Beating the Credit Crunch

Beating the credit crunch
As the credit crunch worsens finding ways to save money and reduce personal debt is important according to The UK Insolvency Helpline. Read more debt advice information and news here. Download a free ebook on beating the credit crunch.
What is the credit crunch?
A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks.
There are a number of reasons why banks may suddenly increase the costs of borrowing or make borrowing more difficult. It may be due to an anticipated decline in value of the collateral used by the banks when issuing loans, or even an increased perception of risk regarding the solvency of other banks within the banking system. It may be due to a change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises interest rates or reserve requirements) or even may be due to the central government imposing direct credit controls or instructing the banks not to engage in further lending activity.
Save money on living expenses in the credit crunch
The below are list of some wise money saving tips to get through the credit crunch that have been suggested by the debt advice team at The UK Insolvency Helpline debt help service.
* Save Money By Getting a Remortgage. Remortgaging not only helps you to get your monthly mortgage payments reduced but also allows you to get a better rate of interest.
* The Rent a Room Scheme. Did you know that you can earn £4,250 a year tax free from renting out your spare room to a lodger?
* Cut Living Expenses by working out a budget. Budgeting also helps make money go further. The fundamental aim of Budgeting is to ensure that basic needs are met and that, where necessary, steps are taken to get you out of debt.
* Lower Utility Bill Costs. Gas and electricity prices are always rising. Look around to switch to the cheapest gas and electricity supplier.
* If you are in debt consider a Debt Management Plan to Make Funds Available For Living Expenses. Debt Management is an informal agreement negotiated between you and your creditors. The aim of Debt Management is to help you clear your debts at a reduced level over a fixed period of time to help you make a fresh start with your finances.
* If you are in debt consider an IVA - Individual Voluntary Arrangement to avoid bankruptcy. An IVA is an agreement with your creditors that you will pay them a set amount each month for an agreed time period (up to five years). At the end of the five years (or sooner if this is what you have agreed) you will be debt-free and any further debts will be written off. The amount you pay is based on what you can afford, not what your creditors are requesting.
If you're in debt, don't panic. But it's important to do something, because the problem won't just go away. Don't ignore calls or letters from the people you owe money to (your creditors). Contact them to explain why you're having problems. Most organisations will be more helpful if you approach them first. Be very careful about taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments.
Be very careful about taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments.
You do not need to pay for debt advice. The UK Insolvency Helpline Debt Help Service gives free, independent and confidential advice. They can help you work out repayments and negotiate with your creditors. To contact The UK Insolvency Helpline call 0800 074 6918 or log onto www.insolvencyhelpline.co.uk