Birmingham is the UK's second city. A large proportion of the population in Birmingham are worried about debt and many are now changing their spending habits to try to cope with rising costs of living coupled with large debt burdens.
The Growing Debt Problem in Birmingham
Birmingham is a hot bed for people with serious debt problems, as more and more borrowers succumb to unmanageable mortgage debt. Birmingham is one of the largest cities in the UK and its economy has changed over the last few years with service sectors replacing manufacturing as the main employer enriching the lives of many of its two million citizens. Despite how great Birmingham has become many families are struggling with serious debt of over £30,000.
Debt is proving to be a serious problem all over Birmingham. The amount of people in debt calling Help With Debt helplines who say that debt has steadily crept up on them is increasing, and they say it's got out of control. Very often they are the victim of circumstance whereby they may have had to take a pay cut or even lost their jobs because of the current credit crunch. At the time of writing, unemployment has risen again by 281,000 a quarter.
The advice available for those in debt ranges through the following
· Debt Management
A Debt Management Plan is an informal arrangement between you and your creditors which allows you to make smaller monthly payments towards your debts. A debt management plan will involve an agreement to repay your debts at a more manageable pace. You will make a single monthly payment to your debt adviser, who will distribute this amongst your creditors on a pro rata basis.
- Individual Voluntary Arrangements
An Individual Voluntary Agreement is a legal and formal agreement between you and your creditors. They are suitable for people who can no longer afford to make their full monthly repayments to creditors, but who can afford to make a reasonable offer. An Individual Voluntary Agreement is a legal and formal agreement between you and your creditors. They are suitable for people who can no longer afford to make their full monthly repayments to creditors, but who can afford to make a reasonable offer.
With an IVA you get:
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- One reduced monthly payment to your creditors
- A court order that stops any legal action by your creditors
- No more stressful telephone calls and letters from your creditors.
- An end to your current debt increasing as interest and charges are stopped.
- A fixed repayment period (normally five years) at the end of which all the debts in your IVA plan are cleared. At the end of the period, any outstanding balance you owe is written off.
- Reassurance that all unsecured creditors who are sent the IVA proposal must accept the arrangement - even if they don't agree with it - providing that 75% of your other creditors agree to the proposal.
- Peace of mind that it is not advertised anywhere and your employer is not informed. If you do decide on an IVA as a method of dealing with your debts,
· Bankruptcy
Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order. Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases. Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the
