The Nation’s Debts

The Nation’s Debts

The Government’s plan to deal with the personal debt levels was revealed by Alan Shatter and Michael Noonan last month in the Dublin city centre room. The personal debt crisis is what sets Ireland apart in this financial crisis and Noonan announced that the Government is now putting in place a legal basis to deal with the personal debt. They are already dealing with the sovereign debt and the banking debt, but this is the introduction of a reform of insolvency law of proportions unseen since the foundation of the State.

Several days later in Davos, Taoiseach Enda Kenny addressed an audience of international delegates and described the debt as created by greed that got out of control, which has caused negative responses at home. McKinsey has reported that Ireland’s debt, as a percentage of GDP, is at 124%, which signals a massive problem when compared to the 77% of regular mature economy. While it may seem that Ireland is financially better off than other troubled countries, the ratio of personal debt to gross domestic product is 66% in Greece, 99% in Portugal, 82% in Spain and in Italy the ratio is only 45%. This, however, doesn’t provide the whole picture – there are at least 30,000 people with unsustainable mortgages and around 150,000 who struggle to make ends meet every month.

The Shatter/Noonan Personal Insolvency Bill cuts the bankruptcy period to 3 years and offers three voluntary debt-settlement systems. However, banks do not want to see mortgage debt included in the Bill, even though it accounts for almost 70% of the problem. They are afraid that borrowers will be discouraged from maintaining their mortgage-loan repayments.

Personal insolvency trustees are key for the success of the voluntary measures. Shatter says that these will be people with different skills (accountants, lawyers etc.) performing the role of financial intermediaries. It is still unclear, however, to whom these people will answer. The “competent authorities” authorized by the Insolvency service are most likely to include the Law Society , Central Bank and the Irish Auditing and Accounting Supervisory Authority.

While Aidan Lambe, the director of Chartered Accountants Ireland, stresses that accountants have been handling corporate insolvencies for generations, Mortgage Negotiators director Trevor Grant says that experienced mortgage brokers are best for the job when they meet the Central Bank’s qualification criteria.

The skills of the trustees will have to include financial underwriting skills, so it is ironic that the best candidates for saving the people with mortgage debts are actually those who signed off their bad loans. Knowing how certain banks respond and what their position is will help trustees in approaching the different banks. Mortgage Brokers’ Karl Deeter thinks that the right candidates will have to be able to work in an operational rather than notional sense. Accountants have the numeric skills, solicitors know the legal basis and brokers understand the property market. The trustees will need to have different backgrounds. Skilled and talented trustees will be especially useful in the first rather drastic stages of the insolvency process since they will be more able to strike a better deal.

Deeter believes that imposing costs on the creditors and making them pay at least a portion of the trustees’ fees will help pressure them into resolving the problems before reaching a crisis stage. Grant points out that property investors will not want to sit and discuss restructuring loans and banks only care about their portion of an individual’s indebtedness. This means there is a need for a more holistic approach. Interested parties have been invited by the Government to consultations, but the full picture will only appear by the end of the following month.

Government Borrowing in the UK is Down

Government Borrowing in the UK is Down

In January Britain’s government received more money than it borrowed for that month. This is good news despite the one trillion in debt that is still left to be paid. Receiving more money than they borrowed meant they were able to get ahead. You cannot get ahead if the government is constantly borrowing more to cover expenses.  There had been some doubts because people were losing faith in the economy, but this latest news gives those same people hope. It is no secret that the government borrowing money can harm the economy, and the debt that is owed by the UK is in the trillions.

The Office of National Statistics released a report that showed an increase of over £2bn that the public sector had paid back in the past year. That is a significant increase and one that has not been overlooked. The fast completing of tax returns this early in the year has helped boost the economy considerably. The money was put towards the debt and was more than they had estimated that they would be able to pay.

The amount of money that the government had borrowed had taken a significant raise from the amount they borrowed last year.  It was pushed into the trillions after it had remained in the billions for so long. Pushing the debt down from this big boost is something to be celebrated in Britain; it signifies an upturn in the economy and is a great symbol of hope for the future. The debt is significant and that is one thing that Osborne has vowed to decrease as a goal. The debt owed by the UK is second to only Japan in the amount owed. This is concerning to lots of people on the front lines of the show that is Britain’s economy. This includes everyone from brokers to private businessmen because they all play a role.

Another thing that had people losing hope was the threat of the UK being removed from its triple A credit rating, which would be a blow to the country. This threat came from Moody’s credit company which was accessing the situation and was also worried about the near future of the UKs economy. While the economy is fragile things like this show that it is possible for it all to turn around. Since the debt has been reduced it shows that the deficit plan of the government is working to reduce borrowing. There are still people who are petrified that a recession is inevitable.

Chancellor Osborne said that he would reduce the government’s borrowing to £127bn this year. With the significant drop in January you would say he is on his way to hit this target. While there are some in the government against the plan to fix the deficit it still moves forward as planned. There are always road blocks and there are always going to be road blocks, but as of now he is on track, and that is a relief to the people of Britain.

How Unemployment is Impacting Personal Debt in the UK for 2012

How Unemployment is Impacting Personal Debt in the UK for 2012

There are several issues that relate to personal debt in the UK. One of the greatest issues that people have involves how debts are rising as the unemployment rate in the country is going up.

Current statistics state that about 2.67 million people around the United Kingdom are unemployed. This has resulted in an unemployment rate of 8.4%. This is the highest rate that has been experienced since the 1990s.

In fact, the ability of people to find work has been a challenge. More than 800,000 people around the UK have been unemployed for at least twelve months.

This relates to personal debt in the UK because it involves a large amount of money being owed due to a lack of ability to get money from working. The total amount of personal debt in the UK has risen to be worth close to £1.5 trillion as of the end of 2011.

The interest that comes with this debt is especially difficult for many people to manage. It is estimated that people in the country spent about £170 million on interest payments every day in December 2011. This is a minor increase over what had been spent a year earlier. This may be influenced by Christmas expenses but at the same time it is a sign that people who have lost their jobs are having tough times with paying off their debts on time. They are being forced to pay interest only.

The worst concern for UK personal debt involves how younger people who may not be fully experienced with debt management are adding to this total. There are more than a million people between the ages of 16 and 24 who are unemployed. This results in an unemployment rate of more than 20% for this age group.

This is an issue for personal debt because people who are not able to find jobs are often more likely to suffer from more personal debt. It is most evident with those who have been employed for a while and suddenly see themselves being laid off.

This is especially problematic when the total amount of money being spent on debts is considered. People are spending approximately £1.25 billion on items with plastic card transactions. This is a sign that the personal debt problem in the UK may end up sticking around for a while.

There is one positive sign to see with this factor. The number of job vacancies around the UK is very close to the half million mark. Therefore, there is a potential that the unemployment rate could decline if enough positions are actually filled. This might cause the total amount of debt to go down if people can actually earn more money.

This point about UK personal debt is one that needs to be understood. Personal debt is being heavily influenced by unemployment in the country. The rise in unemployment is a serious problem because it involves the way how people around the country are not in a position to make their payments as they should be able to.

Dunne and Maxwel Debt Management Company Raided by the Central Bank

Emergency legislation is required to save people that deal with debt management companies.

This was brought to our attention after Ann Fitgerald from the National Consumer Agency Declared that full regulation is needed to take care of people who dealt with these type of companies.

Her statement emerged when it was announced the Central Bank had contacted more than five hundred clients of Dunne and Maxwell, the Irish debt management company based in Dublin also known as “Yourmoney”

The correspondence encouraged clients to freeze all repayments to the company and “give consideration to getting in contact with the Garda” if the payments they have been sending each month were not as they balanced sorrectly with their creditors

Nobody was available today from Dunne and Maxwell to make a statement they have been operating within the debt management industry in excess of four years.

It is unknown what amount of clients are involved but it is assumed to be close to 500, the Central Bank wrote to each one of the customers on the 20th January 2012 recommending them to cease with any further payments to Dunne and Maxwell instantly.

The letter from the Central Bank claimed that it was in the interest of the public and as part of a fundamental review of the whole of the debt management industry, that they had inspected Dunne and Maxwell and were alarmed regarding the managing of customers monies and additionally the way the organisation had been performing business.

The Central Bank has placed a report on their website stating that clients of Dunne and Maxwell really should consult with the lenders and make other arrangements for forthcoming installments, they have also approached the loan merchants requesting them to be lenient with individuals who are being seriously affected by the consequences brought about by working with Dunne and Maxwel.

The Central Bank does not have any control over debt management organisations, which the consumer agency claimed should be revised speedily. The Consumer Agency thinks that the Government must act fast to control all businesses conducting business inside of the debt management profession.

This one is the 2nd such crash involved with consumers money in Ireland recently, the other being Home Payments Limited In Dublin whereby money transferred by consumers was lost.

Anne Fitgerald of the National Consumer Agency likewise called for legislation when this organisation went in to liquidation unfortunately her demands appear to have been unheard.

Individuals paying funds in to a Debt Management Business in Ireland who is concerned that their repayments may well not be safe really should call up the Central Bank on 1890-777-777

DandM