The human cost of the unemployment figures
Although the unemployment rate is slowing, redundancy is still worrying many families as they don't know how they will cope. Previously, we all thought it would not happen to us which meant we never put funds aside - for most of us, there was no safety net.
My concern is how people who do lose their jobs will motivate themselves into getting back to work, having had rejection time and again when applying for jobs. Some firms don't even acknowledge the applicant's letter.
I also fear many will not address their debt issues and will often ignore the fact that they have a serious debt problem growing. Some will, unfortunately, drop into depression or turn to alcohol, gambling or even crime in an attempt to solve their debt problems.
Many will eventually find new jobs but some will not match or improve on their previous salaries and as a result thousands will fall into debt. From this, a segment will end up proposing either an individual voluntary arrangement (IVA) or go bankrupt.
There will also be others who will not be able to pay their mortgages and who will eventually lose their home. The high unemployment figures will have an impact on both the insolvency and house repossession figures.
Creditors also need to be more understanding and sympathetic towards borrowers who find themselves suddenly out of work - and should take note when someone is a ‘can't pay’ case instead of a ‘won’t pay’ case.
Debt can consume your life. These people need support from their families, friends and creditors, both emotionally and financially.
They also need to have clear goals on how they can manage their debts. The best way to start is to draw up a budget, prioritise the debts that need to be paid first (such as mortgage and rent), followed by utilities.
It is a clear fact that once you get control of your debts you regain control of your life.
To comment on this blog, please see the comment box below
A homeowner’s worst nightmare; repossession is an action of last resort by mortgage lenders to recover money from borrowers that have failed to keep up with repayments on their mortgage or other loan secured on their home (see secured loan). Repossession is a legal procedure that has to go through several processes before the homeowner is evicted and the property reposed. These are: if a borrower keeps defaulting; the lender applies for a solicitor’s notice; the lender instigates possession proceedings through the court; at the court hearing a possession order is granted and sometimes a possession warrant; a bailiff is appointed and an eviction notice issued at which point the homeowner has two to three weeks to vacate the property.
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.
An alternative to bankruptcy, an Individual Voluntary Agreement is a legal agreement drawn up between the debtor, all creditors to whom money is owed (banks, credit cards etc) and a licensed insolvency practitioner who then administers the arrangement. Unlike a debt management plan (DMP), which is a more casual arrangement, an IVA is a legal process by which your unsecured creditors cannot then pursue you for payment of your debts outside the agreement. To qualify for an IVA, you must be a private individual (not a company), your debts must exceed £15,000 and you must have a regular income. If you are a homeowner with equity in the property, you may have to remortgage and use the equity to clear some of the debt before you enter into an IVA.