A diary of a debt adviser

Pickle29

National_Debtline wrote: »

Hello again,

From a personal perspective, I think the best copings trategies are:

A) Be organised[/FONT tick, I have a money book where I write everything down, I check my bank balance on line everyday and reconcile weekly with my money book, I have a manual filing system for all my paperwork and I have a series of spreadsheets, with budget, balances, interest and forecasts on - is this organised? Do I need to do anything else?

Share what you’re going through with otherstick, only 2 family members and this forum though!

C) Realise that you’re not the only one going through it (We received over 20,000 calls in January alone!)

tick, this makes me feel better

Thank you, I've only been on my DMP for 4 months but as I have concerns or questions I know I can come on here and find solutions and support :j
I just need more help in posting replies and using the emoticons! :T

National_Debtline

Budgeting

Without doubt, the most important area of dealing with finances is budgeting. Not only can it help deal with difficult debt problems, more importantly it can ensure that people enough money to meet all essential outgoings. Regardless of anyone’s financial situation I think it is absolutely vital to regularly keep track of income and expenditure. If you are like me you probably tinker with your budget often, I think I do it on a daily basis! Most of you have probably had a go at completing a statement of account that Martin links to here on MSE, I think it is very comprehensive. The one we use is very similar. It is industry standard which means that creditors should also recognise it. When we speak to a caller we begin by filling in the standard budget. Creditors would be sent a condensed summary version. You can have a go at completing your own budget right here: https://www.nationaldebtline.org/EW/steps/step2/Pages/Step_2_11.aspx

If you take time to look at the standard budget, we place various essential outgoings within groups. There are guideline figures that are deemed as fair and reasonable for each of these groups. The personal budget on our website helps you stay within the guidelines by offering helpful suggestions as you complete the process. If any of your figures are higher than average, you can write a brief note to let the creditors know why this might be. An example could be special dietary requirements.

There are rules within the Lending Code and the Office of Fair Trading’s Debt Collection Guidance which make clear that a creditor should give serious consideration to a budget which adheres to the expenditure guidelines. If you need to negotiate a reduced payment with your creditors, a good budget can really help you.

Be realistic

I think the fact that so many people post up their statements of account is really useful. Many of the suggestions that the forum community make are great, and often they can help turn someone’s situation around quickly. Dealing with debt does not mean that you have to punish yourself – and reducing your food spending so that you have to live on bread and water is not encouraged. Sustainability is important – especially as it can take several years to clear the borrowing. The guideline figures allow for a reasonable degree of flexibility. The byword is reasonableness. It is perfectly OK to have internet or a television package so long as the expenditure is fair. The same applies for gym memberships and allowances for hobbies. Drawing up an effective budget can be an art, and one which does require a bit of time set on it. There is no point saying that you can live on £200 for groceries for a family of four if three weeks into your month you have spent that amount.

Hardcore budgeting or debt management?

It may be possible to reduce your outgoings to such an extent that you can meet the minimum payments on your credit agreements. If you believe that your reductions are sustainable you may be able to avert a long-term debt crisis. What is not recommended is reducing your outgoings to an unsustainable level simply to meet the minimum payments. It may be more effective to work out a realistic budget and then see what money might be left to offer the creditors. The general approach is to then offer what is left (we call this the ‘surplus’) to the creditors. This is usually via pro-rata payments – creditors get a percentage of the surplus based upon how much each creditor is owed; a bit like cutting up a cake depending on who is hungriest. Creditors will consider accepting a lower payment and freezing the interest and charges if the financial statement is reasonable. These lower payments may affect your credit score but ultimately the debt will be paid off via a sustainable arrangement. There are various ways to approach debts if you are unable to meet your minimum payments, do consider seeking further help and advice if this is likely to be the situation that you find yourself in. There is ALWAYS a solution.

National_Debtline

Hello all!


I would like to share some statistics with you all. These are from January. I thought it might be useful to show you that there are plenty of folks out there looking to get their debts under control.

• We received just over 20,000 telephone calls.

How much debt were our callers in?

• 39% of callers owed between £1 and £5,000
• 32% owed between £5,000 and £15,000
• 12% owed between £15,000 and £25,000
• 9% owed between £25,000 and £50,000
• 4% owed between £50,000 and £100,000
• 1% owed over £100,000

These amounts do not include secured borrowing like mortgages or secured loans (unless there are arrears, in that case we generally list just the arrears figures).


About our callers

• 53% of callers were female.
• 33% of callers work full-time.
• 15% of callers work part-time.
• 1% of callers work under a temporary contract.
• 5% were self-employed.
• 17% were unemployed.
• 9% were sick.
• 3% were disabled.
• 6% were pensioners.
• 7% cared for their children.
• 23% of callers lived in mortgaged accommodation.
• 58% of callers livde in rented accommodation.
• Most callers were between 36 and 50 years old (35%).

Debt types


Here are the most common types of debts our callers had. Most clients would have more than one type of debt.

• 49% of callers owed money on a loan or credit card (or both).
• 47% owed money on at least one credit card.
• 24% had council tax arrears.
• 17% had gas/electricity arrears.
• 15% owed money on at least one catalogue.
• 14% had rent arrears.
• 13% had water arrears.
• 13% had at leats one payday loan.
• 11% were in arrears on their TV license.
• 10% had a benefit or tax credit overpayment.
• 10% had a Magistrates' court fine.

This is just a very brief overview of our statistics. If you have any questions I'll be delighted to answer them for you.

David.

honeypooh1980

Very interesting reading - i shall be subscribing.

National_Debtline

honeypooh1980 wrote: »

Very interesting reading - i shall be subscribing.

Thank you!

If you have any questions, please do give me a shout.

Best wishes,

David.

National_Debtline

As today is the fifth anniversary of the record low bank of interest base rate, I've been looking at our data about homeowners and debt. As I mentioned earlier, 23% of our callers from January were living in Mortgage accommodation.

• In January 2013 that statistic was 27%
• In January 2012 it was 33%
• In January 2011 it was 40%
• In January 2010 it was 42%

As you can see there is a clear trend. I'm guessing that the low interest rates have helped those that are home owners manage their liabilities quite easily whilst those in rented accommodation have really struggled. Their rent instalments have generally increased compared to mortgage rates which may well have reduced - especially if they had tracker mortgages.

It's obvious that interest rates are going to climb at some point, my concern is what is going to happen when it does? Is this a ticking time bomb?

David.

National_Debtline

I thought you might like to learn about the number of debts our callers have. These statistics are from Feburary.

25% of our callers had either one or two debts.
34% had between three and five.
28% had between six and ten.
6% had between eleven and fifteen.
2% had between sixteen and twenty.
1/2% had between twenty-one and twenty-two
.11% had between twenty-six and thirty.
.04% had thirty or more.

As you can see, the vast majorty of people have several debts to deal with. These are usually a mix between priority debts (such as mortgage, rent, council tax, gas, electricity etc.) and non-priority debts (such as credit cards, loans, overdrafts and store cards etc.).

If you have any questions please feel free to ask!

David.

cazmanian_minx

David, just out of interest, do you have the statistics for payday loans versus other types of debt and how that's changed over the past few years?

National_Debtline

cazmanian_minx wrote: »

David, just out of interest, do you have the statistics for payday loans versus other types of debt and how that's changed over the past few years?

Hello there,

This is a great question, and interesting perhaps for the wrong reasons.

Currently just over 1 in 8 callers have at least one payday loan: 12.78% of callers.

Here's the stats for the last few years:

Jan 14 - 12.78% of callers
Jan 13 - 13.31% of callers
Jan 12 - 8.71& of callers
Jan 11 - 3.28% of callers
Jan 10 - 0.61% of callers
Jan 09 - 0.45% of callers
Jan 08 - 0.40% of callers
Jan 07 - 0.22% of callers

As you can see, things seem to have plateaued off at the moment - but we pay a very close eye on payday loans as they can be an incredibly tricky cycle to get out of. They can cause a huge amount of difficulties for our callers.

It's incredible that that eight short years ago we only had one in 455 callers with a loan of this nature, now it's 1 in 8.

Another point that I would like to add is that many of our callers with payday loans have several. I spoke to someone who had about twenty the other day.

If there is anything else you would like to know, please ask!

Best wishes,

David.

tiger_eyes

Fascinating diary. Just wanted to thank you and your colleagues for providing free, impartial, probably lifesaving advice to people in desperate circumstances.