Son Died from Payday Loans

I read this in the Sun and felt it required read by all.

THE devastated parents of a teenager who committed suicide have said the 18-year-old took his life because of the spiralling debts he owed payday loan companies.

Now Geoff and Dawn Scott are calling for a cap on sky-high interest rates charged by lenders such as Wonga.

Bright IT apprentice Oliver — known as Ollie to his mates — committed suicide in September, seven months after admitting to his family he had become addicted to gambling at bingo halls.

To fund his habit, Ollie used his smartphone to access a series of quick-fix loans — some with interest as high as 4,214 per cent — with the money in his account in less than 30 minutes.

His mum Dawn said: “I think you’re not mature enough at 18 to borrow. Kids with computers and iPhones can just touch a button. It’s not real.

“When I wanted a loan for a car when I was starting off I went and saw a bank manager.”

Ollie — who was a popular and exceptionally clever lad, passing at least 14 GCSEs — took loans out with payday loan providers Wonga, Cash Genie and Toothfairy Finance.

But tragically the repayments became too much and he was killed after being hit by a train.

Interest accumulated so fast that Geoff and Dawn, of North Stifford, Essex, still don’t know the true extent of Ollie’s debt, although Geoff paid off almost £4,000 while his son was alive and demands totalling more than £2,500 have arrived since his death.

Payday lenders offer anything up to £1,000 a time without the need for a full credit check. The recession has led to a boom in the sector as Brits struggle to meet day-to-day living costs.

Geoff, who works as a chauffeur in London, said: “I could not believe someone with his intelligence would do this.

“Oliver was not an idiot. This is someone who could explain everything about APR and interest rates to you.

“All he used to say to me was: ‘It’s just like pressing a button. It’s not real money.’ When you fall into that trap there is no way out.”

After Oliver’s tragic death letters addressed to him arrived from different payday lenders and debt collection agencies. They included a bill from Toothfairy Finance, dated September 17, totalling £866, and a demand from Cash Genie for £125.

Geoff had to then fax a copy of the coroner’s statement to these companies.

The couple, who have two younger children, believe Ollie’s death highlights the dangers that these loan companies pose to a computer-savvy generation where cash is just a touch-screen away. Both believe the Government should insist on capping interest rates.

Geoff said: “The Bank of England base rate is just 0.5 per cent, a mortgage could be up to five per cent and a credit card 19 per cent.

“So how did someone come up with 4,200 per cent and authorities agree it legally? That’s what I’m annoyed at.”

Childminder Dawn added: “Ollie was on a computer from an early age. He found it so easy and was very intelligent. The kids of today, it’s not real to them.”

Last week we reported that Wonga have been told to clean up their act after being slammed by the Office of Fair Trading for harassing borrowers.

When asked about Ollie’s death, Wonga said: “We were greatly saddened to hear of Oliver’s passing and our hearts go out to his family.

“We don’t know the full circumstances surrounding this tragedy, but we can confirm he was a customer and that all loans were settled.

“The last loan repayment has since been refunded and we closed the account as soon as we were made aware of the situation.”

Peter Tuvey, managing director of Cash Genie, said: “Cash Genie adheres to a lending policy which includes strict lending criteria such as detailed credit reference checks and financial assessments. We also have a dedicated financial solutions team should any client fall into financial difficulty.”

Lloyds Recent Debt Report

As we approach the Queen’s Diamond Jubilee, new research by Lloyds TSB has looked at the key developments in the UK savings market over the past 60 years. The analysis starts a year before the coronation of Queen Elizabeth II at a time when the country was recovering from World War II and some rationing was still in place.

Key headlines: 

• 464% rise in the real value of UK household savings over the past 60 years.
• Savings now stand at an average of over £150,000 per household, including pensions, investments and deposit savings, compared with just below £50,000 in 1951 (at today's prices).
• Many, however, have little or no savings.
• Household savings recorded their biggest rise in value in the 1980s. Whilst savings fell in the 1970s in inflation adjusted terms.
• Deposit savings' share of total savings has fallen from 42% to 29% since 1951. Pensions and life insurance's share has more than doubled from 24% to 53%.
• Households have saved an average of 6% of their net income since the 1950s.
• The gross interest rate offered on no notice accounts has averaged 6.01% over the past 60 years. In real terms, savings rates averaged 0.29%.
• Savers clubs to investments funds: there have been significant changes in the UK’s savings habits.

Suren Thiru, economist at Lloyds TSB, said:
"The UK savings market has undergone some extraordinary changes over the past 60 years, reflecting the changing way we live our lives. Today, the typical saver is very different compared to the 1950s with the vast majority of savers now viewing their nest egg as an investment rather than as something for a rainy day. This change in attitude is partly as a result of the substantial growth in personal wealth over the period.

Looking forward, savings levels are likely to continue to increase as households look to improve their finances. Furthermore, an increasingly ageing population is expected to save more in the future due to the need to put more aside for retirement."

Total household savings
The value of household savings – including pensions, shares and deposit savings – in the UK has risen by 464% in real terms1 over the past 60 years. This is equivalent to an average annual rate of growth of 2.9%, comfortably outpacing the 1.6% per annum average rise in real earnings over the period.

UK household savings now stand at £4,177 billion, representing a nearly six-fold increase from £741 billion in 1951. In per household terms, average savings have increased more than three-fold from £49,511 to £153,529 (in 2011 prices).

There are, however, considerable differences in the value of savings with some UK households holding little or no savings. Almost one in three (30%) UK households have no savings (accounts and investments) and a further 19% hold savings of less than £1,5002. Household savings recorded their biggest rise in value in the 1980s with a real increase of 115% between 1981 and 1991. The substantial rise in the value of pensions and life insurance held by households, caused in part by the changes to private pension provisions, was a key driver behind the strong erformance of household savings during the decade.

In contrast, the worst performing decade for real household savings was the 1970s when there was a 12% fall as high inflation eroded the value of savings.

Over the ten years to 2011, real household savings rose by 7%; the second worst performing decade over the past 60 years.

From Christmas clubs to investment funds: our changing savings habits In the 1950s, savings activity by UK households was mainly focused on saving for a special occasion as evidenced by the popularity of savers clubs, such as Christmas clubs and holiday clubs, and the greater use of organisations such as National Savings Committees.

Although these clubs offered no interest, households saved an average of 2 shillings and 11 pence a week in savers clubs in 19573, more than a fifth (21%) higher than the 2 shillings and 5 pence of savings made through the purchase of savings certificates and sums deposited in savings banks.

Today, most households view savings as an investment in order to smooth future consumption with funds now most commonly held in financial institutions. This is reflected in the increasing popularity of ISAs . Since their introduction in April 1999, the number of cash ISAs has risen by 160% to reach 11.9 million in 2010/11. There have also been marked changes in how we save with a large share of savings transactions taking place remotely (i.e. online, by phone or by post).

The rise of the single saver 60 years ago, savings was very much a family affair with men, typically seen as the main breadwinner, contributing most to household savings. The rise in both one-person households4 from less than one in five households (19%) in 1971 to one in three (33%) in 2011 and greater personal wealth has led to greater independence when making savings
decisions.

Women now save more
In the 1950s, women earned significantly less than their male counterparts therefore limiting
their ability to contribute to the family savings pot. Today, female savers in the UK have an average savings balance equivalent to 40% of their gross annual earnings, almost double the proportion of earnings saved by men (23%).

Savings instruments
The value of deposit based savings6 has nearly quadrupled (up by 290%) in real terms over the past 60 years; from £312 billion in 1951 to £1,218 billion in 2011 (in 2011 prices).

However, deposit savings' share of the value of total household savings in 2011, at 29%, was nearly one-third lower than its 42% share in 1951.

The 1980s saw deposit savings decline as a proportion of total household savings, falling from 40% in 1981 to 29% in 1989. This decline continued into the 1990s as interest rates started to fall, so that by the end of the millennium, deposit based savings accounted for less than a fifth (19%) of total household savings.

However, over the past decade, deposit savings' share of total household savings has rebounded, reaching 29% in 2011. The popularity of ISAs and the significant decline in equity prices have contributed to the rising share of deposit based savings over the past ten years.

Among the non-deposit savings instruments, pensions and life insurance assets' share of total household savings has more than doubled over the past 60 years from 24% in 1951 to 53% in 2011. The changes to private pension provisions in the 1980s was a key driver of the rise, helping to lift pensions and life insurance's share of total household savings from 33% in 1979 to 48% in 1989.

In contrast, the poor performance of equity markets over recent years has shrunk the value of equity savings. As a consequence, equities have fallen as a proportion of total household savings from 23% in 2000 to 13% in 2011.

Proportion of income saved
Households have saved an average of 6.2%8 of their net income over the past 60 years. The household saving ratio was highest in the 1970s – at an average of 8.9% between 1971 and 1981 – and lowest during the 1950s (average of 1.2%).

In 1951, the household saving ratio was negative, at -2.0%, and remained below 2% for the remainder of the decade. The proportion of income saved by households grew strongly through the 1960s and 1970s as interest rates increased to combat high inflation, reaching a 60 year high of 12.2% in 1980 with official interest rates at 14%.

The consumer debt boom and relatively low interest rates that characterised the 'noughties' saw the household saving ratio decline during the 2000s to a low of 2.6% in 2007. The saving ratio has recovered since 2007 to reach 7.4% in 2011 as households have sought to bring their finances onto a sounder footing.

Households save more during recessions
The historical peaks in the saving ratio have been during, or very close to, periods of recession. The household saving ratio reached a 60 year high of 12.2% in 1980 when the UK economy was in recession.

Landlords Told to Minimise Risk for Students

As research reveals that the number of tenants seeking help with rent arrears, affordable property developer FreshStart Living reveal 10 steps for landlords and buy to let property investors to take to lower the risks involved with late rental payment.

Debt charity, the Consumer Credit Counselling Service recently revealed that more than 10,000 people asked the charity for help with rent arrears in 2011 – a 27% increase on 2010.

According to a recent buy to let index, in March 8.7% of all rent was late or unpaid and an average of 94,400 tenants were more than 2 months behind with their rent payments.

Affordable property developer FreshStart Living is urging landlords and buy to let property investors to take actions to minimise the risks to avoid the problems that late rental payments can cause.

FreshStart Living has compiled a list of ten steps for landlords and buy to let investors to take in order to lower the risk of having to take legal action against tenants.

1. Keep on track of tenants’ financial situations – If they have a habit of missing payments, ensure that your arrange a date each month when they are guaranteed to have the money ready. This could be the day after pay day.

2. Chasing the rent arrears – Establish a firm rent chasing timetable including letters before legal action, telephone scripts, serving notices etc, and make sure that that all staff are aware of these procedures.

3. Get the right tenant – Work with a good tenant referencing partner and don’t cut corners in the checking procedures.

4. Is the Tenancy Deposit correctly placed? The changes in legislation under the Localism Bill took effect in April, and we have heard of solicitors acting for tenants on a no win-no fee basis to catch out landlords and agents if they haven’t complied with the regulations.

5. Guarantors agreements – Buy to let investors need to ensure that they maintain up-to-date contact details for Guarantors so that they can copy them in on all correspondence you send to the tenants regarding their late/overdue rent. This helps apply additional pressure to the tenants to pay.

6. Is your procedure for serving Section 21 notices compliant? Last year it was reported that 70 per cent of notices were thrown out of court because they were wrong. More landlords are relying on the accelerated procedure to regain possession. If the notices are incorrectly served, there will be delays and additional costs that the landlord may seek to recoup from their agent.

7. Make sure tenants know the landlord – Tell them if there are any mortgage or other outgoings at the start of the tenancy and your attitude to risk if the tenant was to default. It takes approximately eight weeks from a possession claim being issued to an order being made – as a landlord can you afford this situation? A Legal Expenses and Rent insurance policy from a specialist supplier may be the solution.

8. Know your tenant – landlords should maintain contact with the tenant, to establish why the rent is late or unpaid. It will improve the landlords chances of a successful outcome.

9. Making an insurance claim – contact the insurers at the earliest opportunity and follow their claims procedures.

10. Keep a record of all payments, transactions and missed payments – If a case does go to court landlords will need to have all the paperwork to prove that rental payments are not being made, or if they are not being made on time. This will act as vital evidence in your case against a tenant.

FreshStart Living specialise in developing affordable residential and student properties in the UK which are sold on as buy-to-let property investments to investors all over the world.

The company offers property investment opportunities starting at just £29,950 with guaranteed rental yields for up to ten years.

Paris Top Spot for Student Property

Paris has narrowly beaten London to be ranked as the top spot for investors in student property.

Knight Frank has compiled a report looking at the investment potential of European cities popular with students.

London missed out on the top spot for student housing due to the high cost of living, according to the Knight Frank research; it is followed by Vienna, Dublin and Barcelona.

James Pullan, head of student property, Knight Frank, commented: “Student accommodation in the UK has delivered solid and consistent returns throughout every year of the economic downturn, thereby attracting significant volumes of international equity and institutional debt into the sector.”

The number of students travelling overseas to attend university has been rising steadily in recent decades, and this trend is set to continue. Just as the world’s economies have become more globalised, with the relaxation of trade barriers, education has also become a global commodity.

Students now seek out the best educational institutions across the globe. The factors that lie behind this trend are: 

• the rise of the middle classes in emerging economies, especially Asia;
• the growing acceptance of international higher education qualifications across the world;
• a new ‘internet generation’ of globally connected and well-informed student consumers

James Pullan commented: “The rise in global student mobility has created an excellent opportunity for investment in key European cities and is a long-term trend that is set to continue. This structural shift in the make-up of student populations has significant consequences for cities that play host to the world’s best universities, and throws up key opportunities for developers and operators.”

Das: Debt Arrangement scheme.

What you do to get out of debt can be one of the hardest decisions you will ever have to make, the first thing we always advice is to get free debt advice from a charity. Be aware of all the options that are available to you and your own personnel situation. For some there creditors start to push for the debt to be repaid if you are able to do this though need a little extra time then the Debt Arrangement Scheme (DAS) is the option that will let you do just that.

What is a DAS?

If you have two or more debts and know you could pay them back in full then this is the debt management tool for you. The reasons are varied for having to use a DAS it could be you have suffered from ill health and are just returning to work or you could have been made redundant from a well paid job as long as you are confident that things are going to better and that you are able to pay off your debt. Then a DAS is for you.

You set up a (DPP) debt payment plan with the help of a trained money advisor this will be based on your current financial situation, they will approach your creditors to get there approval. The amount of money you have available each month is split fairly between each creditor, though it is usually less than what you are contracted to pay them.

Once the offer has been put to your creditors they have 21 days to respond. If you do not hear from them you can assume they are happy to go ahead. If some of your creditors do disagree it does not necessarily mean you that that your DDP won’t go ahead. As long as your payment plan is fair and reasonable your money advisor will to the debt arrangement scheme for approval. Once it has been approved you will make one monthly payment to a payment distributer who will ensure that each payment is made on time to the creditors. At this stage your creditors cannot arrest your earnings or make you bankrupt.

A creditor’s objection would be upheld if they believed you would not be able to repay and that sequestration is the only option or if you had equity in property that could be liquidated to pay creditors.

If circumstances change what happens?

A DAS has been set up to be very flexible; if circumstances do change with more or less income then your money advisor will change the payments by either decreasing them or increasing them.

I have mortgage arrears what happens to them?

The DAS covers mortgage arrears however you must still be able to meet your regular mortgage payments. Your normal monthly payments cannot be included in your DDP.

However your creditors can still take you to court and try to force repossession, however by applying for a section 2 you can delay this process. The court will take into account your effort to pay them through your DDP. As the arrears are being paid through your DDP the court is not allowed to grant a payment order on arrears.

Will my family and friends know I am in a DAS?

It is theoretically possible for anyone to find out; there is a debt arrangement Scheme register which is publicly available. However it is not the sort of database you would just happen to find people would have to be aware how to go there and then search for your name. If you don’t tell them about it is very unlikely they would just stumble on it.

Entering a DDP will affect your credit rating.

Before entering any debt solution we always recommend that you seek professional debt advice we recommend that you contact a registered charity who will give you the best advice to suit your own personnel situation.

Wonga branded ‘morally offensive’

This Article Was Removed from Wonga Site On 19/01/2012
Wonga a payday loan firm has caused outrage by encouraging student to help fund their studies by taking out one of their very expensive loans.

This is a trick from Wonga and anyone who falls for it could find themselves in mountains of debt. It is far wiser to keep to more traditional borrowing.

The firms (APR) annual percentage rate is 4,214% typically, and a £300 loan paid back within 20 days would cost £65 in fees, if repayments are late the fees can be huge.

In comparison a student loan has an (APR) of 1.5% though this may not be a fair comparison as a payday loan is meant to only be short term not annually.
Wonga said on its website: "A student loan is fine to help you pay for your university and living costs, but what about those times when you're waiting on money to come in and you need to buy or pay for something unexpected now?
"There's a totally new way of borrowing money to see you through until your next cheque and it's called Wonga.

"A Wonga loan is essentially a short-term loan that can help you manage your cash flow, without having to extend an overdraft or credit card even further, or get a large student loan."

Are they not aware that many students do not have a pay cheque coming? And surely this must be encouraging students to get even deeper in debt..

Surely This Is Wrong

Wonga were asked to remove this from their page. They said they had put it there for SEO purposes rather than to target students.

They would do this so they would appear high in search engines when people on the web were looking for student loans.

With student loans you only need to repay them when you earn over £15, 000, 00 and you repay in proportion to your income. There are no debt collectors and it does not go on your credit file.

The interest rate on a student loan will never be higher than the rate of inflation". Compare that to the 4,214% Wonga charges.

Nobody should sell high priced credit to Students.
There is no financial education in schools and as a nation we are in enough financial difficulty without encouraging even more .
Wonga took this off their site 0n 18/01/2012 let’s hope no students were taken in by it.

Staff at British gas suffering abuse from public over energy costs

British Gas Managing director Phil Bentley has admitted his staff are facing the brunt of public anger from people struggling to pay their gas and electricity bills.

The company boss admitted his staffs was being deluged with increasingly aggressive complaints about rising energy bills. Workers on the road have also been the target for abuse in recent times.

The groundswell of anger has increased substantially as British Gas continues to refuse to pass on the reduction in the wholesale gas price to its 9.2 million customers.
Since the wholesale price of gas has dropped 9.4% it has come as a surprise to many that British Gas has not reduced bills to their customers for gas although they have reduced their electricity bills by 5%.

Phil Bentley admitted in a staff email:”We have seen a groundswell of anti-British Gas comments, with increasingly aggressive tones. All our call centres are under extreme pressure from more angry customers struggling to pay bills”
Rather surprisingly the Managing director points the finger at the media for customer anger by claiming they have exaggerated the price increases customers are experiencing.

His email continued: “There is no doubt in my mind that the energy industry is facing a crisis-a crisis of affordability, a crisis of investor confidence, a crisis of relentless media criticism, in short a crisis of trust”.
It is to be hoped that British Gas bow to public pressure and gives their customers a much needed reduction in their gas bills sooner than later.

True Story: Being In Debt

I don’t like telling my story, embarrassment, shame or worse still that look of pity that glares back at me. That’s why I found making a telephone call a lot easier there would be no looks just a voice.

How have I got here, a few years ago my life was so different I was married, 2 lovely children a beautiful home. The holidays were great any less than two a year and I would grumble, the restaurants I would frequent were varied and often and I never left without giving a generous tip. I kept myself trim at the gym and enjoyed the friendships I made within this world. My car was my hobby new one every two years I kept it immaculate, the children drove me mad when I saw them entering any of my vehicles with sweets!

So why am I here? When asked the reason I am in this situation what is the correct answer? When my business collapsed I wasn’t scared, it wasn’t my fault the economy has affected a lot of people, spending cuts meant my company which was selling handmade designer furniture was no longer a priority. It was a LTD company so this meant I was not personally liable for the debt I would walk away, I could start again, I had started a business before there was nothing to say I couldn’t do it again. I had my savings they would keep all the bills paid till I began my new venture.

I never thought of my mortgage as a debt more of an investment, I never thought that technically I didn’t own my house the bank did! For me credit cards were wonderful you got what you wanted when you wanted it then pay it when your wages came in no problem. I had been brought up in a generation when credit was how we all lived we were taught buy now pay later. The occasional personnel loan had helped, my wife had been desperate for that conservatory and the kitchen was unique.

The savings didn’t last long and the pressure was immense the arguments at home grew more intense. I don’t remember who said what but I do remember that feeling of utter despair as I walked out the door with my worldly belongings in a case. It wasn’t amicable our divorce, the house was sold with negative equity. We fought over everything the biggest losers as is in most cases were my wonderful children.

Today I am one of millions claiming jobseekers allowance, living in rented accommodation and trying to survive never mind repaying the debt.

If I could help anyone it is to say always think twice when getting credit you do have to pay it back.

If you have a debt problem UK Debt Helper is not an advice agency. We advise you speak to a free debt advice charity such as Debt Support Trust or the Citizens Advice Bureau.

Time for a financial health check

With finances being stretched as never before many of us will be putting household, leisure and entertainment expenditure under the microscope in 2012.

The family of parenting institute has warned that the average income of households with children will fall by 4.2% between 2012-2016.This equates to a drop in household income of £1250 per year.

For many households this will mean cut backs have to be made in order to square the household budget. For some households this will mean luxuries like gym membership, full Sky package or private healthcare will have to be trimmed or cut out completely.

One useful way to give your finances a health check is to break down your bank statement and credit card bill to help identify where your money goes on a monthly basis.

Priority debts are exactly that and must be paid before other expenses are taken into account .Priority debts would include expenditure like mortgage, rent, council tax and utility bills.

Having deducted priority debts from salaries etc you are left with disposable income to cover food, loans, credit cards etc.This will then give a clear picture to your household financial health.

If there is insufficient money to repay personal loans or credit cards etc then it is probably time to seek advice from a debt advice organisation in order to help identify all appropriate solutions available.

Even if your income and expenditure balance it is worthwhile looking carefully at your expenditure to ensure you are getting the best value for money possible. Utility company tariffs vary considerably for instance and using a comparison website like USwitch could make substantial savings to your energy bills with very little effort on your part.

In summary, as peoples financial belt has to tighten make sure you are getting best value for every pound you spend and where you can get debts down as fast as possible or ideally become debt free.

Bankruptcy in Scotland

When you here the term "Sequestration" what it means is bankruptcy if you reside in Scotland. To avoid sequestration, a wise option for you could be a protected trust deed.
While in a trust deed, you voluntarily transfer all your assets, to a person named your trustee who will use all your assets to pay off your creditors. Put simply it enables you to pay back your debts in an agreed period of time. You make one monthly payment to your trustee this is an affordable amount to you, and after the agreed time any remaining debt is written off.

The amount you pay depends on your circumstances and will last for approximately 36months.

All trustees must be a qualified practitioner. They are regulated by law and must be members of an approved governing body.

You need to know:

What you are going into, you are going into a contract to pay back your debts, normally at a reduced rate. Because of this you agree to the below:
1 You must do what the Trustee asks.
2 You must pay the agreed monthly contributions.
3 You cannot take any further credit
4 If you receive any money more than £200 you must inform the trustee.
All interest and charges will be frozen on the day off signing the Trust Deed.

The Good News About A Trustdeed.

1 The trustee will handle all queries from your creditors, so no more phone calls or fear of answering your door.

2 It is made to help so will be affordable and can be more flexible compared to sequestration.

3 It also does not take away all right to hold certain public offices, which is the case in sequestration.

4 It can be possible for some companies to continue trading and some individuals can retain their directorship.

5 The fact you enter a trust deed is not published (unlike sequestration).

Always make sure you know all the facts before you sign.

Entering a trust deed is not to be taken lightly – know all the facts before you sign.
Before you sign anything, seek advice preferably from a charity get them to explain what happens and talk you through the process, make sure you know all your options and choose the best option for you.