Posts Tagged 'debt management'
Gordon Brown and Debt in Football
If nothing else, the excessive amounts of debt in British football can at least serve to make you feel better about a credit card bill! I mean, a couple of hundred quid is thrown into real perspective when you consider the £700 million owed by Manchester United.
And it seems that even the British Prime Minister has a view on the footballing world’s excessive debts. While acknowledging that it’s far from his place to do a great deal about it, Gordon Brown has commented that, “…this is an issue and it’s an issue football clubs are facing and it’s a worry to supporters and I think the management of football clubs have got to look very seriously at their responsibilities to their supporters, that they have high levels of income from the supporters but the debt levels have been at a leverage level that is too high.”
While Gordon Brown might be distancing himself from the ability to do anything, Sports Minister, Gerry Sutcliffe certainly isn’t. He has already called for the FA to intervene and set regulation around debt levels. He will be meeting with football authorities in the coming weeks to discuss the matter further.
But really, what can be done? For some of the smaller clubs, the debt cannot be controlled, given low income for those clubs in the first place. But for the bigger clubs like Liverpool and Manchester United, who do generate huge incomes each year, these excessive numbers seem like nothing more than poor debt management.
Perhaps these billionaire club owners should attend some of the same debt management lessons that schools will be giving to the 5 year olds!
Banks Prepare for Record Debt Defaults
The New Year is traditionally a period that sees higher than usual debt defaults. This is largely attributed to overspending across the festive season. However, credit agency Experian is warning of particularly high defaults in January 2010.
The first 9 months of 2009 saw 771000 people lose their jobs. That is a massive 94% increase on the same period of 2008. Add this to the record insolvency statistics also announced this year and it seems we have all the ingredients for some disastrous debt issues as the new year arrives.
What doesn’t help the situation is that debt management companies, loans companies and even banks increase their marketing in the run up to Christmas, seizing the opportunity as more consumers look to find some extra cash to see them through the season. Calls to households from lenders offering extra cash have risen 50% over the last month, according to the Call Prevention Registry and the Citizens Advice Bureau reports dealing with over 9000 calls every single day from those seeking advice about debt problems.
Experts are advising consumers to approach debt management carefully, to budget conservatively and to avoid high interest credit cards as a means of supplementing Christmas spending. However, during what is largely a commercial and consumer driven holiday, it seems unlikely that we’ll entirely avoid the debt associated with it.
Debt Management Industry Review
The Debt Management Industry is to come under the scrutiny of the Office of Fair Trading. The announcement, made in November 2009, means a potential shake up for the so far unregulated industry.
It will be the first review of its kind since 2003 in an industry that has seen massive growth and change in the past six years. There has been a huge increase in internet based companies and a massive shift in emphasis onto online advertising. Given that the industry is not yet regulated by the Ministry of Justice (something that is widely anticipated to change in the near future), there is concern about the level of compliance to the OFT minimum standards.
The industry review will give debt management companies an opportunity to answer a questionnaire relating to their practices, advertising and overall service provided. The Office of Fair Trading will also consult with a number of debt charities on their view of debt management company compliance with the minimum standards set. Consumers will have the chance to have their say too, through a feedback form on the Office of Fair Trading website.
This review follows 24 companies having action taken against them by the OFT, including the revocation of credit licences, since April 2008.
It is hoped that the review will lead to an increase in standards across the entire industry, for both the creditors and consumers.
While the industry remains unregulated, there are organisations, such as the Debt Resolution Forum, promoting higher standards across the debt management sector. It is widely thought, however, that the result of an ongoing Ministry of Justice Consultation over debt management will mean that the industry is soon to become regulated.
Insolvencies Hit a Record High
Personal insolvencies across England and Wales recently hit their highest number since records began in 1960. The Insolvency Service statistics for the third quarter of 2009 indicate that 35242 people were declared insolvent, which is a massive 28% increase on the same period of 2008. The 35242 insolvencies were made up of 18340 bankruptcies, 12390 Individual Voluntary Arrangements (IVAs) and 4505 Debt Relief Orders (DROs).
The Debt Relief Order is a relatively new alternative to bankruptcy for those with debts amounting to less than £15000 and assets with a total value of £300 or less. It was introduced in April 2009.
What these statistics do not take into account, however, is the number of debt ridden consumers embarking upon debt management plans. Given the informal nature of debt management plans, they do not officially count as insolvencies and there is no central register of figures kept, though an estimated 100000 are agreed each year.
Although not unexpected, the sharp rise is a cause for concern in a period in which unemployment continues to rise. Consequently, the fourth quarter of 2009 is forecasted to see a further increase on these figures, despite the fact that the recession is forecasted to formally end throughout the final three months of the year. However, experts warn that unemployment is likely to continue to rise for some time. As rising unemployment is thought to largely account for the rise in personal insolvencies, it is seen by many to be almost inevitable that the statistics will worsen as the year comes to a close.