Male Debt Advice

June 23rd, 2010

Sex and Debt Advice
Recent statistics have shown that the number of men who are currently seeking debt advice has increased by over 50%. So, does this point to better money management amongst the fairer sex? Have men been hit hardest by the credit crunch?

The number of men seeking debt help has undergone a marked increase over the last three years. A credit counselling charity has seen a huge jump in the number of men who are making use of its debt helpline. Conventionally, it is women who are far more open to seeking debt help and discussing their financial worries. This could be the result of some outdated sense of machismo amongst men, who see asking for help as a weakness. However, there has obviously been a change in attitude that makes it easier for men to ask for debt help.

Initial predictions seemed to show that the hardest hit demographic would be middle class females but it’s seems as though working class men are actually finding it the most difficult. It’s especially interesting as this is traditionally the group who find it most difficult to vocalise their concerns and ask for help. In most cases, the man of the house is still the primary bread winner but unemployment and rising costs have put him under increasing pressure. The sexes differ in terms of their attitude to part-time work too. Men tend to be unwilling or unable to take on part-time work when they do lose their jobs.

There are a greater number of women employed in the public sector in the UK, which has, thus far, largely been sheltered from substantial lay-offs. However, as substantial public sector spending cuts begin to take hold, it will be interesting to see whether this redresses the balance between the sexes and debt. This suggests that the primary cause of these debt problems is loss of earnings. In our experience of providing debt solutions, Harrington Brooks know that it’s more often an unforeseen change in financial circumstances that leads to debt, rather than any irresponsible attitude to spending. This is serving to combat the stigma surrounding debt advice and helping men feel more comfortable coming forward, facing up to their debt and getting the help that they need.

The Consumer Credit Counselling Service said that in 2009, half of those men that came forward to ask for debt help gave unemployment or reduced income as the cause of their debt problem; only about a sixth of women who sought advice gave unemployment as the cause of their debt problem. This highlights a distinct difference in debt between the sexes but as to whether this will find a balance throughout a prolonged recovery is yet to be seen.

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Massive Cost of Capital Gains Tax

June 9th, 2010

The newly formed coalition government has announced plans to increase Capital Gains Tax. However, in addition to the extra tax charges, the move could also cost the UK economy as many as 61,000 jobs. The Government plans to raise the rate of Capital Gains Tax from 18% and potentially bring them into line with the tax applied to your earnings. So, for some people, Capital Gains Tax and Income Tax could be as much as 40 or 50 per cent.

Capital Gains Tax is applied when you sell off a valuable asset. This could be property, shares or other investments. This might not seem to impact too heavily on your finances, if you don’t think that you have significant assets but it’s been suggested that up to a million people will be caught out by this increased rate of tax each year.

The increase in tax aims of to counterbalance and fund the proposed income tax cuts for lower income households. However, as those that hold these valuable assets can decide when and if they want to sell, this increase in Capital Gains Tax could act as a deterrent, taking away any incentive to sell their assets and actually cause a drop in overall economic activity.

Taking a model from other European countries that have gone down this route, it has been estimated that an increase in Capital Gains Tax to 40% would actually result in a total cost to the UK economy somewhere in the region of £3-£5billion. To put it another way, that’s over 60,000 people losing their jobs.

Increasing Capital Gains Tax makes it more expensive for businesses to raise capital. The knock-on effect of this is often a drop in production and as a direct result of that, a smaller workforce. As we know, a sudden change in financial circumstances, like losing your job for example, is a common cause of debt problems. Regardless of the stigma surrounding debt, it is seldom caused by frivolous over-spending and irresponsibility. Getting specialist debt advice as soon as you find yourself in financial strife is key to a smooth, fast acting debt solution. The longer you let the debt go untreated, the more stressful the situation will become and the more limited the debt solutions that will be available to you. Get in touch with an advisor at Harrington Brooks and they’ll talk you through your options.

Ultimately, there was always going to be lasting fallout from the economic crisis and it’s going to affect people in different ways. On the surface, funding a cut in income tax for lower income households with an increase in Capital Gains Tax would seem to be a sensible solution. However, as we’ve seen, this cut in Capital Gains Tax has a knock-on effect that could result in substantial job losses for the workforce that was meant to be served by this drop in income tax. Financial security is about being prepared for these unforeseen eventualities.

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Debt Comes to Disneyland

June 2nd, 2010

Disneyland may be touted as the “happiest place on earth” and there’s certainly no denying that it’s a favourite holiday spot for a lot of UK families but thanks to the recession, visitor numbers to the European branch have been tumbling. In fact, for the first time, EuroDisney looks set for a covenant breach on its debt commitments.

Disneyland Paris has felt the effect of the European credit crisis quite acutely, with a particular drop in the number of visitors from the UK, caused by the record low value of the pound against the euro. While still managing the debt used in the park’s construction, it is estimated that almost €2billion worth of the debt is still outstanding. The service of this debt, coupled with EuroDisney’s biggest stock fall in two years, resulted in a severe shortfall against its financial targets.

For EuroDisney, as there would be for any individual who failed to meet their debt obligations, there are pretty serious consequences. Should they breach their debt covenants as expected, royalty payments to the Walt Disney Company and interest on the original loan for construction of the park will go into long-term credit agreements. This could cost them a lot longer in the long run but they claim that the potential for missing these obligations is small. For any individuals facing growing difficulty in meeting their credit obligations, the example being set by EuroDisney is not one to follow. At the first sign of debt difficulty, ensure that you seek professional debt out so you are getting expert help about how to deal with your debt.

Disneyland Paris has not been a financial fairytale for EuroDisney. Since 1992, they’ve teetered on the brink of bankruptcy a few times; being saved twice by debt restructuring and once by an emergency bailout from a Saudi investor in 1993. Few people have such a benefactor to help them through financial hard times but there are debt advisors, like Harrington Brooks, who are on hand to offer dedicated debt help. A debt management plan can help you to regain control of your finances as it allows you to make just one, lower monthly repayment which is split between your existing unsecured creditors.

The social cost of their debt may not be evident to visitors as they stroll around the park but it was only last year that the staff went on strike in response to a pay freeze. This highlights how a financial epidemic can spread and your personal financial circumstances can change unexpectedly.

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The Duchess of Debt

May 17th, 2010

The Duchess of York has never strayed too far from the headlines since her divorce from Prince Andrew in 1996. More often than not, this sustained media presence has been the result of her poor financial management and ongoing debt problems. Her most recent foray on to the front page is the result of her being filmed while allegedly offering to sell access to her ex-husband.

There was no shortage of front page fodder during her marriage to the Prince either. Although she did strive to be involved with various charitable works, the Duchess seemingly found it difficult to make the transition from independent woman to royal wife and there were numerous occasions where she came in for criticism. The main cause of such criticism was her apparent exploitation of the position of Duchess. Fergie came in for particular condemnation for selling family photos to a popular celebrity magazine. However, the most scandalous photographs emerged in 1992, apparently showing her financial advisor sucking her toes.

By 1995, the duchess had amassed about £4million worth of debt and the Queen responded by publicly tightening her purse strings. Fergie managed to solve her debt problem by striking ambassadorial deals with foreign corporations. Weightwatchers in the US, cosmetics company Avon and Waterford-Wedgwood were quick to offer deals that traded on her regal celebrity. In tackling her debt problem, the duchess managed to reinvent herself as the shrewd businesswoman and even though her foray into chat-show hosting was fleeting, she battled debt and built her media profile. She maintained this profile with a TV advert for a popular fizzy drink, a cameo role in Friends and a part in The Celebrity Apprentice.

In 2008, the duchess spent six months living with a family of six living in Hull as part of an ITV documentary on the benefits system. She was subject to yet more criticism while promoting the programme, stating that she could “live in a council house and below the benefit line.” Well, last September, she was taken to court by three creditors who were seeking settlement of outstanding debt amounting to over £20,000.

Someone in a similar situation owing £20,000 of unsecured debt may be able to qualify for an Individual Voluntary Arrangement (IVA) with Harrington Brooks as the requirement of this effective debt solution is typically a minimum of £12,000 worth of unsecured debt, divided between three or more creditors.

Although her debt problems were refuted, just a month later, as the duchess was celebrating her 50th birthday, the news emerged that Hartmoor LLC, the American company in which she was a majority shareholder, was to be closed with an outstanding debt of over $1million.

Still committed to a number of charities, the duchess is active in raising money for underprivileged children and highlighting the difficulties faced by young people caught up in conflict zones all over the world. She set up Children in Crisis in 1993, is a patron of the Teenage Cancer Trust, Tommy’s Baby Charity and the Motor Neurone Disease Association.

Sarah Fergusson’s own process of debt management is probably not a model to be encouraged but it does prove that no debt problem is beyond repair. There is a debt solution to suit every circumstance so there is no reason to let it get the better of you.

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Dangerous Debt – Tackling the Loan Sharks

May 15th, 2010

A new campaign designed to curb dangerous borrowing habits and tackle loan sharks has been set up by the Office of Fair Trading (OFT). They are striving to combat notorious loan shark black-spots in order to limit their influence on vulnerable people who feel trapped by the burden of their mounting bad debts.

The financial services watchdog has released a statement that paints a worrying picture of the most at risk portion of UK borrowers. The OFT has warned that somewhere in the region of 165,000 British households find themselves at the mercy of illegal money lenders. The vast majority of those in the grip of loan sharks live in the most deprived parts of the country are many view themselves as outside the system of support designed to solve these serious debt problems.

So far, the OFT has been running a successful “Stop Loan Sharks” campaign and has managed to help somewhere in the region of 12,000 people to escape the grip of these unscrupulous lenders. This activity has thus far resulted in illegal lending to a value in excess of £30million being written-off and jail terms for the loan sharks amounting to over 60 years.

This is just the beginning though, as the OFT aims to build on their successful campaign with an online video and a nationwide poster and leaflet promotion. The bottom line is that anyone and everyone in the business of lending money must have a consumer credit licence. For those people who are facing the stress of mounting debt and feel that they are left with no option but to use a loan shark, the Office of Fair Trading have a message for them too; you are not breaking the law by borrowing from a loan shark, they are. As such, vulnerable borrowers do not have to fear any legal recrimination.

In the UK, the problem of unlicensed, unscrupulous loan sharking is extremely serious. Although it may at first appear to be easy access to cash in difficult financial circumstances, it can turn very nasty, very quickly. In areas of significant financial depression, with whole communities finding themselves trapped in the spiral of bad debt, loan sharks can use this vulnerability to excerpt control over desperate families. It shouldn’t come to this though. There are trusted financial institutions that can offer help and advice to those struggling with bad debt. Harrington Brooks are one of the longest established in the UK and can help you to repay your debt at a level which is affordable to you.

If you have been the victim of a loan shark, call 0300 5552222, text “loan shark” to 60003 or email reportaloanshark@stoploansharks.gov.uk Remember, you’ve done nothing wrong. The buck stops with the illegal lender.

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