Paying for debt collection advice?

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A recent stroy from the UK shows that people may be paying for debt advice which could possibly be available for free through outher sources. Please see our free links for debt advice on NZ Blacklist by clicking here.

Story:

People in debt are being charged for advice that they could be receiving for free, according to an industry insider.

Jessica Brown, a spokesperson from talkaboutdebt.co.uk, said that research by the company showed that up to 48 per cent of people in debt have paid money for advice on how to resolve their situation.

She described those in severe financial situations as a vulnerable group who needed to be given the right support and – considering their circumstances – it should be free of charge.

“We completely support any steps by the government to provide better protection for indebted consumers, with our recommendation being the implementation of an industry code of practice,” said Ms Brown.

Last week, the government published a consultation paper called Debt Management Schemes, which will review solutions for both creditors and debtors.

Ms Brown expressed her delight that central government has decided to look into the problem of firms charging people for debt advice.

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Comsumer debt on rise in UK

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Britain’s level of debt increased again the second quarter of this year, with almost double the level of borrowing compared to the first quarter of 2009.

Consumers borrowed £5.5 billion between April and June, nearly twice as much as the £2.9 billion borrowed between January and March, said financial advice site unbiased.co.uk.

Savings levels grew to £21 billion in the second quarter, up from a record low of £14 billion in the first three months of the year.

Despite the rise in saving, the amount represents a 70% fall compared to saving levels in the year ago period.

Unbiased.co.uk said the drop in savings is due to an increase in the number of people choosing to pay off personal debt rather than save.

“After the topsy-turvy behaviour of financial markets and a deluge of contradictory reports on the economy in the media, it is not surprising that many consumers may feel uncertain about their financial standing,” said David Elms, unbiased.co.uk chief executive.

He added that the UK risks “heading down the debt path again” unless consumers rein in their addiction to credit.

“However, it is encouraging to see that Brits are beginning to save again, despite the low interest rate environment,” he concluded

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Money News .co.uk reports complications with personal debts on the rise

Personal debt problems have become more complicated in the past few years because of changes in income and people having mortgage arrears, says a debt expert.

Frances Walker, spokesperson for the Consumer Credit Counselling Service (CCCS), said that it is encouraging see that people are starting to pay off their debts, but in some cases it can be very hard to find a solution.

She pointed out that around 30 per cent of the people that come to the CCCS for advice on how to deal with their debt will end up having to find a way to make more money, plain and simple, but this is tricky with the level of unemployment at the moment.

“Also people’s debt problems are more complicated now than they were a few years ago because they often have mortgage arrears and have experienced a drop in income,” she added.

Ms Walker made her comments following the release of figures by the Citizens Advice Bureau, which show that there has been a 99 per cent increase in the number of enquiries about jobseekers allowance since this time last year.

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Bankruptcy or Settlement?

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(MADISON, Wis.)—A recent analysis found the number of Americans filing for bankruptcy continues to rise. The Association of Settlement Companies (TASC) today reminds consumers who are struggling to pay off their unsecured debt that debt settlement remains a reliable tool for relief, especially when compared to taking the dramatic step of filing for bankruptcy.

According to a report from Automated Access to Court Electronic Records, bankruptcy filings in the United States now exceed 6,000 per day. Reputable debt settlement companies such as those that are a part of TASC—a non-profit watchdog for the industry—can help consumers avoid being a part of that statistic. One reason is that debt settlement companies can often negotiate with creditors to settle for less than the full amount owed.

“Every day the debt settlement industry assists consumers in navigating through their financial straits,” Chris Kesterson, president of TASC, said. “Our staff members are knowledgeable and experienced in working with creditors, who are willing to take a settlement over getting nothing with bankruptcy.”

Debt settlement provides consumers with a three-year plan to get out of debt without the 10-year stain of bankruptcy on their credit report. Bankruptcy also is time-intensive and can be difficult to apply for, if a consumer even qualifies, Kesterson added.

To illustrate debt settlement as a growing choice over bankruptcy, TASC revealed recently that the industry returned more than $2.2 billion in consumer debt last year. In addition, TASC’s research shows more than $500 million in settlement funds saved by consumers are available to credit card companies today.

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Path of Debt

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Consumers are beginning to borrow again which means they are ending up down the debt path again, according to Unbiased.co.uk.

David Elms, chief executive of the comparison website, made his comments following news that people borrowed nearly double in the second quarter of 2009 than they did in the first quarter.

He pointed out that 2008 saw many people repaying much of their debt because of the financial turmoil that went on, but that this trend has not continued.

“The first half of 2009, in contrast, has seen consumers head back down the debt path as they shift back into borrowing,” said Mr Elms.

In the same report it also showed that savings levels have increased from £14 billion to £21 billion in the same period.

Industry commentator Chris Tapp recently claimed that the price of debt has gone up, because people are finding it harder to get work in order to clear credit cards and loans.

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Economic Recovery?

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SYDNEY – The Reserve Bank of Australia (RBA) believes it is “too soon” to be certain that the global economy is on the road to recovery, the central bank’s latest board minutes show.

The RBA left the cash rate unchanged at three per cent for the fifth straight meeting on September 1, as board members pondered whether a raft of local and overseas data presented over the previous month was confirmation of an economic recovery.

“Members concluded on balance that the global economy was most likely on a sustained, if modest, recovery path, though it was still too soon to be confident of this assessment,” the minutes said.

The minutes, published today, repeated comments from the August board meeting saying that if the improved prospects for economic growth were realised, the central bank would at some stage lift the cash rate from its current 49-year low.

“At the previous meeting, members had agreed that if the economy continued to evolve as in the latest forecasts, the Bank would in due course need to adopt a less expansionary policy stance,” the minutes said.

The information at this meeting suggested that economic conditions were indeed evolving broadly in that way.

“Nonetheless, some uncertainty remained about the outlook both abroad and at home.”
The minutes said information presented to board members at the meeting “showed that the situation in the global economy was continuing to improve”.

Gross domestic product (GDP) in the Asian region had been much stronger than elsewhere, while there were some “upside surprises” in countries such as Germany and France, the minutes said. Read more

Debt being paid of in record time!

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Inside Arm reports ;

U.S. consumers are paying off debt at a record pace as the recession lingers. In the past 11 months, nearly $70 billion has been erased from credit card balances, a trend that the ARM industry may need to watch.

Credit card debt outstanding in the United States has fallen by nearly $70 billion in less than a year and continues its downward spiral, according to a government report released yesterday.
The Federal Reserve said Tuesday that consumer credit outstanding in the U.S. declined by $21.5 billion in July, the largest monthly drop on record. The annualized rate of decline, 10.4 percent, was also the largest on record.


The Fed, in its monthly G.19 report on consumer debt, said that revolving debt – mostly credit cards – fell at an 8 percent annual rate in July, or by $6.1 billion. July marked the 11th straight month of declines in credit card debt.

In those 11 months, consumers have shed nearly $70 billion off credit card balances. Banks have also had a hand in the decline, tightening credit lines for their customers.


The trend is one that the accounts receivable management industry, particularly credit card collectors, will need to monitor, according to Mark Russell, director at ARM industry advisory firm Kaulkin Ginsberg.


“ARM companies that specialize in credit cards have been swamped with work this year,” Russell noted. “But if credit card debt continues to contract, there may be fewer accounts to work down the road.”


Collection agencies said that they had more work in the second quarter of 2009 in insideARM’s latest Quarterly Credit & Debt Collection Industry Confidence Survey. Of the collection agencies that said they specialized in financial services work (which includes credit cards), 63.4 percent reported an increase in account placements in the second quarter, up slightly from the 63 percent that answered the same way in the first quarter. But those numbers were significantly higher than the 53 percent that saw an increase in account placements in the second quarter of 2008.

In July, non-revolving debt – like that found in auto, student and personal loans – paced overall declines in consumer credit outstanding. The Fed said that non-revolving debt contracted by $15.4 billion, or at an annual rate of 11.7 percent. The G.19 report does not cover real estate loans.

The decline in non-revolving debt for July will likely prove to be an anomaly, as consumers probably held back on auto purchases for most of the month until the government’s “Cash for Clunkers” program was launched on July 24. As such, the Fed’s non-revolving debt in August is expected to show a significant increase. Student loans also began to roll out in earnest in August.

Taken overall, July’s drop was unexpected and far exceeded economists’ predictions. Economists had forecast consumer credit would drop $4 billion in July, according to the median of 31 estimates in a Bloomberg News survey. Projections ranged from declines of $12 billion to no change from the previous month.

Total consumer debt outstanding in the U.S., excluding real estate loans, stood at $2.472 trillion at the end of July, down from its all-time high of $2.581 trillion at the end of July 2008.