Insolvency Newsletter April 2012

Brits Financial Statistics

Statistics have shown that 70% of Britons have experienced a debt or financial problem.  

This was shown by research conducted by the Co-Operative Bank.

Here are a few statistics you may find interesting (based on 4th Quarter 2011 trends):

•318 people are declared insolvent or bankrupt every day.

•1,473 CCJ’s or County Court Judgments are issued every day.                                                                   

•93 properties were repossessed every day.

•Average household debt in the UK, not counting mortgages is £7,975.

So, each of us on average owes almost £8K in debt.

And many of us, for many reasons, struggle to repay these debts/loans.  We may struggle due to losing our jobs, or it may be through poor money management, or simply being overextended by living beyond our means.

So what are your options if in debt and struggling and looking for help? Let’s look at them-

•Token Payment Arrangement:  This is where you make ‘token payments’ to your creditors each month of £1 or £5 to each account.

•Debt Management Plan:  A DMP, is an informal arrangement similar to a token payment plan in that you make payments each month of what you can afford towards the debts, but these payments are a higher amount than just a few quid each month.

•IVA/Individual Voluntary Arrangement:  This is a formal arrangement between you and your creditors where you make payments of what you can afford each month, this is a formal arrangement.

•Insolvency: Bankruptcy or a Debt Relief Order depending on your circumstance.       

Originally sourced from www.financial-news.co.uk  Photo Credit: Distressed debt – Reorganization from Caston Corporate

Insolvency News

Wiltshire's insolvency rate among lowest in England

Wiltshire had one of the lowest insolvency rates in the country last year, according to new research.

Out of 27,631 businesses, only 193 in the county's local authority area folded - a rate of 0.7%.

That percentage was slightly higher in the Swindon Borough Council area with 112 businesses out of 10,188 going bust - a rate of 1.1%.

In contrast, the highest insolvency rate in England last year was in Slough, Berkshire, with a rate of 2.6%.

The research, carried out for the BBC by Experian, looked at evidence of growth, or otherwise, in every local authority area in England.

The data included information from sole traders and partnerships not normally collected by other data agencies including, for example, people operating online auction businesses from home.

Originally sourced from www.bbc.co.uk

Tech sector to defy bankruptcy bloodbath

An analyst has tipped the tech sector to resist a wider upward trend in UK business failures in 2012 and beyond.

According to BDO, insolvencies among firms in the technology, media and telecoms (TMT) sector will drop every year until 2015, defying an overall rise in total UK business failures.

Some 1,100 TMT firms hit the wall in 2011, down 15 per cent on 2010, the auditor said in its Q1 Industry Watch report, which projects business failures using data from the Centre for Economic and Business Research.

"Failures are expected to decline significantly as domestic high-tech firms drive sectorial growth, leading to declining failure numbers," BDO stated.

In contrast, total business failures rose by 5.8 per cent in 2011 to stand at 23,600. That number is expected to increase to 25,600 this year and 25,800 in 2013, before beginning to taper off.

Originally sourced from: www.channelweb.co.uk

Top 7 Budget Tips to Avoid Bankruptcy

1. Get Organized
2. Live Within your Means- On paper, it might appear that you can justify treating yourself from time to time, but are you spending more than you earn?
3. Accept that a Budget Works for You, Not Against You.
4. Put Your Budget to Work- Below are the four primary expense categories that should appear in your budget. Organizing your expenses this way makes it easier for you to track your monthly spending habits and budget to avoid bankruptcy. 

Fixed Expenses-

•  Mortgage, rent, condo fees, property taxes, home/vehicle/medical insurance.
• Your entire household budget each month should not exceed 32% of your net income.
• Your maximum rent expenditure should not exceed 25% of your income.
• Your maximum mortgage expenditure should not exceed 30% of your income. 

Incidental Expenses-

• Repairs to home or vehicle, cost of gas, child care, clothes, shoes, spending allowances, tobacco and alcohol expenses, pet food, cleaning supplies.

Debt Repayment-

• repayment of student loans, car loans and consumer credit.
• Your total debt service ratio should not exceed 40% of your net worth

Savings-

• Retirement savings, education savings and medical costs.
• Your recommened minimum savings goal should be no less than 10% of your income

5. Compromise and Cut Unnecessary Expenses, These May Include-

• Entertainment
• Clothing
• Beauty Products
• Transportation
• Rent (you may need to downsize)

6. Pay Down Your Debt-

• Make a payment schedule that chips away at your principal. paying interest only prolongs the repayment period and can add thousands of pounds to the total cost.
• Contact your credit card companies and request taht the lower your interest. you'r reclaiming control, so be persistent.
• Consolidate your credit cards. You can do this be transferring the balance of your other credit cards onto the card with the lowest interest rate. Cut up your old cards.
• If the above steps do yield results, seek credit counselling and bankruptcy advice to help you choose an effective debt repayment program.
• Take on a secone job, ask for a raise and increse your hours, as required.

7. Get Expert Bankruptcy Advice

If you are feeling the strain of the financial economy, KMC could help you in any of our areas of speciality.

So please do not hesitate to contact us on any of the following:

Contact Details

2^nd Floor 94 New Walk,

Leicester,

LE1 7EA

Tel: 0844 997 0325

Mobile: 07889 643 611

Email: advice@kmc-consulting.co.uk

Web: www.kmc-consulting.co.uk