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Investigation into the “death of Integrity Financial Services Ltd

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Bankruptcy- A Personal Story

Are you up to your eyeballs in debt? Are the Constant phoning and letters driving you to distraction? Do you dread every knock at the door? I know what you are going through, you have my sympathy.

I am a full time debt advisor and I’m proud to say a discharged bankrupt. My experience of debt is from the school of hard knocks. Like most people I would borrow money to buy a car or help around the home. I would be able to meet the repayments and didn’t think anything was wrong. This is why I think debt can be such a difficult problem. You don’t think you have problem until it’s too late.

You go to work and pay your bills and at first the loan/card repayments are low. You still have disposable income and no debt problem!. As the debt rises over time the repayments also rise; now you get paid and pay all your bills and your left with no disposable income. Now we are at the tipping point of the debt trap. There is no spare money to save for the car insurance, tax or MOT or any of the other little expenses life throws your way. When your car needs to pass an MOT you have to pay the bill you have no choice. Your only choice is to use credit and this only increases your overall debts.

From this point onwards the amount at which your debt increases is much greater than you can afford to repay. It’s like a car rolling down a hill with no brakes. The debt just keeps getting higher and higher, faster and faster, and I’m sorry to say there is very little you can do about it. You can postpone the inevitable by remortgaging, consolidating and or switching cards. All this does is increase the amount you will owe. You are already insolvent and only by taking action will get your life back.

This brings me back to the title of this piece, don’t feel bad about bankruptcy – it’s not what you think? What is a bankruptcy? A bankruptcy is a legal second chance, and it is designed so people can try to better themselves. It gives ordinary people the chance to try and fail. A person starts a business and puts there heart and soul into making this a success (90% of all businesses fail in the first 5 years) this business hits hard times and fails. The owner is left with the substantial debt. If there was no bankruptcy what happens to our business man? He would live the rest of this life indebted to others, bonded to them in economic slavery. Only to be free once he dies.

The safety net of bankruptcy allows people the chance to make mistakes and to learn. We are allowed to start again and prosper. Sir Alan Sugar made his millions only after being made bankrupt. On the apprentice he said ”there is no shame in bankruptcy”. I agree with Sir Alan. There is a culture in this country that wants you thinking that bankruptcy is somehow bad, shameful or wants you to believe in some imaginary stigma.

If you have debt problems you feel pretty bad about it already, you feel stupid, helpless and lost. You ask yourself how could it happen to me. When you are in debt your choices are very limited. You look for help but who do you trust? Your feelings of guilt and moral obligation are used to cloud your decision making. You are told that you should pay back as much as you can. You are asked to pay the debt back over terms lasting 5 years and longer. Why are you encouraged to feel shameful and morally obligated to pay? So people can make as much money out of your misery as possible.

What many people do not realise is what happens if you can’t payback your loan to the bank. Most people mistakenly think that the bank takes a loss. This is why we are all encouraged to pay back as much as we can. WRONG. The bank sees any loan as a business transaction. It weighs the risk of you defaulting against the money to be made on the interest. The bank then insures the debt and if you fail to pay the loan, the bank collects the insurance. It’s a win win for the bank.

The banks then collect all these loans together and sell the package to outside investors. The banks have now made a profit on the loans and someone else is taking the risk. These were the seeds that created the banking crisis. As the banks were not holding the risk they wanted everyone to be in as much debt as possible. This is why before 2008 every other letter was an offer for a credit card and if you asked for help you were offered a consolidation loan. The Banks were making billions from this practice. Now you’re picking up the tab.

So if you are in debt think about you and your family first not the lender.. Ask yourself, what is the quickest most practical way for me to clear my debts and start afresh? If you have no assets (no house, cheap car). If you are a home owner and your house is in negative equity. You should seriously consider personal bankruptcy. As we say “if you have nothing then you have nothing to lose”. Negative equity means the mortgage lender technically owns your entire house so you also have nothing to lose.

Why prolong your struggle trying to satisfy creditors who have stacked the system against you? Why live in poverty trying to meet a repayment plan that benefits others?

Use bankruptcy it’s designed to set you FREE.

If you want to know more about bankruptcy or are considering becoming bankrupt, then speak to the experts first. We understand what it feels like to be facing huge mounting debts. Call us now for free, fair and impartial advice on 01743 272900 or see our website for details.

http://integrity-debt-solutions.co.uk

 

A Tale of Debt & Credit Ratings (Scores)

A credit rating is a strange thing? It has the ability to help or hinder our lives in so many ways. With a good credit rating it can open the flood gates to borrowing. With a bad credit rating your choices are very limited. The question is “How can an electronic record hold so much power? The answer is it’s all about risk.

Your credit score is used by any business that wishes to provide you with a service or credit. From the utility supplier looking to see if you can pay on time to a multi national bank offering you a mortgage.  Your credit rating is the way a business assesses your risk, and your risk sets the price.

Any business offering you a service or credit is in business to make money. The business has to way up how much money they will make against the risk of you defaulting.  This is why your credit score is so important. It helps them decide who is good, who is charged more and who is untouchable.

When you are in debt the debt can have a dramatic effect on your credit rating. The curious thing is as long as you can meet all the payments. Even if these are just minimum payments then your credit rating will be good. This will allow you to borrow more!  A note of caution if you can’t repay your existing debt then borrowing more money is not a smart move. Seeking help is.

If you are struggling to repay your normal household bills and your debt, your credit rating is at a turning point. As soon as you start missing any regular payments your credit rating will fall. The more you miss the more it falls. By this stage your credit rating becomes so poor that the only way to improve it is by dealing with the debt.

For most people there a 3 main ways of resolving a debt problem (England & Wales only). These are Debt Management, Individual Voluntary Arrangement and Bankruptcy. Each of these solutions has different consequences so please take advice before entering any solution.

Let’s look at how each of the solutions affects your credit rating.

Debt Management is an informal arrangement between the Debt Management Company and the creditors. You a pay an agreed amount per month and the money is split between the creditors. As each creditor receives less than there normal monthly repayment. Your credit rating will continue to be affected until all of the debts have been paid in full.

Once the debts have been paid in full, your debts are classed as satisfied and your credit rating will start to improve.  Example: let assume debts of £25,000 with a repayment of £200 per month. Note the any debt management company charges an administration fee; let’s say £40 per month.

Without interest and charges it will take 13 years to repay the debt. However it is unlikely that the interest will be frozen and the repayment period can be much longer. In this instance your credit rating will start to improve after 13 years.

IVA (Individual Voluntary Arrangement) is a legally binding contract between yourselves and your creditors. An agreed monthly payment is paid into the IVA each month. Once the IVA is complete (usually 5 to 7 years) any surplus debt is written off.

A common misunderstanding is that your credit rating is treated differently in an IVA to someone in a bankruptcy. It is not. If you cannot repay all of your debts in full you are insolvent. While you are in an IVA your credit rating is classed as bankrupt- “Bankruptcy Status”. Your credit rating will only start improving once the IVA is complete (after 5 to 7 years). For many years after the completion of the IVA lenders will know that your previous debts were not paid in full. This will affect your ability to access credit

Bankruptcy is where you recognise that you cannot afford to repay the debts, and an application is made in the county court to be declared bankrupt. A bankruptcy lasts for 1 year but you may have to repay an agreed payment for 3 years. Once the year is over all your debts are written off.

Once you are declared bankrupt you will have a mark against your credit rating for 6 years. During this time all lenders will know that the debts were not repaid in full. However once the bankruptcy (1 year) is over your credit rating can start improving.

An IVA and bankruptcy are legally binding therefore you should seek advice before entering into any arrangement.

If you are in debt, improving your credit rating boils down to 2 factors.

1.      The debt must be dealt with. How this is achieved is dependent on personal circumstance.

2.     Time. The time it takes to improve your credit rating after the debt has gone.

By dealing with the debt you not only improve your credit rating but you set yourself on a path to security and financial freedom.

If you have any queries about credit ratings (scores ) or debt help please call 0333 666 0 666 or if you require a call back click here

thank you

http://www.integrity-debt-solutions.co.uk

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