July’s money and debt news

posted by in Bailiffs, benefits, Debt, Debt Law

It’s been over a month since the Brexit vote, and we’ve been busy looking at how it could affect your finances if you’re in debt

July has also seen increases to the cost of bankruptcy  in England and Wales, Universal Credit being pushed back, and the release of our latest report, looking into which organisations are the most unfair when dealing with people with debt problems.

Bankruptcy fees increase

The cost of declaring yourself bankrupt in England and Wales increased by £25 to £680 on 21 July. This is due to a rise in the ‘debtor’s deposit fee’, the amount that anyone going bankrupt has to pay. The deposit was last increased in 2011 so, according to the Insolvency Service, this change amounts to a rise below the rate of inflation.

Going bankrupt has always been quite expensive, and this increase will make it even harder for some people to afford. While they save up for it, their situation might also get worse if their debt is going up.

We were curious to know if the cost had prevented any of our clients from petitioning for bankruptcy. If you’ve been recommended bankruptcy but the fees were too much, we’d like to hear from you.

Students suffer £250 shortfall each month

Students in the UK are struggling to pay rent and cover essential living costs, according to the National Student Money Survey 2016. The survey asked students about their living costs and found that while this averaged £790 each month, maintenance loans for students living away from home were just  £540 per month – a huge £250 shortfall every month.

Many students have been pushed to find part-time work to fund their living costs, or asking for money from parents, and some are even resorting to gambling and taking out credit to plug the shortfall. More worryingly, some students are turning to prostitution to cover living expenses, according to this report from iNews.

Students who are struggling with debt and living costs can speak to their Student Union for advice on how to manage their finances.

Our report on which creditors are most unfair when dealing with people in debt

Government departments, local authorities and bailiffs are among the most unfair when it comes to the treatment of people with debt problems, according to our new ‘Creditor and debt collector conduct’ report.

Our research found that some creditors aren’t taking people’s vulnerabilities – such as depression and other mental health conditions – into account. We also found poor practice by bailiffs, such as intimidating behaviour and excessive fees, despite the bailiff reforms introduced two years ago.

Banks and credit card companies performed much better in the survey, although the numbers who felt unfairly treated were still too high, at around one in five.

Based on the evidence we found it’s clear that more needs to be done to support people with debt problems. We’re calling on government, regulators and creditors to make sure people in financial difficulty aren’t pressured into making payments they can’t afford, and are fairly treated.

Brexit affecting finances

We’ve seen endless arguments, debates and opinions on how the UK’s exit from the EU will impact in the coming years, but in the short-term how could Brexit affect your finances if you’re in debt?

In short, Brexit shouldn’t change a great deal in the short term, and its likely to be a while before we know what the long term impact will be. With that said, we do have an idea about where the changes to your finances might happen, based on short-term predictions of the economy.

Our Brexit article explains the impact on your rent and mortgage costs, wages, benefits and the cost of living in more detail.

Help with court fees moves online

The EX160 – one of the most popular forms our clients use to apply for help with court fees – has moved online. Most types of court or tribunal applications have costs, which can often be very expensive.

The online system replaces the lengthy paper-based application, which should make it easier for you to check your eligibility and apply for a reduction in costs. Your eligibility depends on your income or whether you receive certain benefits, all of which you cannow do before filling out the form.

Universal Credit roll-out pushed back

The Government has announced that Universal Credit will be delayed further, with a full roll-out expected in 2022. The scheme, which replaces six types of benefits with a single payment, should’ve been completed by next year but has been plagued with IT issues and escalating costs.

James explained all about the introduction of Universal Credit back in 2013 when he was celebrating his 30th birthday. By the time the scheme is completed he’ll be closer to 40! Talk about a long delay…

Half of adults getting nuisance calls offering high-risk financial products

One in eight people in the UK are receiving nuisance calls every day, and over half have had some sort of call offering high-risk financial products, such as payday loans, in the last year.

Our research shows that nuisance calls can be a particular problem for people struggling financially, as calls offering payday loans or fee-charging debt management services can often seem an appealing way to deal with a money worry in the short-term, but can make debt problems much worse.

The charity is calling on the Financial Conduct Authority (FCA) to ban the unsolicited promotion of high-cost credit and debt management services.

Our Chief Executive Mike O’Connor said:

“Unsolicited phone calls promoting high-risk financial products cause serious harm. Most people receive them and one in eight of us are bombarded with calls”

“Before taking out any financial product, people need to know whether it is right for them, work out if they can afford it and shop around for the best deal, but unsolicited phone calls can take these key decisions away from them. It is not a good way to sell credit or financial services and it is certainly not a good way to buy them.

And finally…

Unless you’ve been sleeping under a Snorlax, you’ll have heard about the Pokemon Go craze that’s sweeping the world. This article from Mashable claims that you can actually make money from the online game. However, prepare for trouble, because the Financial Times claims that Pokemon Go can actually cost you money if you’re not careful.

Rory Marshall joined the MoneyAware team in July 2014 after working for our Web Helpline as a debt advisor. In his spare time Rory is a self-confessed technology geek and spends far too much of his spare time on his phone.

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