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Mike ThomasHow to listen

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Mike Thomas was in the studio with Chris Berrow (deputising for Dave Monk) just after 6pm to comment on the latest set of consumer insolvencies released earlier today.

Mike starts off with explaining what debt options a consumer has and which ones are classed as insolvency. Mike then raises the point that people just don't decided to go bankrupt or propose an IVA or DRO as soon as they experience a debt problem, for some the trigger for their financial woes could have started several years ago.

Then Mike reveals the average cost to the taxpayer to administer a straightforward consumer bankruptcy and explain how a bankrupt is assessed to see if they can afford to pay something each month towards the bankruptcy costs with any surplus going to the creditors in the insolvency.

Read more: BBC Essex Drivetime with Dave Monk, 6pm 30/4/19 - Listen 10 mins

 

Total individual insolvencies 31,527 in England & Wales in Q1 2019, were the second-highest since Q3 2010, reports The Insolvency Service. This is an 16% increase on the same quarter for 2018. Consumer insolvencies combine Individual Voluntary Arrangements (IVAs), Bankruptcy and Debt Relief Orders (DROs).

Individual Voluntary Arrangements (IVAs)

There were 20,235 IVAs in the first Q of 2019, compared with the same quarter last year, an increase of 23.7%.

Last year saw the highest annual level 71,034 recorded since IVAs were first introduced in 1986.

Read more: Consumer insolvencies reach highest Q since 2010

 

Citizens Advice are calling for new rules in the way council tax arrears are collated saying the current system is ‘Outdated and Punitive’ which causes serious financial harm to householders.

Their research found that missing an average council tax payment of £167, in the first month of the financial year (April), can escalate to a debt of over £2,065 in just 9 weeks.

How the fees add up

Read more: Call for changes after a £167 council tax debt can escalate to over £2,000 in just 14 days

 

April 2019 striking numbers - our top 10 from The Money Charity

  1. People in the UK owed £1.633 billion at the end of February 2019
  2. £2,649 average credit card debt per household in February 2019
  3. 2.46% was the average mortgage interest rate at the end of February 2019
  4. £4.05 a day is what the average UK householder spends on water, electricity and gas
  5. Read more: The Money Statistics April 2019 - Our top 10

     

Since the introduction of Debt Relief Orders (DROs) back on 6th April 2009, 254,000 consumers have successfully applied for a DRO and as a result written off £2.3 Billion of debt.

DROs are seen as a softer form of insolvency for people that have a certain amount of debt, little disposable income and few assets and designed to place the least complicated debt discharge cases on a fast-track through the court system with no personal appearance at court required.

What debts can you put into a DRO?

Read more: £2.3 Billion of consumer debt written off in just 10 years with DROs

 

The Financial Conduct authority (FCA) has written to credit card providers after its own research revealed too many firms were applying multiple late payment fees, sometimes in a single billing cycle, when it was evident that the card holder was experiencing financial difficulty.

For some card holders the applied late payment fees would then have an impact on their already maxed out credit card taking the card holder over their agreed credit limit, this was then an opportunity for the credit card provider to apply another fee for breaching that limit.

The FCA found that in many cases firms who were continuing to apply fees in such instances potentially made the customer’s position worse.

Lower credit limits more at risk

Read more: Credit card customers set to save £80m a year in fees

 

The Financial Conduct Authority (FCA) have confirmed that a price cap on the rent to own sector will commence on 1 April 2019. Once implemented it will save around 400,000 consumers up to £22.7m a year from excessive charges.

In other words, the industry is to lose £22.7m a year which they receive for what some people say is exploiting the vulnerable.

The new rules on rent to own from 1 April 2019

Read more: New 'rent to own' rules will save customers £22.7m per year

 

February 2019 striking numbers - our top 10 from The Money Charity

  1. 18.66% Average credit card interest rate in December 2018
  2. -5.9% Change in the average real wage since pre-crash peak in February 2008
  3. 26 years and 5 months Time to pay off average credit card debt making only the minimum payment per month
  4. £7,863 Average consumer credit debt per household in December 2018
  5. Total credit card debt in December 2018 was £72.2 billion. Per household this is £2,634

    Read more: The Money Statistics February 2019 - Our top 10

     

The Police Federation of England and Wales (PFEW) is seeking a three-year pay deal for officers with a five per cent uplift in each year. The claim is to bring police officers pay back to ‘fair levels’.

However, if the government declines the pay award then the Federation will push for a 6.2 per cent rise this year with the increase coming into effect from 1 September.

Details of the pay claim are part of a joint submission to the Police Remuneration Review Body (PRRB) with the Superintendents' Association. The next stage of the PRRB process is the oral evidence sessions scheduled for 27 February - 6 March.

Police officers struggling with debts

Read more: Police Federation - 'We need a 3-year pay deal to rescue officers from financial cliff-edge'

 

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