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Last Updated: Thursday, 6 July 2006, 16:40 GMT 17:40 UK
The money trap: Your questions answered
Thanks for sending all your questions about your money worries to Panorama to be answered by a counsellor. Experts from the Consumer Credit Counselling Service have offered their advice below.

WRM, Inverness
A friend is encountering the exact scenario from your programme. She had a business which closed with 30,000 of debt, 70% of which is to the Royal Bank of Scotland (RBS). The RBS Manager did not carry out annual business reviews but continually increased her credit limit. She lost her house, is in debt repayment and severe depression. She has nothing and her income goes toward the debt. If not in my house she would not be alive today. PLEASE can you help in cancelling her debt to RBS?

You do not say if your friend took out a secured loan and that is why she lost her home but it sounds like she could benefit from an in-depth advice session. If she has any income, the counsellor maybe able to work out a debt repayment plan or maybe she should consider bankruptcy or an individual voluntary arrangment. For more help your friend should contact CCCS helplines between 8am and 8pm, Monday to Friday on 0800 138 1111. The service is completely free of charge.

John, Dover
I'm 25 and 61k in debt, most of it with RBS. When I got a loan out with Natwest I found it very hard to pay off my internet cardit cards as Natwest would only let me pay off 1k at a time over the phone or online.

Did you take out the loan to pay off the credit cards? In which case there should be no problem about paying off your credit cards but it is difficult to give specific advice without knowing more about your circumstances. One thing is certain, you have too much debt. I recommend that you contact CCCS helplines between 8am and 8pm Monday to Friday on 0800 138 1111.

Nyasha, Kingston
I agree with the view presented on Panorama. Banks do lure customers into debt. I remember one time I needed an overdraft from my bank (HSBC). Instead of saying yes or no they requested that I get a loan. I think they target people they know are really in need of the money at the time they offer their products. I think banks should be held responsible and more should be done by the governing bodies to protect consumers.

Often banks will suggest a loan as it may be cheaper than an overdraft. You should check the cost of the loan and see if it offers a better deal than the overdraft facility. CCCS counsellors see many examples of irresponsible lending but creditors are working very hard to improve lending practices and there has to be responsible borrowing as well responsible lending. About half the people who come to CCCS get into difficulties because of change of circumstances such as divorce, unemployment and ill health so there we must always ensure that we have a safety net in place to help people.

Gail, Birmingham
I have credit cards that I am only able to pay the minimum amount on. I am off sick from work. Can I freeze the interest and pay off the capital only? If so, how do I go about it?

If you are still able to make minimum payments on your credit cards, the creditors will not cancel the interest or the capital but will treat you the same as any other customer. If you are finding it difficult to make minimum repayments you should contact CCCS and ask for a counselling session. There is no guarantee that the creditors will freeze interest but they are usually prepared to be understanding if circumstances have changed substantially and especially if CCCS has been approached. CCCS helplines are open 8am to 8pm Monday to Friday on 0800 138 1111 or click on www.cccs.co.uk. One final point, did you take out payment protection insurance? If you did, your illness may be covered.

Ken, Aberdeen
I have a 9,000 loan and owe 4,000 on a credit card with Lloyds TSB. I have contacted the Citizens Advice Bureau who assured me they have contacted Lloyds. Yet I still receive up to eight phone calls a week, not to mention the letters. On their letters it asks you to contact them and they will help only to be told pay up or else. As I am on benefits I can't pay the debts back. HELP?

Collection activity is often generated automatically even when the creditors have been informed. Even if you can no longer meet your full contractual payments, it is often a good idea to make token payments as a goodwill gesture. Even paying a 1 a month per creditor, helps the creditors to understand that you cannot repay the debt because of your current circumstances. Try not to be too anxious about the calls but explain what has happened and that you are on token payments.

Louise, South Shields
Northern Rock (NR) have given me 125,000 of debt, based on a salary of 19,000. I started experiencing problems and contacted them. They said they could not help and if I didnt pay I would be in default and then taken to court. NR are trying to secure debt on my home, putting me into negative equity and adding 50 per cent interest to the loan. I believe there are grounds for irresponsible lending.

This sounds like a complicated case. I recommend that you contact CCCS as soon as possible and ask for an in depth advice centre. You can do this via their free helplines which are open 8am to 8pm Monday to Friday on 0800 138 1111 or via their website www.cccs.co.uk.

Jenny, Surrey
I recently learned of 100k my spouse has run up over five years. Is there protection for a spouse in such a case? Even if we divorce, my solicitor says settlement of his debts must come from the matrimonial pot. Is this fair? I feel the need to understand the underlying problem (gambling) to give us a chance to deal with that, but he is determined to conceal this. We are both approaching 50. I don't want our financial security to remain at risk. Suggestions?

This sounds very distressing. If the debts are solely in your husband's name, you have no liabilities. Your solicitor is right, however, your husband's creditors do have a claim on your husband's share of any assets which you own jointly, including any property. You need to ask your solicitor to explain fully what your liabilities are and to advise what your best course of action is likely to be. You are quite right to urge your husband to face up to any problems he may have and he may benefit from consulting Gamblers' Anonymous. You may both be helped by contacting Relate to talk about your relationship.

Mukesh, Chigwell
Very good programme, must be shown every month to all school children at 18 years before they go to university. And to people who have money problems why not get the computer to work your expenses so you know how much is left over to spend on credit card, loan repayments or cash.

You are right that financial education is important. We live in a society where credit empowers us to do many things and most people can borrow money successfully, indeed it is only a small proportion of people, estimated at between four and eight percent who use credit will get into difficulty. Credit is here to stay and we live in a society where we are encouraging young people to use credit to go to university so we must teach people how to use it properly. Personal finance has been part of the national curriculum since 2000.

Jethro, Reading
My bank made an accidental payment into my account over four months ago. I got an email yesterday saying that another bank accidently payed it in to me and so they just took it back. Can they just do that? It appears it was the other bank's fault and over four months later my bank just decided to give it back to them just because they realised they had made a mistake.

Presumably you were aware that an unexpected payment had been made to your account. Did you contact the bank about it when you saw your statement? The bank is entitled to say that a mistake was made and withdraw the money from your account. Obviously you should talk to the bank if this means that you will go overdrawn so that you are not liable for any bank charges.

Nicola, Stoke on Trent
I am an unemployed student and have received a letter from MINT offering me a credit card. My partner filled in his details as I am not earning and requested a balance transfer from his Capital One card of 3,161. We were shocked when I received the card through the post in my name with the outstanding balance. How can they transfer this money into my name when I have not signed anything? MINT have said they will send another card in my partners name. Is this acceptable? Please help.

It sounds like MINT has made a mistake but you have done the right thing by alerting them and if they are sending out a card in your partner's name they are presumably cancelling the one in your name, so there should be no problem. Make sure that MINT have definitely cancelled the card in your name.

Robert, Manchester
Just a bit of advice that I am after. Although I have got myself on a better footing financially I still owe about 1,400 on my credit card. I am only paying the minimum amounts which don't do much to clear it. Now my bank, the RBS, have offered me a loan to clear it which I am not so sure is a good idea. Though I don't worry too much about this I would like to clear this before too long. Any advice please?

As a rule CCCS does not think it is a good idea to borrow more money to get yourself out of debt but it is important to clear your balances on your credit cards, making minimum payments is never a good idea. I suggest that you take a good look at your finances and draw up a budget to cover all your essentials and see if you can manage a bit more money every month to clear your balances and try and increase payments as much as possible every month in order to reduce the balances and pay less interest. Click on www.cccs.co.uk for help with drawing up a budget. I presume from what you say that you have stopped using your credit cards? If you haven't, cut them up today and don't apply for any more until you have repaid the 1,400.

Doug, Camberley
I have a very longstanding arrangement with Barclaycard that my total monthly balance is paid off by direct debit, monthly, from my current account. Hence not a penny of interest for many, many years. But you would not believe (maybe you would) how long it took to get this agreed. Recently I thought it would be reasonable to ask for an increased credit limit. Current limit 6,650, increase sought to 10K. Declined.

It is a good idea if you can afford it to pay off your cards every month by direct debit. Not all credit cards offer this facility but you can always switch to one that does. I cannot comment why Barclays refused your application for an increased credit limit but 6,650 is fairly generous and remember, you are not paying a penny for this credit facility.

Mandy, Northants
I do not normally watch news programmess but it did strike a chord so I stayed up to watch. As a single parent earning approx 500 a month, I am offered a 'guaranteed' 7,500 loan about every three months. Surely my bank must know what I have left at the end of each month but it is still offered! I have three credit cards, so in theory I could go out and spend approx 25,000 with no way of repaying that. I have a 2,000 credit card bill that I struggle with.

It sounds like you are being very sensible and not taking on more than you can afford to repay. If you are finding it a bit of a struggle to make ends meet at the end of the month, you may find it useful to review your budget. Click on www.cccs.co.uk for help with this or www.moneybasics.co.uk offers a useful interactive budget which does all the maths for you.

Nick, Tarporley
I took out a loan with HSBC for 15,000 with insurance. What I did not relise was that they added the total of the insurance premium payments over the full term which amounted to about 19,000 in total and then charged me monthly interest on the full amount. Is this usual practise, if not what should I do? This only came to light when I repaid the amount after the first year and had not paid anything off the original loan.

It is common practice for the insurance premium to be added to the loan monthly and interest charged. The whole way PPI is sold and marketed is being looked at by the Office of Fair Trading after Citizens Advice referred it as a super complaint.

Richy, Middlesborough
I had a charging order placed against my house on the mortgage. I have now paid off the debt for this. Do I need to do anything so the charging order is actually taken off the paperwork, land registry etc?

You need to ask the lender who took out the charging order to inform Land Registry that the debt is no longer owing. This is a very straightforward process which should be familiar to the creditor. Form reference CN1 is downloaded off the Land Registry website and completed by the lender. The whole process should be completed within five working days.

Jenny, Nottinghamshire
I went to TSB to get a loan to consolidate debt. I wasnt working but they gave me a 10k loan. A while later they gave me a 15k loan while I was still not working. They refinanced the loan last year at a lower APR but was still more than 11k. They just threw money at me. This is very irresponsible of the lender and although I'm paying it back it is not easy. Something should be done about this as I came close to a breakdown and twice attempted to take my own life.

If you are struggling you may find it useful to have an in depth advice session with CCCS which specialises in providing debt advice and may be able help you with a debt management plan and who provide on-going support with the debt problems throughout the lifetime of the DMP which is a big help. Repaying debt is never easy but it can help to have an interface between you and the creditors. Call CCCS helplines on 0800 138 1111 to make an appointment. The lines are open 8am to 8pm Monday to Friday or click on www.cccs.co.uk. If you are feeling very stressed, and debt is very stressful, please talk to your GP who may be able to help you.

Fred, UK
When offering loans do banks ever check if the loan requestor is actually in employment? I took up a loan of 15,000 with HSBC without them ever wanting to see proof I was actually in employment. I wasn't.

Different creditors have different practices. When you apply for a loan, you will normally be asked to complete the bank's own application form which will vary from bank to bank. All banks will run a credit check with a credit reference agency and it is on the basis of this report combined with your application that you will be offered a loan and on what terms.

Richard, Rhyl
I have a close relative who currently has seven credit cards and all up to their limit which is at least 7,000 per card. On top of this my relative has debt problems with loans and outstanding mortgage payments. Is there any help out there for this person?

Your relative should contact CCCS without delay. Call 0800 1381111 or click on www.cccs.co.uk. CCCS is a charity and there is no charge for any of its services.



SEE ALSO
Britain's Streets of Debt
09 Jun 06 |  Programmes

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