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Today's Guardian: Record Debt, Mortgages, Sharks, Iva's, Bankruptcy

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Scaling the red mountain

Britain's IOU has hit a record £1.15 trillion - but we're not all doomed yet. After the Christmas and New Year sales spending splurge comes the January hangover - and one in eight of us has no idea how to settle the bills. Two million people who used credit cards to buy presents are still paying off their 2004 Christmas bill.

The statistics on Britain's debt mountain are terrifying. Three million people have personal loans and credit cards with outstanding debts of more than £10,000 each. Around 250,000 people have unsecured debts of £50,000 or more. The number of individuals going bust, according to the latest Department of Trade and Industry figures, is up 46% on a year ago.

Easy way out may make life harder

Loan consolidation or individual voluntary arrangements may be tempting - but they cost, say Tony Levene and Samantha Downes. When you're up to your neck in debt, those daytime TV ads and websites offering an easy way out of mounting interest bills and threatening letters from debt collectors seem like an overstretched borrower's dream.

But what do these debt management companies actually offer? And given promises of "free no-obligation advice" just how do they make their money? Guardian Money went mystery shopping to test some of them. None charged for the initial conversation.

Should you consider bankruptcy?

When all else fails, there is bankruptcy. Insolvency experts expect 20,000 people to declare themselves bankrupt in the first three months of this year, which will be the highest quarterly figure since records began in the 60s.

For debts of less than £20,000, the procedure is known as a summary administration and the bankrupt may be discharged after two years. A first-time bankrupt owing more than £20,000 may be discharged after three years.

Anyone can go bankrupt, either voluntarily or forced by a creditor owed more than £750. A bankruptcy order can be made even if you refuse to acknowledge or agree to the proceedings, so it is best to co-operate and negotiate. Negotiating after a bankruptcy order is made is difficult and expensive.

Interestingly DFD.L shares are up 40% over the last 3 months! It seems house price inflation does actually have some 'benefits', for some at least :huh:

UPDATE

More crash journalism on the radio:

Bankrupt Britain - BBC Radio 5 - Sunday 7th Jan - 10am

The number of personal bankruptcies in Britain has rocketed by 46% in the past year. So why are so many people going for broke? Joanne Griffith uncovers the reality of life for hundreds of Brits who have opted for insolvency.

Edited by BuyingBear

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Interestingly DFD.L shares are up 40% over the last 3 months! It seems house price inflation does actually have some 'benefits', for some at least :huh:

Aye, the Grauniad actually had it's own dedicated pullout devoted to "bankrupt britain" today. R5 has been advertising a dramatic piece with the same title recently.

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Its happening everywhere folks :angry: .

My sister is about to go bankrupt as she has no way of paying 28k of debt. No one had a clue she was in as much trouble as she was until her husband went off with another woman and left her with the debt.

Thankfully she is renting and doesn't risk being homeless.

My point being, there are ALOT of people sitting on the brink who you'd never suspect of being in trouble in the first place. Be prepared to be suprised over the next few years as the £1.1 Trillion worth of debt rears its ugly head.

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ETOPS773,

Pretty much bang on the figure that it I'd come to the conclusion was a serious enough amount to cause a debt sprial.

http://www.housepricecrash.co.uk/forum/ind...c=18654&hl=£30k

The debt taken out now will require maybe 1.5-2x the amount of money to pay it back in the future. During inflation as we have known it in the past when wages rise roughly in line (or even outstrip) the general inflation in goods and services then this is not so much of a problem as eventually a level is reached when the debt repayments become less onerous. With under-reported inflation and salaries linked to under-reported inflation this is not the case. Many people's costs are rapidly outstripping their ability to earn and the debt that they have is properotionally not reducing in the way that it would normally do. Take out interest only loans or rolling credit or indeeed serial MEWing and the situation is worse.

£30k of unsecured debt is enough to take you under if you have anything like a normal set of living expenses and a normal salary and ecounter the wrong circumstances. A slight hiccup in earnings, unexpected bills, ill health, having children even and debt spiral can kick off, it starts with just one missed payment, rates ratchet up and starts a snowball effect on your ability to pay.

The lenders have stolen the future off many, if not the whole economy. They probably have enough debt to gouge out profits for decades by just raising the temperature a bit on their existing debt year after year.

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For debts of less than £20,000, the procedure is known as a summary administration and the bankrupt may be discharged after two years. A first-time bankrupt owing more than £20,000 may be discharged after three years.

Bankrupts are now discharged after 1 year and in some cases 6 month due to the Enterprise Act which is why so many people are going bankrupt at the moment it has been made very easy for them

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Guest muttley

Bankrupts are now discharged after 1 year and in some cases 6 month due to the Enterprise Act which is why so many people are going bankrupt at the moment it has been made very easy for them

And Credit Card Companies are being given the legal right to share information on individuals.Lets see how people who take the "easy option" fare in the future.

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And Credit Card Companies are being given the legal right to share information on individuals.Lets see how people who take the "easy option" fare in the future.

I don't understand the connection - a couple of the banks have decided to share information there is no "legal right" anyway I am just pointing out that people are discharged within a year now - not saying it good, bad or indifferent

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Guest muttley

I don't understand the connection - a couple of the banks have decided to share information there is no "legal right" anyway I am just pointing out that people are discharged within a year now - not saying it good, bad or indifferent

If you lent someone 20K and he didn't pay you back,would you lend him 20k 12 months later?

Don't expect the banks to take up the slack for the borrower's proflicacy.

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Guest Charlie The Tramp

I don't understand the connection - a couple of the banks have decided to share information there is no "legal right" anyway I am just pointing out that people are discharged within a year now - not saying it good, bad or indifferent

Could be up to fifteen years if the court decides they were irresponsible or intended to borrow and then seek bankrutcy.

The Rules

I believe things will get tougher when the stats increase. The New Act was initially brought in to help businesses to start again. It was not there to help irresponsible personal debtors who thought it was the solution to clear their debts. Another badly thought out Act. I saw an interview with an insolvency expert who said at the time that this would happen in consultation with the government but her advice went unheeded.

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If you lent someone 20K and he didn't pay you back,would you lend him 20k 12 months later?

Don't expect the banks to take up the slack for the borrower's proflicacy.

Check any debt help forum, debthelpuk.co.uk for example and you will find loads of of bankrupts and discharged bankrupts relating how they have been offer credit cards, bank loans etc, some of the reason so many people in this country are in debt is because the banks will lend money to anyone - they write their losses off against tax and then palm higher charges off on their customers

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Guest Charlie The Tramp

Check any debt help forum, debthelpuk.co.uk for example and you will find loads of of bankrupts and discharged bankrupts relating how they have been offer credit cards, bank loans etc, some of the reason so many people in this country are in debt is because the banks will lend money to anyone - they write their losses off against tax and then palm higher charges off on their customers

There is a restriction how much credit the banks will give. We have members on this site who have gone bankrupt and been discharged in the past year. Bankrupt Idiot is one, read his posts they are very informative.

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There is a restriction how much credit the banks will give. We have members on this site who have gone bankrupt and been disharged in the past year. Bankrupt Idiot is one, read his posts they are very informative.

Yes it is £500 until you are discharged - the enterprise act was to help fledgling companies it has really blown up in the govenment face - think i saw the same interview - Trevor McDonald's programme - a couple of young blokes who made themselve bankrupt after spending about £50k on champagne and lapdancers!!! the mind boggles really

Edited by *sparkle*

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My sister is about to go bankrupt as she has no way of paying 28k of debt. No one had a clue she was in as much trouble as she was until her husband went off with another woman and left her with the debt.

Amateur. My sister does it every 6 or 7 years. Get's married, new name, get's the big house, get's the credit cards, gets divorced, sells the house. By the time the balifs come knocking the bread is gone.

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Guest muttley

Check any debt help forum, debthelpuk.co.uk for example and you will find loads of of bankrupts and discharged bankrupts relating how they have been offer credit cards, bank loans etc, some of the reason so many people in this country are in debt is because the banks will lend money to anyone - they write their losses off against tax and then palm higher charges off on their customers

But the rules have changed.Banks are allowed to share information.Previously this was not possible due to the Data Protection Act.

Banks exist for one purpose,to make a profit.They employ sharp people to ensure they do.If there is an upsurge in bad debt they will not see passing this on to their existing customers as an attactive option.Better to get rid of the bad debtors.It's called the credit crunch,and it's coming.

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Guest Charlie The Tramp

But the rules have changed.Banks are allowed to share information.Previously this was not possible due to the Data Protection Act.

Banks exist for one purpose,to make a profit.They employ sharp people to ensure they do.If there is an upsurge in bad debt they will not see passing this on to their existing customers as an attactive option.Better to get rid of the bad debtors.It's called the credit crunch,and it's coming.

Was there not a link to an article a few months back where it said the banks had set aside £12 billion to cover bad debts?

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Amateur. My sister does it every 6 or 7 years. Get's married, new name, get's the big house, get's the credit cards, gets divorced, sells the house. By the time the balifs come knocking the bread is gone.

Can we have a description? Forewarned is forearmed :P

Edited by BuyingBear

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But the rules have changed.Banks are allowed to share information.Previously this was not possible due to the Data Protection Act.

Banks exist for one purpose,to make a profit.They employ sharp people to ensure they do.If there is an upsurge in bad debt they will not see passing this on to their existing customers as an attactive option.Better to get rid of the bad debtors.It's called the credit crunch,and it's coming.

Again this is slightly misleading no rules have changed 4 banks Barclaycard, Egg, the Co-Operative Bank and Abbey have decided to place extra information with the credit referencing agencies some sceptics feel this is more of a marketing ploy than trying to stop people getting loans they cannot pay back as a simple credit check should show a lender you are overstretched. As CtheT said the banks set aside millions to cover bad debt. the also get tax relief and they do pass on extra charges to existing customers. HSBC by the way are not joining this scheme as they say there will be issues with data protection and customer privacy

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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