The Debt Advice Online Blog

Is there any way you can avoid bankruptcy? Yes, there are several ways of avoiding this financial meltdown. All you have to do is know about them through this article and put them into use. Believe it or not, you’ll be surprised at how these simple steps can actually change your life.

The first one is to seek help from your bank. If you have been unemployed recently because of your company’s need for retrenchment, you should contact your bank and tell them about it. Most of the time, we let our banks take charge of our loans and bills such as mortgages, electricity bills, phone bills, and a few others more.

When your bank is informed early about your recent unemployed status, they will give you six months official consideration. What does this mean? It simply means that they will take care of your outstanding bills and loans for six months until you can get another job. It is a sort of bank insurance you, as a bank client, automatically have. You should bear in mind however that this kind of action is under the sole discretion of the bank. If you are a good payer and depositor, your bank won’t hesitate to give you this deal. But if you always have a bad reputation of late bills payment, then your request might be declined.

Another way of avoiding bankruptcy is making a list of all your debts and the monthly required payments you should be paying. This gives you a great overview of how much you should be earning each month to make ends meet. Of course, you should still consider the daily expenses your whole family is incurring and think of some ways to reduce it. Most of the time, a lifestyle change is the key to avoid to bankruptcy.

Is your wife’s weekly shopping spree making you loose more money? Is your toy collecting hobby getting more expensive? Are your extra-curricular activities such as traveling getting in the way of paying off your loans? Take some time to examine your current lifestyle. If your job or business can’t support all of these “wants,” you should consider disregarding them for awhile until you can splurge some money all over again when your current debts have been paid. I’m sure your family will understand if you explain to them carefully your present financial standing.

One of the effective ways of avoiding bankruptcy is to get in touch with your creditors. If you think that whatever lifestyle cost-cutting you are presently doing at the moment won’t still make enough money to pay off your monthly dues, talk to your creditors directly.

You shouldn’t demand anything from them because this might make the situation worse. Instead, you should request from your creditors for any other possible way to make your monthly payments a bit lighter. They may consider providing you with a lower interest rate or may even reassess your debt and require you to pay lower monthly payments. Again, if you have a good paying record, your creditors will be more than happy to assist you especially during this time of global financial crisis.

If you have any non-income generating assets such as an unused land or an extra car, you could always sell them to pay your debts. This should be done earlier once you have detected you are on the path to bankruptcy. If not, the bankruptcy official receiver will take these and all your other assets, including your home, and sell them for cheaper price in order to pay your debts. Don’t worry if you sold one of your real estate properties, you could always buy a new one after your financial crisis.

What can you do if you don’t have any extra assets to sell? Well, you can always get a second job to generate more income. But you should bear in mind that getting a second job doesn’t mean that you could spend more. You should stay on track and pay your current debts first before any splurging ideas tempt you into spending more. Spending more will just make your situation worse and give you more debts to pay.

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Declaring bankruptcy can definitely help you when you don’t have the means to pay off your current debts right away however there are some disadvantages associated with it. One of them is the effects of bankruptcy to your credit rating. When you file for bankruptcy which have been approved, credit reference agencies registers this public information about you and will remain on your file for six long years. Because of this matter, your credit rating falls drastically.

What can this drop in credit rating do for you? If prior to bankruptcy, you have been eligible to receive a fourteen percent rate credit card, you won’t be getting the same rate after you have been declared bankrupt. The best rate you can get if a credit card approves your application will be at least twenty percent.

You can still turn this around though. You can file for a discharge of this negative stigma to your local court so that your file in credit reference agencies will be eliminated. However, you can only do this procedure five years after your bankruptcy has been approved. Sometimes this proceeding may be refused or delayed by the Court so it may not be the best option for you but it is still worth a try to improve your credit rating.

Another disadvantage to bankruptcy is the rippling effect to the concerned parties involved with the issue. Say for example your business declared bankruptcy. The rippling effect includes financial loss, which will then directly affect your family, your employees who will eventually be unemployed, and lastly your suppliers and creditors who provided your business with extended credit options, they will also have diminished sales because of your business being declared bankrupt.

If you have mortgages upon filing bankruptcy, anyone who agreed to consign for your mortgage loans might be eligible for your debt. This is one of the disadvantages of bankruptcy not unless the consignee files for bankruptcy as well. But this kind of situation seldom happens, unless your consignee is a partner in business which has been declared bankrupt.

In addition to these disadvantages, the Official Receiver may take everything that you own in order to pay off your debt. Your bank accounts will be drained and closed, your credit cards will be taken, your car of value will be sold, some home furnishings will also be included, and your assets such as real estate properties, like your home, and insurance policies will also be forfeited. All of these actions are geared towards trying to pay off your debt. If they are still insufficient to cover all of your debts, you are still required to pay a small amount to your creditors each month.

If these aren’t enough, try facing the public once your bankruptcy issue has been published in local papers and even in the London Gazette. Just imagine the shame and social stigma attached to filing for bankruptcy. Most of the time relationships are directly affected by this situation.

You will also face loosing your professional and business status once your bankruptcy hits the public. This would mean prejudice when you are looking for a new job and not being able to manage, promote, or form a company without the court’s approval. When you are transacting a business proposal, you are only allowed to use your name which has been declared bankrupt. In addition to your rights being limited, you won’t be able to run for public office as well. Once you have been declared bankrupt, your immigration rights will also be terminated to avoid the possibility of escaping your responsibilities to your creditors.

As you can see, there are a lot of disadvantages to bankruptcy which all are physically, emotionally, financially and spiritually burdensome. Can you handle facing them in reality?

In the UK, Individual Voluntary Arrangements (IVAs) are a formal alternative for individuals wishing to avoid bankruptcy.
The IVA was established by the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor’s creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA compromises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged.

An IVA is a contractual arrangement with creditors and can be as flexible as an individual’s own circumstances; they can therefore be based on capital, income, third party payments, or a combination of these.

Creditors take a decision at a creditors’ meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in bankruptcy. A vote is taken - by value. More than 75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved. If any of those voting are ‘associates’ (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.
In the UK, an increasing number of consumer debtors with overwhelming levels of debt are turning to specialist debt advice organizations that offer an alternative to bankruptcy via the use of an IVA.

An IVA is an alternative to bankruptcy; however, they are not mutually exclusive. A person can propose an IVA after they have been made bankrupt. If an arrangement is approved post-bankruptcy then the debtor can apply to the Court for an annulment of the bankruptcy order - such IVAs can only be proposed whilst the bankrupt is undercharged. If an IVA is proposed after a bankruptcy order has been made, it is now also possible to nominate the Official Receiver to be the supervisor of the arrangement. The Arrangements offered by the Official Receiver are very restricted and have not proved very popular. This type of arrangement is called a Fast Track Voluntary Arrangement and is only suitable in certain cases.

In Scotland, there is a similar procedure to the Individual Voluntary Arrangement called a Protected Trust Deed (PTD). The Trust Deed, although similar to the Individual Voluntary Arrangement in many ways, lasts only for 3 years as opposed to the normal 5-year period that constitutes the vast majority of IVAs. Trust Deeds are an alternative to bankruptcy in Scotland which is referred to as Sequestration.

Advantages and disadvantages

The advantages and disadvantages of an IVA compared with other debt solutions are particular to a debtor’s individual circumstances and professional advice should be sought to decide on the best option.
Stigma

An IVA is a private agreement between a debtor and creditors. Bankruptcy is advertised in a local newspaper and the London Gazette, an IVA is not. Both debtors in an IVA and bankrupts are listed publicly on the Personal Insolvency Register www.insolvency.gov.uk, and will be recorded by credit reference agencies.

Length

An income based IVA can often last up to 5 years, although it can be any length. A bankrupt is normally automatically discharged after just 1 year (unless subject to a Bankruptcy Restriction Order) or benefiting from an early discharge. An Income Payments Agreement or Order in bankruptcy is will not last for more than three years and payments are generally much lower than under an income based IVA.

Credit

Unlike Bankruptcy, an IVA does not statutorily restrict a debtor from obtaining credit, although the proposal might do.
Ability to trade
Bankruptcy will usually dissolve a partnership and prevent a debtor from acting as a director of a company. A self-employed trader will have to disclose the fact that he or she is bankrupt when obtaining credit, for example when dealing with suppliers. There are no such implications with an IVA, although lenders often ask.

Credit rating

Although arguably an IVA is seen as more positive than bankruptcy in the eyes of creditors, as it shows a certain commitment to repaying debt, in reality an IVA is likely to have an equally detrimental effect on a debtor’s credit rating as bankruptcy. Usually a debtor’s credit rating is already poor before an IVA or bankruptcy is considered however. Both bankruptcy and an IVA will stay on a debtor’s credit file for 6 years from the start of the IVA/bankruptcy.

Fees

An IVA is usually less expensive than bankruptcy as the Insolvency Practitioner need not deposit funds in the Insolvency Services Account as is the case in a bankruptcy - here the Government levies an ad valorem charge of 17% on all deposits after the first £2,000.

Protection

A major advantage of an IVA over debt management arrangements is that all unsecured creditors are bound by it once it has been agreed: even if they did not agree to the IVA at the meeting of creditors. As only those creditors who vote at the meeting are counted, those creditors who did not vote at all are still bound by the decision, as are those who voted against it if they are outvoted (see above). Creditors bound by the IVA cannot take enforcement action to recover the debt, but instead submit a claim in the IVA and are paid by the Supervisor.

The home

Perhaps the biggest advantage to an IVA over Bankruptcy is the control the debtor has over their home. In bankruptcy, the debtor’s assets will vest in the Trustee (some assets are excluded, notably those used as tools of trade, ordinary household contents and a modest motor vehicle). This will usually include equity in their property and the Trustee may force its sale. An IVA proposal may exclude the property altogether, propose a re-mortgage or offer income based contributions for a longer period in lieu of the debtor’s equitable interest in the property. The Supervisor may register a restriction on the property to ensure that his or her consent is required before the property is, for example, sold, or re-mortgaged.

For many people, 2009 will be all about just one thing – being able to make ends meet to pay bills every month. Often half these bills are loan repayments on a car and a mortgage. After this there is the payment of credit card balances; with many credit card companies charging anything from 10% to 18% on the outstanding credit card balance. Even at 10% interest, this quickly becomes a tidy sum in the way of monthly interest for those who use their credit cards frequently.

Basically, living on credit is as bad a survival strategy as can be and it leaves nothing for an emergency. To be able to cope with emergencies, and to save something for a rainy day, you should concentrate on wiping out outstanding credit card balances. To do this you firstly should consider methods of bringing down the credit accumulated on your credit cards.

One option is to go to a bank that offers a low interest bank loan. If a bank loan is available at an interest rate lower than the interest rate of any credit card debt, then availing that loan is a viable option. Should you go for this option, then remember to go for a fixed interest rate and not a floating interest rate. A floating interest rate could sometimes become higher than the interest rate on the credit card, even if it wasn’t at the time you took the loan out. Furthermore, such a bank loan should only be taken on if you are sure to discontinue ongoing use of your credit cards, and you are certain that your monthly budget allows you to repay the loan consistently. To do otherwise would be counterproductive.

Another option is to seek out a credit card companies that offers lower interest rates if transfer an outstanding balance of a previous credit card to that company. This can be an effective money saving formula if you do some homework through the internet. In this way you can reduce the interest you are paying and start making inroads on the core debt as well; queries should be done to zero in on such a company before you commit to this option.

Of course, these are solutions for those who have already accumulated credit debt. If you are thinking about getting a credit card and don’t want to fall into this trap, then think about the fact that the best way to avoid the pitfalls is by not having credit in the first place. Controlling and limiting credit card use is the first step towards lessening credit balances. Pay cash as often as you can and use a credit card only when it is unavoidable. Try to stick with one credit card only to keep track of your spending more easily. Too many credit cards can make it easier to rack up a lot of debt inadvertently. You can avoid this by sticking with one credit card which you pay in full and regularly.

To take things one step further, using a credit card continuously to tide over ‘emergencies’ is not sufficient. What you truly need is to have a budget to manage your money more effectively, instead of relying on credit. Aim to always put something aside every month; going above and beyond paying off credit debt. Those who have too much credit should first pay it off and then concentrate on not accruing more credit. Availability of credit leads people into an illusory world of financial security; thinking they have more than they in fact do. Of course, some sort of a monthly payment for a car or house might be necessary. The key is to be savvy about what you borrow and be sure these loans are realistic for your particular situation. When you opt for a loan, be realistic about the amount you can afford to spend on your car or home loan so that the monthly payments don’t strain the budget.

To truly eliminate bad credit and to be secure that you have everything you genuinely need, then budget a small provision so that you have savings being regularly made over and above paying back credit card debt and other financial commitments. If you fail to make these provisions, then you will soon slip into a financial ‘danger zone’.

The feared recession has well and truly struck at the US economy and each day we see the financial system in a state of topsy-turvy. As the majority of the global market shares are dipping, it seems to be more confirmation that the advent of a recession in the US is here and well into its first month.

It’s been said that “when America sneezes the world catches cold” and this seems to be proven time and again in the current economic shakeup. The global share markets have crashed badly tumbling one after another as the talks of recession began in US. It’s truly seems that as the American economy gets weaker, so does the rest of the world.

Defining Recession

Recession can be defined as a decline in any nation’s economic growth, the GDP or Gross Domestic Product (to be precise) for more than two successive quarters of the year. A recession is also often be preceded by slowing down of several quarters.

A recession is likely to cause unemployment; salary cut backs, tax cuts and a number of other financial stresses that could have a resounding impact on the greater population.

Instead of getting panicked during this time, people in general should look for better financial options in order to save some money for themselves. Though the period of recession generally doesn’t last long, even within the short duration it can create financial havoc. Ideally you should plan things in advance when the recession is being predicted by financial experts in order to preserve your funds.

Some of the potent financial options during a recession are –

 Bond Funds: Bonds can be considered during recession as one of the potential financial options and experts agree that investment-grade corporate bonds are a better choice even than U.S Treasury Bonds. Taking this into consideration you should try to plan your finances accordingly.

 Utility Stocks: These are stocks of the utility companies that serve our basic day-to-day needs, the things that are a crucial part of our livelihood. Utility stocks are highly recommended during the period of recession as these companies provide necessities and continue to pay reasonable dividends. The products and service that these utility companies provide are usually spared from the clutches of recession; making this a wise financial option.

 Exchange Traded Funds: expert financial planners suggest the purchase of exchange-traded funds or ETFs. These are basically the stocks that keep a track of all the activities of a foremost market index. ETFs have gained immense popularity amongst individual investors as they are less expensive and much convenient in terms of investment.

Lastly, don’t forget the 401(K). Diversification is the key to success during a recession and that needs to be kept in mind. Wise investment plans and proper knowledge of the market trends can help in making profits during the low as well high times. Try to invest in solid stocks that will remain intact for the long haul and weather the recession. Remember, people often hesitate to spend money during recession; luxury items are often hardest hit. Stick with investments in essential companies that deal in wholly necessary goods and services and don’t let the recession pull you down.

With Christmas less than a month away, the shops are already in hyperdrive with 20 – 25% sales to lure you in ahead of Christmas. Pressure to buy great presents, and make it a happy time always makes it difficult to balance your budget.

Temptation is everywhere. The message seems to be to buy presents with big discounts, and if you can’t afford it, then a new credit card deal is ready to help out.

Don’t think “I just need to get through Christmas” because January is just around the corner and it is usually the cruelest month for bills.

We decided we would get together and come up with our Credit Crunch busting Christmas ideas to make a great Christmas without being burdened by greater debts .

Firstly it’s time to start thinking like your grandparents and figure out how you can spend time rather than money on your presents. Perhaps get a favourite photograph framed. Better yet, make the frame yourself. You’ll be surprised that the reaction from the recipient will usually be greater than if you waltzed into a high street and bought the most expensive thing you could afford. Maybe think about making Christmas decorations yourselves. Time to get all Blue Peter.

If you are asked for present ideas for yourself, we recommend you ask for vouchers. That way, once the dust of Christmas has settled you will be able to pick up some bargains in the January sales. As you probably know, you would only have to wait one or two days for the sales to start anyway!

If this the time you usually book your summer holiday. We recommend you hold off until nearer the time. With the travel industry desperate for customers, you’ll be sure to get some last minute bargains in 2009, and you’ll help your wallet at this expensive time of year.

Some smaller tips that will help keep costs down. Make sure you don’t leave lights on in rooms not being used, or have the heating on too high if you can help it. You could save hundreds on your next quarterly bill.

The biggest gift we recommend you give yourself this Christmas is the gift of being debt free. Whether its credit cards, loans or worse, you will be glad to get rid of that horrible feeling you get when someone mentions Credit Cards or when you hear more depressing news about the economy.

If you need to talk to someone about getting out of debt, then hop over to our advice page and find out a bit more about it.
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With the economic crisis deepening, I am probably not the only one to notice a worrying trend, that the amount people owe on their credit cards is actually increasing! According to the Bank of England’s statistics, the UK’s consumer debt has risen to record levels this autumn, having risen by £300m between August and September alone.

I don’t know about you, but I’m worried. This is a terrible trend given the Credit Crunch we are in. The one thing you don’t want to do in a time like this is to get further into debt!

I know there are many people out there who are struggling to make ends meet, and just to feed their family and pay the bills, they are living beyond their means and resorting to extra loans or credit cards to temporarily get them out of trouble. But as I’m sure you know, this will lead to an ever increasing spiral of debt. Couple that with the inevitable recession we are about to enter and it could spell disaster for many people.

So what can you do about it?

First of all you, the simplest step is to take a good look at your outgoings and see if you can cut back on items that are not essential. You’ll be surprised at what a difference that can make.

If you’ve cut back all you can and still you are falling short each month, perhaps your lender is increasing their interest rate on your existing loans or your credit card’s introductory period has expired, then you can think about consolidating your debt into one lower monthly amount. These so-called Debt Management plans are very useful to a lot of people stuck in real debt trouble.

A good debt advice service will recognise from the information you give them that you are struggling with your payments and will propose a plan whereby you only pay what you can realistically afford once your essential costs have been factored in (mortgage, utilities, food etc). Your lenders then get a copy of your financial statement to ensure that you are paying the maximum you can afford to pay once your essential living costs are factored in, and then you are able to make ends meet once more.

If you are looking for this kind of debt advice, then there’s some fantastic information on our main site under Debt Management.

That’s all for now, but in the meantime, I know times are getting tough for everyone, myself included, but try to decrease any debts you have.

You’ve probably heard the term “Credit Crunch” so many times that you ought to have a pretty good grasp of what it means. But do you? Most of my friends, when asked, were stumped to come up with a satisfactory answer. The term is relatively new and is still considered slang by some quarters, so a good description is hard to come by. So putting on my heroic hat for a moment, I have put together a little handy guide that should hopefully clarify a few points for you.
OK, so lets start with a basic description. A Credit Crunch is a sudden reduction in the amount of cash available from loans (or credit), or from the sudden increase in the cost of obtaining loans from banks.

So, why might this occur? There are a number of reasons why banks may suddenly increase the costs of borrowing or make borrowing more difficult. It may be due to an anticipated decline in value of the security used by the banks when issuing loans, or even an increased perception of risk on the subject of the solvency of other banks within the banking system, which we have seen plenty of lately. It may be due to a change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises interest rates or reserve requirements) or even due to the central government imposing direct credit controls.
A credit crunch is often caused by a sustained period of careless and badly chosen lending which results in losses for lending institutions and investors in debt when the loans turn sour and the full extent of bad debts becomes known. These institutions may then reduce the availability of credit, and increase the cost of accessing credit by raising interest rates. In some cases, lenders may be unable to lend further, even if they wish, because of earlier losses.

The crunch in general is caused by a reduction in the market prices of previously “over inflated” assets and the financial crisis that results from the price collapse. In contrast, a similar sounding Liquidity Crisis is triggered when sound businesses find themselves temporarily incapable of accessing the finance it needs to expand or smooth its payments. In this case, accessing additional credit lines and “trading through” the crisis can allow the business to navigate its way through the problem and ensure its continued solvency and viability. It is often difficult to know, in the midst of a crisis, whether distressed businesses are experiencing a crisis of solvency or a temporary liquidity crisis.

In the case of a credit crunch, it may be preferable to sell or go into liquidation if the capital of the business is insufficient to survive the post-boom phase of the credit cycle. In the case of a liquidity crisis on the other hand, it may be preferable to attempt to access additional lines of credit, as opportunities for growth may exist once the liquidity crisis is over.
A prolonged credit crunch as we may be currently experiencing from the excesses of the sub-prime market is the opposite of cheap, easy, and plentiful lending practices (sometimes referred to as “easy money” or “loose credit”). During the upward phase in the credit cycle, asset prices may experience bouts of frenzied competitive, leveraged bidding, inducing hyperinflation in particular asset markets. This can then cause a speculative price “bubble” to develop. As this upswing in new debt creation also increases the money supply and stimulates economic activity, this also tends to temporarily raise economic growth and employment.

Often it is only in retrospect that participants in an economic bubble realize that the point of collapse was obvious. In this respect, economic bubbles can have dynamic characteristics not unlike Ponzi schemes or Pyramid schemes which I hope to cover later on if you’re feeling brave.

I personally like the quote from the economist, John Maynard Keynes, when he said in 1931 during the Great Depression: “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.”
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If you get a letter, telling you someone is making a County Court Claim saying you owe him or her money, do not be alarmed. The Court will decide whether you have a debt to pay - and if so, how you should repay it - in a way that is fair to everyone.

The purpose of a County Court Claim
Someone you owe money to (a ‘creditor’) can take a County Court action against you to claim the money. If you pay the amount outstanding, you can avoid a hearing or judgment. If not, there will be a simple court hearing in private. You can attend if you wish, or just send the information the court asks for by post.
The court does not find anyone ‘guilty’ or ‘innocent’. It looks at the facts and decides whether you owe any money, and if so, how you should repay it.
Under Scottish law, the Sheriff Court deals with claims differently.
County Court Claim Form
The court will send you a ‘Claim Form’, showing how much the creditor says you owe them and the details of the claim (though these details can be sent separately up to 14 days later). This form gives you the opportunity to explain your situation to the court.
Replying to a Claim Form
You will receive an Admission Form with the Claim Form, asking you about your income and outgoings. On the form, you can make an offer to repay the debt (or a lower amount if you think you owe less than the creditor claims).
If you do not make an offer and the court decides against you, it may say you must pay either the full amount or monthly payments.
You have 16 days from the date of the postmark to send the form back to the court. Or you can submit an ‘Acknowledgement of Service’ or a ‘Defence Form’, depending on how you want to proceed
County Court Judgments (CCJs)
After the court hearing, the court may issue an order saying you must repay the debt. This order is called a CCJ and will either be for the amount agreed between you and your creditor or, if you can’t agree, a payment set by the court.
If you have judgments from more than one creditor, the court can combine your debts and make an ‘administration order’ - saying you must make a single payment every month to be shared by all your creditors.
What to do if you can’t pay
If you pay nothing, or do not keep up with the payments, the creditor can ask the court to take steps to make you pay, in which case you may have to pay more costs. If you genuinely cannot pay, even in stages, you can ask the court to:
• change the amount of the regular payments
• suspend the order until you can afford to pay
County Court Judgment (CCJ) records
Unless you pay the full amount of the judgment within one month, your CCJ will be recorded on the Register of County Court Judgments for six years.
Organizations such as banks, building societies, and loan companies use the registered information to help decide whether to give you credit or loans, like a mortgage.
What to do if you disagree with a CCJ
If you have a genuine reason to disagree with a CCJ you can ask, the court not to apply it straight away (’set it aside’). You may have to pay a fee for this. If you don’t have a genuine reason, your application could be treated as wasting court time or even perjury - serious offences that can incur fines and prison sentences.
If the judgment is set aside, things go back to the start of the claim. You have another chance to reply to the Claim Form, and explain your situation. The CCJ is taken off the County Court Register until a new judgment is made.
Changing your credit record
Some companies charge for credit repair services that claim to help you get CCJs taken off the register - get free, independent advice first before using one of these companies.
You can get incorrect information removed yourself by paying £2 to see your credit file and asking for mistakes to be corrected. Remember though, a judgment is only taken off the register if:
• you paid it in full within one month
• it’s set aside by the court (see ‘If you disagree with a CCJ’ above)
You can search the record for any CCJ registered against you and have it marked ’satisfied’ if you have paid off the debt.
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With so much in the news about the state of the worlds banks, you could be forgiven for trying to fix the worlds problems and not concentrating on your own situation. If you’re one of the millions in this country with a little more parked on your credit card than is healthy you may have heard that debts incurred on UK credit cards before April, 2007 may actually be written off under certain circumstances. Yep, that’s right. Written off! We here at Debt Advice Online firmly believe that if you borrow money you should pay it back. No questions asked. We also believe that certain credit card companies have been far too exuberant when it comes to hiking their interest payments after the low or zero % introductory period, which has given them a less than favourable reputation.

So here’s the deal. Your credit card company is required to produce an original copy of the agreement that it had with you, and if this credit card company no longer has this document then the debt incurred on the credit cards becomes unenforceable by law. Now before you get all excited, do not misunderstand what is meant by this. The debt that you have on your credit card is not wiped off. It remains there, but the credit card company cannot legally process any claim for it.

To put it another way, the debt on your credit card stays put, but the credit card company cannot legally ask you to repay it unless they find your original agreement. If you are the kind of person who can bide their time, then you will probably like to know that there is an act of law called the Limitation Act of 1980, which is a six year rule. Under this Act the debt on your credit card becomes non-existent after six years from the last time it was acknowledged.

There are several agencies that can take up your credit card debt problems, and offer to have your debt written off. These agencies provide you with this service against a fee, while they deal with your credit card debt within the legislation which controls such claims. Now I have to officially remain impartial here and not mention any names of companies who have a darn good team who could help you if you so chose. Ahem.

You probably won’t be surprised to learn that since 1995, write-offs of credit card balances rose substantially from £0.1 billion to £1.6 billion in 2003.

It was also the nineties that saw the start of the sharp rise in credit card debts, with the rise flattened to around £1 billion, however if we factor in debt write-offs which rose sharply during 2001 and 2002, the overall debt was pushed up to around £2 billion.

Generally speaking, given the current climate, you will want to get on top of any credit card bills you have especially if those bills are mounting each month. It is wise to look into the possibility of having your credit card debt written off, but if that isn’t possible then working out a sensible repayment plan could be your next best alternative. Debt Advice Online has some great people who can walk you through your options, plus they can help you get the creditors off your back if you are getting constant phonecalls and letters and it’s getting too much for you to cope with.

You would think that the banks would want you to start saving rather than borrowing more money to ensure they had the safety of capital in their coffers, but even today, with not just banks but entire countries going under, you can still pick up a friendly looking credit card with 0% APR for the first sixteen months! Whilst that is a little crazy to my mind, you may think we’ve got it good when in some countries banks send unsolicited credit cards to people with instant balances of 1000’s of pounds even before they’ve signed anything. That is just asking for trouble!

So take care with your credit card, try to get it repaid on time, paying more than the minimum balance, so you actually pay back more than the interest, but also look into clearing your credit card either by yourself or if your not feeling confident with the paperwork try one of the specialist agencies.

Till next time.

Michael Ford