trade union membership, following the model in New Zealand

– new rights to make it easier for unions to gain the right to negotiate at workplace level

– new rights for unions to negotiate right across sectors, starting with hospitality and social care

The TUC is also calling for:

  • a £10 National Minimum Wage to be introduced as quickly as possible
  • a ban on zero-hours contracts, and a crack down on insecure work that means people don’t know how much they’ll earn from one week to the next

Talk Money tomorrow

The City of Edinburgh Council will join partner organisations in four Talk Money events held across the city to share tips and advice for managing money.  Continue reading Talk Money tomorrow

Money worries? Start talking!

Wednesday 14th November 11am – 2pm

The Prentice Centre, Granton Mains Avenue

(opposite entrance to Edinburgh College Granton Campus)

The event brings together multiple agencies who are working to tackle poverty and inequality and assist people in a range of ‘financial capability’ areas including income maximisation, debt advice, help with fuel and housing costs, free school meals and clothing grants, housing support, employability, low cost credit, etc.

Organisations taking part in the Prentice Centre event are:

  • Granton Information Centre (hosts)
  • Muirhouse Housing Association (event sponsors)
  • Changeworks
  • Family & Housing Support
  • Scotcash
  • Y People
  • Community Renewal
  • Circle
  • West Granton Housing Co-operative
  • Advice Shop
  • Dunedin Housing Association
  • Fresh Start
  • Turn 2 Us

For further information telephone Granton Information Centre 0131 551 2459 or 0131 552 0458 or email michelle@gic.org.uk or david@gic.org.uk

Personal debt continues to rise

Is household debt out of control?

According to the latest YouGov debt research commissioned by Equifax[1], 15% of UK adults have missed a payment on a credit card or short term loan at some point. Almost a third (32%) of UK adults with a credit card admit that, in a typical month, they don’t pay off their credit cards debts in full, with over half (52%) of these saying it’s because they can’t afford the full monthly balance. Continue reading Personal debt continues to rise

Plan now to avoid festive finance hangover, says Community Bank chief

Falling behind with post-festive finances needn’t be the ‘horror story’ that is often depicted by the media, according to the founder of an Edinburgh-based community bank, which is already dealing with a ‘steady stream’ of savings applications for next Christmas. Continue reading Plan now to avoid festive finance hangover, says Community Bank chief