Who Are The Consumer Credit Counsel Service?
Frances Walker CCCS
has been one of the leading charities that have helped many people, of all age’s combat debt. As Frances takes a moment from her hectic schedule, she reveals her tips on avoiding debt and the signs of a bad debt habit!
Transcript for Frances Walker CCCS:
Q1) The CCCS is the UK's leading debt charity and our aim is to help people who have become over in debt. The primary aim is to separate the can’t pays from the won’t pays so people who can repay there debts. We help them to do that and put them on a debt management plan. For others whose circumstances have changed so dramatically that they can no longer pay their debts, we will act on there behalf with their creditors and give them advice that is relevant to there needs- perhaps insolvency or bankruptcy. We will explain to them what the consequences of insolvency are and there are no charges for our services.
Q2) In the statistics yearbook for 2005 which we published just a couple of weeks ago, some what to our surprise our biggest group is now people aged 40 to 59. Previously it has been people in their late 20’s to early 30’s which is what you would expect on the economic model of debt. This is when people are starting off in life setting up there homes they borrow money and they are not yet at the top of there earning scale so they are borrowing money when they need it. You would expect people by the time they’ve got into there 40’s or 50’s to be in a position to start to repay their debts as they are coming to the top of there earning capacity. One would hope that they are also saving money for the future, so we will have to monitor that closely because it probably has quite a few implications for society that people in their 40’s and 50’s aren’t starting to save now. We don’t know the reasons for it, we can speculate one of the reasons might be that children are economically dependant for longer now; many parents feel they’ve got to help there children through university and things like that. You can get a lot of people who feel confident because their property prices have gone up and their feeling that they have got a lot of equity in their house- so it’s ok to run up debts because at the end of the day they can afford to pay it off. They think they can afford to pay it off, so it’s actually a quite interesting development and money which needs further exploring.
Q3) If you’re using credit for basic expenses such as shopping and basic life. If you’re increasingly getting warning letters from your creditors it’s probably a bad sign.
Q4) There are two main reasons why people get into debt. One is change of circumstances, so it could be something unexpected very often you get people who would take out a mortgage or get credit and go up to their limit and can afford to pay it very well, then something unexpected could happen- divorce or separation. There are huge causes of debt it could be unemployment, it could be ill health or even an unexpected pregnancy. If there are two of you working and suddenly you face a loss of one’s salary, even if it is temporarily that can push you over the edge into debt. That’s the sort of debt that is always going to be with us. There’s always going to be unforeseen circumstances for the other half. Misuse of credit they have just run up more than they can afford to pay.
Q5) There’s a number of things you can do; you can guard against becoming over extended. A simple rule of thumb is to add up how much you have to pay every month to your unsecured creditors. Minimum payments, personal loans, retirements catalogue debt or whatever, if that comes to more than 20% of your take home pay excluding mortgages then you are over extended -you need to cut back. The other thing you should do is you should never pay just the minimum on your credit cards, because if you do that you will find that your shopping or whatever you bought on your credit cards will cost you a lot of money because the average minimum repayment is 2%. For example if you borrowed £2,000 never borrow another penny and just pay the minimum amount. It would take you 20 years to clear off that debt. The other thing you can do is budget and see how you can manage your money better and there’s quite a lot of budgeting tips on our website www.cccs.co.uk which will help you to show how you should plan a budget. Another good idea, if you just don’t understand where your money is going- keep a money dairy for a week or a month. If you can be bothered, just write down very honestly what you spend your money on -you can look at it and find out ways where you can cut back. For example if you tend to be the sort of person who always buys a star bucks cup of coffee on your way to work or something like that you’ll probably find that costs quite a lot of money, or you could try bring sandwiches to work or something like that. Sometimes people underestimate where they spend their money -keeping a very honest money dairy can be very illuminating.
Q6) There’s over obvious things you can look at that might be able to save you money. If frequently pay your utility bills by direct debit that’s sometimes a way of saving money. There’s a lot of online sites that will help you cut down on your utility bills, like there’s www.uswitch.com where you go in and put in your details. You also need to make sure your getting all the credits, such as tax credits and benefits that you’re entitled to. There is quite a lot of online information about that that can help you. Budgeting is incredibly dull and boring, but it never been easier to do, particularly if your happy with computers and doing it online. There is all these systems which will do all the arithmetic for you and suggest and recommend to do all the hard work. If you spend a bit of time on it and get into it you might find it a quite enjoyable experience to think of ways that you can cut back.
Q7) Ok, well the most important thing is not to ignore the problem to seek help at the earliest opportunity. Go to a charitable organization such as the CCCS, national debt line or CAB and don’t borrow more money to get out of debt. You see an awful lot of advertisements for consolidation loans it’s never a good idea to borrow more money to get out of debt.
Q8) As long as you can afford to pay £5 per month per creditor we can administer that for you. Token payments would only be a short term measure because the average person that comes to us owes £33,000 -so obviously if you’re paying £5 per month per creditor it’s going to take you a long long time to pay off £33,000. It’s not very realistic it’s essentially a short term measure. If the client for example was ill or was temporarily unemployed and you knew their circumstances were going to change you could put them on token payments for 6 months. Then they would go on to a full debt management plan where their circumstances have changed and they can afford to pay more money.
Q9) We have a huge number of people contacting our phone lines and were planning to expand our service by 40% over the next few years in order to meet demand. That’s not necessarily a sign that debt is going up across the board, it’s also a sign that our service is becoming better known. It’s also a sign that people are recognising that they have to seek help with their problems. There’s been a huge amount of media coverage about debt and I think the message is getting through that you have to seek help. The thing that is going up though, without any doubt and is quite worrying is the amount of debt outstanding. Our clients owe on average over £33,000 to 11 different creditors and probably a couple of years ago it was only about £28,000 -so the actual debt that people are getting into is worsening.
Q10) Well one of the things we are looking at as your probably aware that there is a quite an increase in solvencies and bankruptcy’s. We are trying to do a project with clients into bankruptcy- a look further at them and find out why or what the trends are. My guess is it’s among younger people who don’t have any assets and therefore decide to opt for bankruptcy, but we are doing some more to find out if that’s true. The other thing we are looking at is the increase in extreme debt, which is people that owe more than £100000 to more than 16 different creditors. What we are doing is we are looking in great details at 2 or 3 of those people and trying to back track as to what exactly they put on there application forms when they applied for the credit to the creditors- so we know what information the creditors have. It’s beggar’s belief that people have been lent such astronomical sums of money particularly on their incomes.
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Charles & Co - the Debt Help Specialists |
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