Consumer Credit Counselling Service

Homeowners Mortgage Support (HMS)

As the credit crunch hits and the jobs have dried up, you maybe struggling to meet your monthly mortgage payment. The government have introduced a scheme specifically for borrowers that are experiencing a “temporary income shock”. A temporary income shock can be anything that affects your household income, such as, redundancy or reduction in hours, loss of part time or a partner’s earnings, loss of benefit due to a child leaving school, or a grown up child unable to contribute board due to unemployment.

How does it work?

HMS involves changing your mortgage to interest only, and then reducing the payments for a specific period of time (up to two years). This reduction will be based on your financial situation and can be up to 70% of the monthly payment. This is not a payment holiday, and reduced payments do have to be repaid at the end of the scheme, which means that you will likely pay extra interest over the term of your mortgage.

Are you eligible?

• The scheme will only cover borrowers with a total mortgage of less than £400k, and less than 16k in savings.

• You must have been making regular payments (though not necessarily of the full amount due) over the five months before joining the scheme, unless you had agreed a payment holiday with your lender

Where do you go for help?

Speak to your lender: You can check to see if your Lender is participating in the HMS scheme at www.directgov.co.uk. If your lender is participating, they will also need you to meet certain eligibility rules before they make a decision and offer you the scheme.

Not all mortgage lenders are participating in this scheme; however, all lenders must try and offer help to borrowers before commencing any legal action for repossession of the property.  This is called forbearance, or pre action protocol, and may include reducing the mortgage to an interest only product, changing the payment date, or capitalising arrears.

What’s next?

CCCS will provide HMS advice, but please speak to your lender first who will refer you through a dedicated phone line.  If your lender is not participating, CCCS can provide you with general debt advice by contacting our free phone number on 0800 138 1111.

The most important thing to do is speak to your lender.  Even if you are not considering applying for HMS, or any of the other government rescue schemes, you must make contact as soon as you are unable to make a payment to your mortgage.

Do you find that your household costs’ are spiralling and you are struggling to meet your payments, how do you feel about having up to an extra £4250 per year tax free?!

Often people ponder over their budget and look at the areas they can cut back. How about getting rid of those spare boxes and having a good old spring clean and then renting that spare room out?

There is a government tax free scheme, called The Rent a Room Scheme, which allows you to have an income of up to £4250 per year tax free. Anything over this amount would have to be declared.

What could you do with an extra £354 every month? Clear those credit cards, pay off those priority arrears? Or even save for that well earned break.

Some of the Advantages of the scheme include:

ü      Earn an extra income without working extra hours

ü      A house sitter on hand to water those plants and feed the cat when you’re not around

ü      Extra money to clear your debts and get your finances back on track

ü      You would be able to claim expenses for utility bills and house insurance if you go over the allocated £4250 per year.

If all the above sounds like a good idea, then you also need to consider the down side of letting a room. If someone else’s dirty pots and smelly socks is enough to send you round the bend, you may want to set ground rules from the start, this may save a lot of tension further down the line. Things to consider could include smoking, pets and general tidiness.

If you still like the sound of the extra cash and don’t mind sharing your home, you will need to ensure there is an agreed notice period to end the agreement and also make an inventory of all the room contents. You will need to agree what the rent covers as well as date and method of payment.

If you would like further information, please click on this link that will take you to the Direct Gov website. 

From April 2009 Debt Relief Orders (DRO) are being introduced, so what’s all the fuss about?

What is it?

DRO’s are a new form of Insolvency designed to be cheaper than bankruptcy. They aim to help people who have few assets, little available income and relatively low levels of debt. There is no court involvement with the application; instead an approved intermediary such as the Consumer Credit Counselling Service would help you complete and submit an application if you meet the criteria.

What are the eligibility criteria?

In order to be eligible for a debt relief order you will need to meet the following qualifying conditions:

ü      You must have less than £15,000 debt. Certain debts are excluded, including student loans, secured loans, CSA arrears, criminal court fines

ü      You must have less than £50 a month surplus after your household priority bills have been paid

ü      You must have less than £300 worth of assets. This includes savings, shares, cars, caravans, antiques, jewellery and collectables

ü      You must not be a homeowner

How does it work?

The overall aim of the DRO is to help in releasing you from overwhelming debts.

Applications for a DRO will either be approved or rejected by the insolvency service.

Once a DRO has been agreed a hold will be put on your accounts, this is known as a moratorium period and in most cases will last for twelve months. During this period you will not make any payments at all towards the qualifying debts and your creditors will be unable to take any further action during this time. At the end of the moratorium period, you are discharged from liability for all the qualifying debts listed in the DRO.

What are the costs?

Before an application for a DRO can be considered, a mandatory court fee of £90 must be paid to the insolvency service.

If you would like the CCCS to see if a Debt Relief Order is an option for you, you can visit our free online debt counselling system Debt Remedy or if you would prefer, you can call our Helpline free on 0800 138 1111 to speak to a counsellor.

Travel can work out to be one of our main expenses over the month. Today we are looking at ways to reduce travel costs. Below we have listed some of the main costs related to travel.

Petrol Prices

Find the cheapest petrol station in your area. You can do this by looking on the internet. Some websites allow you to search on your postcode and they then give you a list of garages you could use in your area. Some examples of these are http://www.petrolprices.com/ and http://www.findcheappetrol.com/ 

Be vigilant, as some supermarkets do offer price reductions at the pumps if you spend so much in store, so this could be a great way of making savings.

Reducing Petrol Consumption

There are many ways of improving your fuel consumption and making your car more efficient. By cutting your speed, you will save at the pumps. Things you could consider are;  

• Use the left hand lane wherever possible on motorways - 56mph could use 25% less fuel than doing 70mph
• Check your car tyre pressure regularly
• Air conditioning and heated seats use a lot more fuel
• A full petrol tank adds weight to the car, therefore uses more fuel

Compare Quotes

Does your insurance provider offer loyalty bonuses? If not bin them, and move onto a better deal.

Use price comparison websites to compare insurance quotes, use more than one to make sure that the companies really are the cheapest.

Car Finance

If you are struggling with debts and you are on a tight budget, car finance can be a nightmare! One thing you really need to ask yourself, is this an essential in your budget? If you need a car, does it have to be one on hire purchase? Or could you get by with a cheap run around?

If you feel you can do without your car on HP, Section 99 of the Consumer Credit Act 1974 allows you to terminate your agreement and return the goods. This is known as Voluntary Termination (VT). Once you have handed the car back to the finance company, they will sell the vehicle at auction, and you would be liable for any wear, tear and shortfall but this does give you the opportunity to come out of the agreement if needed. If this is something that you would like to do, then you will need to have paid at least half of your agreement and you will need to put it in writing to the finance company to get the ball rolling. If you would like to discuss this in more detail, you can call our helpline on 0800 138 1111.

Cut Back on Unnecessary Travel

This can apply to bus users and car drivers. Walk whenever possible, not only is this more cost effective but it will also be a way of shedding those extra pounds – An all round winner!!

Car Share

Some councils have set up car share schemes all over the UK. Have a search for a car share group in your area. This will also help reduce the cars on our roads, and stop those big rush hour tail backs.

Parking

If you have to pay for your parking, does your work offer a discount scheme? City centre parking can work out expensive over the month. Check on the internet to see if anyone is has a garage or drive to let, this could again work out cheaper than commercial inner city companies.

In your area is there a Park and Ride system? If so, then you could look to use this to avoid the city centres extortionate prices.

Travel Passes

Local travel companies have a wide range of different passes available to suit everybody’s needs. Look up your local companies and see what the have to offer.

Generally yearly passes work out cheaper but are a big initial outgoing. Does your work offer an Interest free travel loan? If not, ask them if this is something they are willing to set up for their employees as you will be able to spread the cost. 

Forward Planning

As a general rule, the earlier you buy your ticket the cheaper it will be, so forward planning pays. When looking at the prices of train tickets, check what the cost of a single and then a return would be. Sometimes two singles can be cheaper than a return!

Mothering Sunday is always the fourth Sunday of Lent and has been since at least the 16th century.  This is why Mothers Day in the UK falls on different dates each year and sometimes even falls in different months.

In days gone by, young British children that worked as maids and servants were only allowed one day to visit their family each year and this was usually Mothering Sunday.   They would often be allowed to take a gift for their mothers of fresh eggs and baking.  The children would also collect wild flowers as they were making their way home. 

The old English Mothering Sunday has its roots in pre-Christian times, but modern-day Mother's Day - the cards, flowers, chocolates etc - was started in the United States. 

In modern times it is inevitable that businesses see the day as a way to make money.  However, many mothers would be happier with a homemade card because it shows some thought and effort has been put into it.

No one objects to spoiling their mother on her special day but there are other ways to do it rather than buying expensive flowers and chocolates.  With the credit crunch biting hard, here are some ideas:-

• Home cooked meal instead of restaurant meal
• A lie in and breakfast in bed.
• Offer to do the cleaning/ironing while she puts her feet up and reads a good book or has a leisurely soak in the bath.
• Basket of fruit.
• A letter or poem telling your mother why she is loved
• Home made chocolates/cakes/biscuits instead of buying expensive shop bought.  If you want to make these extra special you could present them in decorated box. 

 We have included a cheap and easy recipe for “Credit Crunchies” which children can make for their mums…..with a little adult supervision of course.

Warning! You may find that these “Crunchies” disappear very quickly and may not even reach mum!!

Credit Crunchies

• 75g white chocolate, or milk chocolate
• 2 tbsp golden syrup
• 30g Rice crispies

Method

Melt the chocolate with the golden syrup in a large bowl over a saucepan of simmering water. Add the crispies and gently stir in.

Spoon into mini bun cases and put into the fridge for 30 minutes to set.