|
|
-
Diary of a Debt Advisor
- C for Charity
- P for Pensioners
- D for Divorce
- W for Weddings
- P for Planning
- F for Family
- P for Pressure
- E for Equity
- H for Housing
- R for Relationships
- B for Buy-to-let
- I for Income
- R for Retirement
- S for Shame
- I for Illness
- B for Bust
- C for Criticism
- M for Mental health
- H for Hormones
- R for Remortgage
- D for Director
- T for Travel
- B for Banks
- H for Humour
- A for Articulate
- M for Medicine
- C for Care
-
In Profile with...
- Dave Collier of CA Tax Solutions
- Nicki Stewart of Money Return Ltd
- Peter Welch of Bridgewater Equity Release
- Justin Rees of LeadPoint UK
- Gerri Riddiough of Financial Bliss
- Stephen Brown of Classic Mortgages
- Sue Forrest at 1st Stop Debt Solutions
- John Fairhurst of Payplan
- Ross Walker of EuroDebt
- Neil Cronshaw of Varden Nuttall
- Bev Budsworth of The Debt Advisor
- Hayley Newton of Ashley Park Debt Solutions
- Ian Woodley of Now Financial
- Barry Mitchell of Recro Debt Management Services
- Aftab Zahoor of Debt-Simple Limited
- Mark Fawcett of Release Money Group
- David Rankin of Harrington Brooks
- Nick Pearson of Paymex Group
- Andrew Smith of ClearDebt Group
- Lee Healey of IncomeMAX
- Daniel Walker of The Debt Professionals
- Anthony Sharp of Anthony Sharp Associates
- Michael Fitch of Fairpoint Group Plc
- Charles Greed of In Control Debt Solutions Ltd
- Melanie Taylor of DEMSA
- Emma Bryn-Jones of Zero-credit Limited
- Stephen Robertson of Metis Partners
- Rehan Ahmed of Kingsland Business Recovery
- Kevin Still of the Association of Professional Debt Solutions Intermediaries
- Melanie Giles of Association of Professional Debt Solutions Intermediaries
- The Round Up
-
Features
- Will enquiry find a case for fee-paying DMCs?
- Charging Orders - Threat or security?
- Are back book buy-outs the future?
- Bailiffs 'Exposure' - The aftermath
- New proposals: a stepping stone for bankrupts
- Debt and depression - a holistic approach
- Full and Final Settlements - a win-win solution?
- Repossession - a threat to overcome?
- Debt Relief Orders - the new bankruptcy?
- County Court Judgments - how can DMCs assist?
- Sale and rent back regulation - protecting the vulnerable
- The debt showdown - IVAs vs Trust Deeds
- Payday lenders cashing in on credit crunch
- Clever money management - the key to tackling debt
- The debt-trimental impact of friends and family borrowing
- IFAs speak out over impending RDR
- DMT delves into the world of insolvency
- Paydayloan companies: Case study from the Debt Advisor
- The secret to making debt leads work
- Top 10 money-saving apps
- Is the finance industry responsible for the nation’s debts?
- Dundee-based brokerage wins Business of the Year award for debt solutions
- FSA facing a difficult year ahead
- One advisor, two debt management referrals and over £600 commission
- Serious Fraud Office – Costing less but more effective?
- Former mortgage packager tells of transition to award winning debt advisor
- EuroDebt and mortgageforce partnership goes from strength to strength
- Paydayloan companies: Case study from the Debt Advisor
- From investment banker to debt advisor: EuroDebt welcomes new franchisee
- Family debt advice business scoops Franchisee of the Year award
- In The Spotlight...Jenni Slader, EuroDebt Franchisee
RSS Feed
The debt-trimental impact of friends and family borrowing
Nearly one in five people turn to their family and friends to help them out with loans, according to new figures.
Debt charity, the Consumer Credit Counselling Service (CCCS), highlighted the trend of borrowing from family and friends in recent research. In 2010, 18 per cent of CCCS clients had outstanding loans with members of their family or close friends, owing an average of £3,530.
Furthermore, Aviva compiled ‘secret statistics’ of lending between family members, which saw two thirds of consumers (63 per cent) stating that there has been an increase in family approaching relatives for money as a direct result of the credit crunch.
Sue Forrest, Debt Solutions Manager at 1st Stop Debt Solutions said: “Borrowing money off family and friends can seem a perfect solution, especially as they are unlikely to charge you interest. However, you need to consider whether this is actually helping the situation.
If you are “bailed out” by family members, your credit file won’t be affected leaving you free to continue taking credit. However, your ‘lender’ may end up struggling themselves as a direct result, especially if they have taken out loans for you and you don’t keep your side of the bargain. Even if they haven’t had to borrow the money to lend to you, your relationship could be become strained if you needed to miss a payment.”
Delroy Corinaldi, director of external affairs at the charity agreed: “Many people turn to family members or friends for a loan when they are struggling to cope – especially where obtaining credit is difficult because of a poor credit history.
“However, borrowing in this way can place an enormous strain on friendships and family relationships, and should be considered very carefully.”
There are many reasons why individuals feel it necessary to borrow money from relatives. Data from Make It Cheaper publicised the fact that 22 per cent of GP surgery owners have been forced to borrow from friends or family in order to support their businesses.
Research from the Funding Circle also revealed many small businesses that needed money over the last year were worried the bank would ‘lower their overdraft if they sought a loan’, reports the Mail Online. According to the study, 20 per cent of small businesses had approached their family and friends for money.
Stephen Brown, of Classic Mortgages, highlighted the problems lending money to relatives can cause: “Recently I went to see an old lady aged 73 who was suffering with debts. One of the debts was a loan she had taken out on behalf of her grandson.
“The debt was for approximately £4,500, which wasn’t necessarily a huge sum of money, but her grandson didn’t pay her back. This was one of the factors that forced her to get a debt management plan.”
The average unsecured debt of those approaching CCCS was £22,476. Money owed to family or friends represented nearly one sixth of total debt.
In its recent Real Retirement Report, Aviva found people who were in debt to family members and friends owed them substantially more than other sources of borrowing such as overdrafts or store cards. In fact, of retirees with this type of debt, those aged between 55 and 64 owe on average £2,100 to family and friends, with this figure increasing to £6,790 for those aged 65 to 74, although the majority of lending between family and friends is likely to be of smaller amounts.
When it comes to family, the recent findings suggest a staggering third of UK consumers would be willing to take out borrowing in their own names, for family members who are unable to obtain credit, possibly due to a lack of available credit lines, a problem often seen in retirement.
Sue Forrest continued: “I have seen many cases over the years where sons and daughters have literally started avoiding family members because they owed them money and couldn’t pay it back. The sad fact is that once on that slippery slope, the debtor usually ends up having to seek professional help anyway.”
CCCS advises clients to prioritise paying back loans from family and friends because of the “detrimental impact that non-payment of these debts can have, both to the client’s wellbeing and, in some cases, to the financial position of the relative or friend lending the money.”
“My advice to anyone considering borrowing money from a family member, or lending it, is to consider the detrimental effect on friendships and relationships if it all goes wrong. Debt advice is freely available and so easily accessible now to anyone. If you are unfortunate enough to find yourself with debt problems, don’t call mum or dad – call an expert,” Sue Forrest advised.
