Surviving the Financial Winter Coming up in Ireland and the UK
The winter of 2011 lies ahead and if the last two winters are anything to go by then it’s hard to be optimistic this year. If we don’t learn from the past, it is said that we are doomed to repeat it so let us see what we should do this coming winter. The big freezes during the last two winters in 2009 and 2010 had quite catastrophic effects on people and on their physical and financial health. A number of people and not just the elderly and infirm or those living alone did unfortunately and unnecessarily die in the UK and Ireland. Some of these deaths occurred after people fell to the ground often quite close to their homes. Others succumbed to hypothermia in their own homes and even as the big thaw set in following the big freeze-up there were plenty of further casualties with hospitals being inundated with patients seeking treatment for broken bones following slips and falls.
It’s easy to forget the economic price of those two bad winters as many people missed time at work because of the cold spells due to the inadequacy of transport services and the conditions of roads. Airports were shut down and rail services were regularly suspended. People felt the effects in their pay-slips as employers docked wages for non attendance at work, regardless of the fact that employees were largely blameless in the matter.
For those who were confined to their residences, home heating bills jumped and lots of people consciously ran up huge electricity, gas and heating oil costs attempting to keep warm, and who could fault them. And for that reason, following the cold spells, there were huge surges in the number of individuals looking for aid in managing their finances so adversely affected by the weather conditions and by the added expenses incurred through the Christmas holiday seasons.
It is sensible for that reason to plan for the season ahead and to try to foresee the weather linked conditions that will probably arise and to at least have a plan to handle them. However, even with the best will in the world, matters will undoubtedly go wrong for some people who will indeed need expert financial guidance. Help is at hand. In Ireland the Money Advice & Budgeting Service known as MABS provides an advisory service for citizens with financial problems. MABS is backed up by the Irish taxpayer and it works out a deal with creditors for indebted people. It tries to come up with affordable payment plans that are acceptable to lenders and which beleaguered people can ideally keep up. Unfortunately, long term management of such payment plans is the task of the individual debtors as MABS does not at this time have the resources to give continuing debt management services. Whether the Irish government and indeed the taxpayer is prepared to pay for the enhancement of the MABS service remains to be seen
There are a number of professional Debt Management Companies which are not funded by the Irish taxpayer and which provide commercial debt management services on an ongoing basis and not just the initial set-up of such plans. Each plan is tailor made in accordance with the income and expenditure of individual debtor. The debtor makes an affordable monthly contribution which is paid to creditors on a pro-rata basis, after deduction of the management fee. The fee is usually limited to 15% of the ongoing monthly contribution. There may also be an initial one-off set up fee payable.
In the United Kingdom there is a significantly broader assortment of financial remedies there for the heavily indebted person than there is in Ireland. Debt Management Plans are widely available of course and the services are much more stringently regulated than in Ireland, even though even in the UK it is accepted that additional regulatory legislation is required. The UK also has one of the more benign Bankruptcy regimes in the world, certainly from the point of view of the insolvent debtor. Their highly successful Individual Voluntary Arrangement structure, also aimed at the insolvent borrower, celebrates it 25th anniversary this year, having been introduced via the Insolvency Act way back in 1986. It is quite amazing that successive Irish governments have sat on their hands and not created an equivalent scheme in Ireland, seeing as the long life of the UK system has at this point ironed out any snags or problems in the initial scheme. One would have assumed that given the similarity of the two economies, Ireland could take on and legislate for a facsimile of the UK system practically verbatim, without feeling the need to reinvent the insolvency wheel. The UK also has Debt Relief Orders, Administration Orders and Debt Consolidation accessible to its people and to any troubled debtor. Many commercial firms offer insolvency and financial management services in the UK on a fee charging basis. As well as that a number of not for profit organizations offer financial services. These include CCCS and Payplan which are financed by lenders and not by the borrower and CAB. Citizens Advice and every Citizens Advice Bureau are independent charities, dependent upon the aid of a wide range of funders which includes central and local government, not for profit trusts, companies and individuals. The winter season in the UK is without a doubt significantly less scary than it is in Ireland from the personal finances perception at least.
In case you are struggling with arrears and worried about the approach to winter an IVA could help you get by.
