Posts Tagged ‘credit’

INTEREST RATES – ARE YOU READY FOR THE RISE

The Bank of England will soon need to rediscover its trigger finger and fire the gun on as interest rates rise in the near future. We have enjoyed 7 years of ultra-cheap rates and “cheap money”, however any rate change is set to have a significant impact.

Bank of England’s Monetary Policy Committee meets on 8 October and though they are expected to vote to keep rates at 0.5% there is a consensus one more member may vote in favour of a rise. Furthermore, members have conceded a rate rise in the near future is inevitable.

What the committee is weighing up is the sharp rise in disposable household income and the effect global uncertainty will have on the UK economy, this uncertainty is caused by the ongoing Eurozone crisis and China’s struggles. Mark Carney, Bank of England Governor, has said the rise in household disposable income is the next step towards a rate rise although economists have argued the economy may be unable to handle a rate rise come Spring and Summer 2016 due to global economic uncertainty.

When I research the interest topic the literature rarely focuses on Northern Ireland. The fact is a high proportion of borrowers here are “mortgage prisoners” and many simply will not be able to sustain mortgage payments. When you couple rising mortgage payments and increase in general in credit commitment payments many will find themselves in a dire financial position.

Bell & Company are advising borrowers concerned with mortgage payments to contact them today. It is important to “act” and not “react” to the proposed changes in interest rates. We cannot stress enough the inevitability of this rate rise, we have had our time utilising cheap credit and many will now feel the pinch. Even if you are in Negative Equity our expert team can assist. Please call the office on 02895 217373 to arrange your free initial consultation.

The team look forward to taking your call.

 

IVAS – WHY WE DON’T LIKE THEM

Our client liaison team often field queries in respect to IVAs. Many initial enquiries requiring our resolution service have a portfolio of properties in negative equity and feel the IVA route may suit them, accordingly they often contact an Insolvency Practitioner.

Typically at Bell & Company we do not like IVAs, though in some instances they can have their benefits. If an individual has a diverse range of unsustainable credit such as mortgages in arrears, unsecured credit and HM Revenue & Customs debt it is an option. The primary reason we do not encourage clients entering IVA’s is the length of time the client is in the IVA, 5 years. Initially the individual may feel the benefit paying an agreed sum into the agreement every month and not having to worry about creditor perusal. But, over time we find the debtor becomes frustrated with the payment given it is over five years, it adds up to a good annual family holiday!

Many debtors do not understand the IVA process, you don’t simple just sign the dotted line and are debt free. Your creditors vote to accept the IVA proposal and this is a face to face meeting. Many IVAs don’t go through simply because Creditor’s do not turn up and vote. Furthermore, if a creditor wishes to be more aggressive in their debt collection approach they may not vote and instead commence legal action to recover outstanding monies.

As the agreement is over 5 years there is a good chance an individual’s circumstances will change. If they worsen, payments may become unsustainable and an IVA variation is required where creditors again have to meet to vote. Or if the IVA fails you are once again liable for the balances outstanding, effectively meaning the IVA was ineffective and ultimately a waste of time.

The damage to your Credit Rating is also dramatic as an IVA is a form of insolvency. We have already eluded to in a previous blog entry that your Credit Report and Score are an important tool and in an IVA your credit will be badly effected and will not improve for 5 years.

Other options are available and Bell & Company can offer expert advice in these areas. Firstly, there is the option to enter into dialogue with the creditor in question and appointing an expert advisor, such as Bell & Company, can lead to reduced settlements in a shorter time frame and often with a smaller impact on your Credit Rating.

Secondly there is Bankruptcy, the dreaded “B” word! The stigma of Bankruptcy has been reduced now given it is an option which so many have utilised since 2008 We recommend you always take control of your Bankruptcy and put forward a Debtors petition rather than be made Bankrupt by a creditor. Although a concerning thought Bell & Company advisors are trained to give you the full ramifications of Bankruptcy and what can and can’t be done. What we like is that it “clears the decks” and gives you a straight edge to start again and is particularly useful for a younger individual. Your credit is damaged but the time period in Bankruptcy is one year rather than 5 for an IVA and credit options are available post-Bankruptcy to improve your rating over time.

If you have been given advice to enter an IVA why not call Bell & Company to discuss other options. All our initial meetings are free and we offer a relaxed environment to discuss your circumstances. Even if you do not sign up as a client we can offer you an insight into the other options and ramifications and if you choose not to utilise our services we will bear no grudge. So call an advisor today on 02890 517047 to discuss your scenario. We await your call.

Terry Bell – Director