DEBT RELIEF & CREDIT CONTROL

Money makes the world go around

In a modern world where the state milk citizens from the moment they are born with taxes and for many years after they die, it's a welcome sign that while you are alive some states are now safeguarding people from debt with legislation designed to get them back on their feet again quickly. Credit card debt is an example of unsecured consumer debt, accessed through credit cards.

Debt usually results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has.

When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying. This practice is called universal default.

RELIEF

Account holders can request a reduction in their annual percentage rate (APR). A survey conducted by the U.S. Public Interest Research Group in March 2002 found that among its fifty participants, including people of all credit backgrounds, who contacted their credit card issuers, 56 percent received a lower APR. On average the percentage went from 16 percent to 10.47 percent.

Due to the start of the Great Recession in December 2007, multiple credit card debt relief options became widely popular for consumers living in the U.S. with unsecured debt totaling over $5,000.
The various debt relief options available in the U.S. include:

1. Debt settlement

2. Debt consolidation

3. Credit counseling

4. Chapter 7 bankruptcy and Chapter 13 bankruptcy

5. In the UK - Debt Relief Order

Although each of these debt relief options deals with credit card debt specifically, they are also able to deal with other types of debt including personal loans, medical debt, accounts in collections and more (depending on the specific program type). Still, these programs have not been enough to help enough Americans get out of debt, resulting in a government call-to-action by economists for a massive debt bailout.

Bankruptcy concerns

Sometimes the late fees, high annual percentage rates (APRs), and universal default overcome consumers who frequently do not pay off their debt, and the customer declares bankruptcy. If a customer files for bankruptcy, the credit card companies are required to forgive all or much of the debt, unless such discharge of debt is successfully challenged by one or more creditors, or blocked by a bankruptcy judge on legal grounds irrespective of creditors' challenges.

Because forgiveness of debt reduces likelihood of profit and continued survival, the companies are generally willing to offer another deal to the consumers in danger of bankruptcy. This deal consists of reduced APRs, removal of past late fees and penalty charges, and reaging the accounts so that the credit agencies see them as late accounts.

DEBT RELIEF ORDERS (DROs)

These may not apply in your circumstances, but if you really are in serious trouble with debts limited to £15,000, then this may apply to you provided that you do not own your own home.

If you have limited assets, debts of less than £15,000 and very little surplus income then a DRO may be applicable. For example you could be on income support, hence have less than £50.00 disposable income a month. DROs only apply to unsecured debts.

A DRO lasts for a 12 month moratorium period after payment of a fee of £90 and acceptance by The Insolvency Service. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order.

DROs do not involve the courts. They are operated by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries, who will help you apply to The Official Receiver for a DRO to be granted. 

A local Citizens Advice Bureau (CAB) typically is a competent authority with an approved intermediary and the application can be completed on-line. Your DRO will appear on a public register and will remain on your credit file for 6 years.

A DRO is a serious matter, like any insolvency proceeding, and to apply you must meet certain strict conditions:

You can own a car to the value of £1,000 but the total value of other assets must not exceed £300.

After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.

You must be living in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.

You must not have been subject to another DRO within the last 6 years.

You must not be involved in another formal insolvency procedure at the time you apply.

It may be a good idea to seek help from your local Citizens Advice Bureau.

The National Association of Citizens’ Advice Bureaux (CAB)

Citizens Advice

Myddelton House

115-123 Pentonville Road

London

N1 9LZ

Tel: 0207 833 2181

Contact: Lisa Colclough

Email: DRO@citizensadvice.org.uk

Website: www.citizensadvice.org.uk

Please note that Citizens Advice will only consider intermediary applications from CAB employees or CAB volunteers.

The Foundation of Credit Counselling (Consumer Credit Counselling Service)

Consumer Credit Counselling Service
Wade House
Merrion Centre
Leeds
LS2 8NG

Tel: 0800 138 1111 (Mon - Fri 8am - 8pm)

Contact: Martin Swift

Email: bankruptcysupport@cccs.co.uk

Website: www.cccs.co.uk

Please note that CCCS will only consider intermediary applications from CCCS staff

LINKS:

www.moneysupermarket.com/debt/

www.creditaction.org.uk/helping-yourself/debt-advice

www.getbackincontrol.co.uk - a very friendly and helpful advice line: 0800 980 0078

www.moneysavesolutions.com

www.insolvency.gov.uk/insolvencyprofessionandlegislation/DebtRelief.htm

www.insolvency.gov.uk/bankruptcy/alternativestobankruptcy.htm

MONEY FINDER

SolarNavigator is to be equipped with the SNAV intelligent autonomous navigation system. This system is thought to be the only system under development that is COLREGs compliant.

This website is copyright © 1991- 2013 Electrick Publications. All rights reserved. The bird logo and names Solar Navigator and Blueplanet Ecostar are trademarks ™.  The Blueplanet vehicle configuration is registered ®.  All other trademarks hereby acknowledged and please note that this project should not be confused with the Australian: 'World Solar Challenge'™which is a superb road vehicle endurance race from Darwin to Adelaide.  Max Energy Limited is an educational charity working hard to promote world peace.

 AUTOMOTIVE  |  BLUEPLANET BE3  |  ELECTRIC CARS  |  ELECTRIC CYCLES  |  SOLAR CARS  |  SOLARNAVIGATOR