The Debt Inspector

Summary:
If your getting divorced you’ll realise that the proceedings can often leave both parties dangerously in debt. The emotional side of divorce can be awful, but it’s the money side that can be one of the most taxing aspects of separation. And dividing up the debts from the marriage can leave a huge deficit in your available funds.

Since in financial and emotional terms the whole divorce process can be costly, there have been demands for a more sympathetic way to organising the separation terms. The “Debts and divorce campaign”, has been launched by the UK Insolvency Helpline to provide a organised approach in dealing with household online debt advice. This is good news as nearly two thirds of people questioned said that breaking up caused them more money problems than redundancy or losing their partner.

In the questionnaire, 30% of divorcees said that they required professional debt counselling, while 28% found it a strain to adapt to having just one household income. In fact 9% had major problems organising their debts and had to consider bankruptcy.

The research which was sponsored by the UK Insolvency Helpline, has decidedly demonstrated that the expense of divorce can leave people burdened with debt. 16% said they had used credit cards to purchase luxuries or holidays they wouldn’t have bought if still married. This kind of spending can create a very sore point during the divorce negotiations.

Only 8% of people said they were able to balance their finances during the divorce process and had arranged an amicable agreement. Of the seventy eight per cent of respondents who terminated their marriages amicably, most said that their finances now needed extensive review and makeover.

On average those divorcees who got in touch with the UK Insolvency Helpline had between £14,500 and £25,000 of unsecured loans, while 50% had debts of between £2,400 and £5,900, mainly as a result of the price of moving into a new home.

Many divorcees interviewed had entered into an IVA which is a easier alternative to bankruptcy whilst still resulting in greatly reducing debt levels.

When it came to functional information, many relied on the CBA, whilst some relied on colleagues and others went to counsellors or used support organisations.

A spokesperson for the UK Insolvency Helpline said, “We have released the Debts And Divorce Campaign to try and understand our callers’ spending trends. We can then assist them in planning for the future so that they should be able to keep their legal costs down as they are directed through the whole divorce process.”

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Mounting costs from ill health is one of the most commonplace causes of people pursuing debt advice.
As in times of chronic illness people are incapable to work or are dependant on social security, income shortfalls can exacerbate create debt issues in multiple ways. Strain caused by financial issues is in itself a major contributing factor to health problems.

The sort of help topics consumers are asking for includes: Free Debt Management Schemes , Protected Trust Deeds, Individual Voluntary Arrangements (IVA’s), bankruptcy advice, administration orders, general money management and budgeting advice, Protected Trust Deeds, Individual Voluntary Arrangements (IVA’s), administration orders, general money advice and budgeting, Free Debt Management Plans.

Debt councillors tend to spend more time with clients burdened with debt from ill health because they acknowledge the particularly strenuous times they are experiencing. They do not want to see people struggling with serious debt issues created by ill health.

The reasons for financial issues in sickness are many and varied. The most common factors that lead to finance issues for those suffering from poor health are as follows:-

• The rate at which their income has dropped.

• When you are ill people tend to neglect finances.

• It can be increasingly tricky to resolve financial problems with clients whose health is deteriorating.

• Some people get into money difficulties because they have increased expenditure connected to their poor health.

• Respite care can be costly

• Debts can be racked up by the extra cost of transport for treatment. 

• Repaying debts can drastically lower the households disposable income and the reduction in income due to sickness, makes the circumstances even worse.

• The illness can mean that carers have to be hired.

• The situation can be exacerbated if the primary earner job is physically orientated. It makes getting back to work take that bit longer.

• Similarly, problems related to mental health may force people to be off work for particularly long periods.

If you have to get a new job even more difficulties develop. Although there are strict employment laws in the UK, some people with ill health often have debt problems because they’re unable work normal hours. For those with chronic term health difficulties, dependency on benifits will make their debt far more difficult to resolve. The problem is that many people suffering from ill health do not qualify for any benifits.

So what can be done? If you’ve already gotten behind on your bills, your lender will normally suggest methods to pay off your arrears gradually, together with your normal payments. And if you’re unable to pay these extra payments, you could possibly append them to your loan or postpone them for a time. It will generally depend on your track record. So pay as much as you can each month. Make regular payments even if you have to stagger them as this shows that you are reliable then your lenders are more likely to treat you sympathetically and you could might reduce the arrears charges as well.

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