DEALING WITH A NEW YEAR DEBT HANGOVER

A north east finance expert is advising people in the region facing difficulty in paying for the festive season to not allow a New Year debt hangover to last all year.

And Jim James, north east regional chairman of insolvency trade body R3 and head of the Insolvency and Corporate Recovery Unit at Newcastle-based law firm Ward Hadaway, is recommending such people follow R3’s ten-point plan to recognise, review and address their money issues.

Recent figures released by the Insolvency Service showed that the number of people being declared bankrupt has risen by 28% in the last 12 months, with over 2500 individuals going into insolvency across the UK each week.

With unemployment rates continuing to rise, R3 is predicting that the number of personal insolvencies will increase dramatically during 2010 and won’t start to come down until 2011 at the earliest.

Jim James says: “Dealing with a New Year’s Day hangover can be arduous, but whilst a couple of paracetamol and a few hours’ more sleep usually  deals with the problem, there’s sadly no such quick fix for financial problems and they can be a lot more painful for a lot longer if you don’t address them.

“The fact is that personal insolvencies have hit record levels last year, and they are almost certain to rise even further in 2010 as the recession continues to take its toll on individuals.

“There are a number of measures that people facing this prospect can take to try to avoid it, but they need to be prepared to face up to their situation and take swift, decisive action.”

R3’s top ten tips for managing a debt hangover are:

  1. Act today. Putting off the problem is far more dangerous than dealing with it.
  2. Start by working out how much you owe right now with everything combined. Do not be vague.
  3. Begin by prioritising the payment of your debts by highest interest charges.
  4. Communicate with your creditors. This will give them an opportunity to help which will be gone further down the line.
  5. Bankruptcy or an IVA (Individual Voluntary Arrangement) is not the end of the world - everyone comes through them. They are both statutory and highly regulated procedures, and not the debtors’ prison of Dickens.
  6. Certainly shopping at cheaper supermarkets means “every little helps” but it may not be enough to trim a few pounds here and there. Consider the bigger options such as boosting your income or find somewhere cheaper to live or try to lower your mortgage payments.
  7. Spend less than you earn.
  8. Don’t use your credit card to plug the gaps in your day to day finances - this is a sure sign of financial trouble.
  9. Don’t spend more. Shops are desperate for your cash or credit card payments right now, but try to resist the temptations they’re offering.
  10. Go back to basics with your banking arrangements. Cut the credit cards. Use cash and see the real value of goods. Start saving so you will be ready to deal with life events that 2010 may throw at you.

Jim James concludes: “Above all else, if you’re facing financial difficulties, seek advice early from a qualified source, much in the same way you would think of seeing a doctor.

“Making such your personal finances are in the best possible condition for what look likely to be a difficult 12 months should be a New Year’s resolution that we can all stick to.”
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For further information please contact:
Julian Christopher, Footprint Public Relations, t: 07891 005034 e: julianchristopher@btinternet.com

Will Black, R3 Communications Manager
t: 020 7566 4215  m: 07917 422 485  e: will.black@r3.org.uk

Notes to editors:

  • R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners from all over the UK. R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.
  • R3 comments on a wide variety of personal and corporate insolvency issues. Please contact the press office, or see www.r3.org.uk for further information.
  • R3 promotes best practice for professionals working with financially troubled businesses.  Our members work in preventing insolvency and turnaround, as well as formal insolvency procedures.  All R3 members are regulated by one of nine recognised professional bodies.
In Q1 2009, there were 29,875 personal insolvencies in England and Wales.