The Eurozone Debt Crisis Explained.
Unless you have been living on the moon for the past couple of months you will be well versed on the impending doom that is a “double dip” recession. But do any of us really understand what this means for each of us?
If reports are anything to go by, we are indeed heading into our second recession in five years and we should expect to see a domino effect with consumer spending going down, less money going into the economy, jobs getting cut and unemployment rising and finances getting stretched to their limits.
Memories are still fresh in people’s minds from the last time, with many still picking up the pieces; we can only hope that we have learnt lessons from the last time to help us through what is certain to be a difficult time for us all.
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In a plan and taken out more credit.
I recently came across a post from a worried Payplan client on a forum, they had been in a Debt Management Plan for a couple of years with everything running smoothly until an unexpected cost came along and they found themselves having to take out credit to pay for it. Then they panicked about getting into trouble with their DMP provider.
If you are in a DMP it is not impossible to obtain further credit for unexpected expenses, but you must be honest in any application. IF you are asked about your financial circumstances and you are not honest, then you are potentially committing Fraud. There are creditors that will not ask about your financial circumstances but these will usually charge a very high rate of interest. .
If you are in an Individual Voluntary Arrangement and you have taken further credit without the approval of your Insolvency Practitioner then you arrangement is at risk of failing. It is written into your IVA proposals that you cannot take out any credit whilst in the IVA without prior approval of your IP in exceptional circumstances.
If you find yourself in a situation where you feel you need to take out credit it is always best to speak to the person who is handling your case as they may be able to help your situation and offer some guidance. If you are on a DMP they can look into reducing your monthly payments to allow for the additional expenditure. Or if you are in an IVA it may be possible to take a payment break.
Have you ever been caught out? What did you do?
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Is my job at risk?
Many people coming to Payplan have various worries and concerns about debt management solutions. The main concern we hear is “will I lose my home?” After than comes “will it affect my employment?”
After your house, your job will be the most important thing to you; after all without your job you cannot pay your mortgage or your debts. Unfortunately not all jobs are safe with all debt solutions.
We would always recommend that if you are unsure, then check your contract of employment.
As a DMP is an informal agreement between you and your creditors you shouldn’t be at risk by entering into this type of arrangement. However some jobs are at risk if legal action is successfully brought against you, such as: a County Court Judgement, Attachment of Earnings or a Charging Order.
Individual Voluntary Arrangement
An IVA is a legally binding agreement between you and your creditors and therefore some employers may not allow their employees to enter into such as agreement. Jobs or promotions may be affected if you work in the financial services industry for example.
Many jobs are affected by bankruptcy such as those that work in financial services, legal and accountancy or if you work for a FSA regulated company. Other jobs that could be at risk include working for the Police, Armed Forces, as well as being a Local Authority Official or a Member of Parliament.
To be on the safe side, you should always check your contract of employment.
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Does anyone need to know I am in debt?
We live in a culture where discussing debt is taboo. We worry about what people will think if they were to find out that we had money troubles. We think that we are the only ones to go through this. The truth is hundreds of thousands of people are in debt: some unable to pay it back, others managing to cover the monthly repayments.
One worry for many is, does anyone need to know about my situation? The simple answer is no. If you don’t want your friends or family to know then you don’t need to tell them.
You don’t need to inform your employer either, unless you are entering into a plan where your job could be at risk then you would need to discuss it with them. In that situation everything you tell your employer will be confidential, so you would not need to worry about office gossip.
At the end of the day, it is completely your decision whether you tell anyone or not. If you have someone to talk to then you know what they say “a problem shared is a problem halved.”
Who would you turn to if you had money worries? Would it be your partner, a parent, a friend or would you keep it secret?
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