Cash, Cars and Babes

A lot of us are owing money to debtors at the moment, but are you, yourself, owed anything? Have you been lending your cash out to friends and family, in a quest to help them become debt free?

According to research by Paypal, there are a lot of people in this situation. In fact, out of the 48million adults there are in Britain, nearly half have loaned money to their friends and family, and, what's worse - 24% of these are still waiting to be paid back, amounting to a total of £4.71billion. That's a lot of cash! It apparently comes down to our inability to be blunt, when it comes to asking for the money back - instead taking the bashful route, and waiting for the money to be repaid.

Abbey are in talks with a debt advice charity about how to deal with borrowers who are struggling to pay their mortgages. They are in discussions with the CCCS, for it to offer a free advice service for customers who are struggling to handle their repayments.

Abbey say that they have always had a low rate of repossessions because of its ongoing responsible approach to lending and treat repossession as a last resort.

With the credit crunch in full swing, more and more people are turning to their parents for debt help. Research by moneysupermarket has found that when applying for a loan, or mortgage, 23% of people in their 20s have used their parents as guarantors.

Younger people have been found to be particularly vulnerable in the current situation as they are more likely to not be a homeowner or to have missed payments on bills - a huge impact on their credit rating.

OK, so these tips probably aren't the recommended choices, but they are still options if you are in need...

• Ask for a payment holiday on your cheapest debt. In that time, throw all your repayments at your most expensive one.
  • Risky for three reasons:
    
    • The lender may think you are asking because you are going to default
    • They may misunderstand and treat it as a default
    • Temptation to spend your repayment rather than putting it towards your larger debt
• Extend the length of your loan. Yes, the interest you pay will end up being more but...
  
  • If you have a lrge debt with a big interest rate, and another loaan with a lower rate, ask to extend the deal of the lower rate. Use the estra each month that you are saving to put towards the bigger debt.
    
  • Don't extend your cheaper loan beyond the time you think it will take to pay off the more expensive one.
    
• Take out PPI (?)
  • More likely to get a loan if you ask for PPI, and it will more likely be at a lower interest rate.
    
  • You have a small window in which to cancel your PPI, so Cancel it when you can.
    
  • Risky because you may forget to cancel it.
    
• Consolidation. Use any from of credit to consolidate (credit cards, unsecured loans).
  
  • Budget properly though!

You could always rob a bank if it's the only option... That last one wasn't serious by the way, although it is tempting...

Free Legal Advice has had to be denied to homeowners who are being threatened by repossession, because the lawyers are so swamped. Transact are blaming the credit crisis for the massive number of cases. And if people don't receive the legal advice they are after, it is more likely for them to lose their home. The charity are calling for more help for people who are in court facing the loss of their homes.

In the first quarter of 2008, the number of orders made in England and Wales, at an early stage in the process, increased by 17%. There were 27,530 orders made in comparison to 23,438 made in the same period of 2007. It has been estimated that in 85% of cases, if people have legal representation, they avoid immediate repossession. Homeowners who cant afford proper legal help are more susceptible to repossession.

Alliance & Leicester have found that UK consumers are expecting to have less spare cash in the next six months - more than a third expect to see less disposable income, mainly blaming household costs, fuel and the cost of food.

The advice gven would be to see how your finances are at the moment, and see where they can be improved. The poll found that 42% of consumers are budgeting, 45% are shopping around for better deals and nearly 40% are saving electricity by turning off lights that aren't being used.

Its good to see that many of us are making changes to try and improve our finances. I expect there's a long way to go though.

Bought in 2003, and now part of the HSBC group, HFC have been fined £1million for failings over Payment Protection Insurance (PPI). The FSA said that HFC failed to ensure advice was given to customers between January 2005 and March 2007. Between these dates, the bank had sold 163,000 policies, representing 75% of the loans they agreed.

PPI covers repayments of loans, mortgages and credit cards in the event of the borrower being unable to pay them themselves, as a result of accient, sickness, unemployment or death. HFC put their customers at risk of buying PPI that was unsuitable, causing them significant financial impact, by recommending incorrect products.

A programme of improvements is well under way, to ensure their standards are to the FSA's liking. by doing so, they qualified for a 30% discount on the fine, without which, it would have been over £1.5million.