How to be debt free during current economic crisis

>> Thursday, February 19, 2009

The current economy feels worse than any previous recessions. And it is now more difficult to stay debt free during current economic crises. People around the world are equally feeling that now its not safe with their jobs, banks or even business in terms of money or investment.

'Wikipedia' describes it a "global financial crises" and says further:

The global financial crisis of 2008–2009 is an ongoing major financial crisis. It became prominently visible in September 2008 with the failure, merger, or conservatorship of several large United States-based financial firms. The underlying causes leading to the crisis had been reported in business journals for many months before September, with commentary about the financial stability of leading U.S. and European investment banks, insurance firms and mortgage banks consequent to the subprime mortgage crisis.

Beginning with failures of large financial institutions in the United States, it rapidly evolved into a global credit crisis, deflation and sharp reductions in shipping resulting in a number of European bank failures and declines in various stock indexes, and large reductions in the market value of equities (stock)[7] and commodities worldwide.

The crisis led to a liquidity problem and the de-leveraging of financial institutions especially in the United States and Europe, which further accelerated the liquidity crisis, and a decrease in international shipping and commerce. World political leaders and national ministers of finance and central bank directors have coordinated their efforts[14] to reduce fears but the crisis is ongoing and continues to change, evolving at the close of October into a currency crisis with investors transferring vast capital resources into stronger currencies such as the yen, the dollar and the Swiss franc, leading many emergent economies to seek aid from the International Monetary Fund. The crisis was triggered by the subprime mortgage crisis and is an acute phase of the financial crisis of 2007–2009.

Either you are a self employed person or a businessman current economical crises may effect you. There are increasing number of bankruptcy around us then few years ago.

The main cause of bankruptcy:

Companies are downsizing, rightsizing, and filing for bankruptcy. There is no such thing as job security. If you were downsized, you may have taken a job that paid substantially less than what you were paid when you took on the debt load that you have currently. The unemployment rate continues to get worse, and it does not account for those who have exhausted their unemployment and continue to be unable to find work. If you are unable to make up that money in a part-time or another full-time job because of family constraints, you will continue to get further behind.

Self employed persons rely on consumer spending to continue to be successful. As consumer spending falls, it creates an overall poor financial outlook for small businesses.

Current economic crisis is not effecting big names but common person who was interested in saving money and then investing it to a profitable industry is hesitating to step forward.

Related posts:

* Alternative views of the economic crisis

* At this year's World Economic Forum in Davos, top business and political leaders offered their analysis of what caused our current turmoil and presented ideas on how to put the global economy back together.

Read the full story: The World Ecnomic Crisis, What's Your Solution?

* This articles shows the reasons why people think that this is best time in history to make lot’s of money and become filthy rich

Read the full articles: How to Become Filthy Rich During Economic Crisis?

Read more...

Mortgage possession orders and effects on home owners

>> Wednesday, February 11, 2009

People around the world are facing the worst financial situation. As unemplyment rate is on hike, people are unable to pay the mortgage and as a result losing their homes. This article would help you know the statistics and related posts which are concerned to this topic.

Recent economical downfall has increased the rate of unemployment and with the effect of the global credit crunch on the markets, together with recent figures from the Ministry of Justice, which reported a 17% rise in mortgage possession claims from the second quarter of 2008 when compared with the same period last year, it is likely that an increasing number of clients will get into trouble with their repayments.

Ministry of Justice figures show that mortgage possession orders – made by judges in the county courts – were up by 24% in the third quarter of 2008, compared with the same period last year.

Debt free direct provides these figures in this regard:

The FSA reported a total of 13,161 homes were repossessed by lenders in the third quarter of 2008, as households across the UK continue to struggle with home loan repayments in this grim economic climate.

While the amount of mortgage possession claims issued has only risen by 9% since the third quarter of 2007, the amount of mortgage possessions ordered by County Courts continues to rise. Regionally, Wales was the hardest hit with a 38% increase since the third quarter of 2007, while the Midlands saw the lowest increase in England of 16%.

Some 36,923 landlord possession claims were made, with 28,086 orders granted in the third quarter of 2008. This figure has risen 4% since the same quarter last year and shows that it’s not just UK homeowners struggling with finances.

Council of Mortgage Lenders says:

What happens to your mortgage debt after your home is repossessed?

After your lender takes your property into possession they have a legal duty to sell the property for the best price that can reasonably be obtained. The property will generally go on the market as soon as possible and your lender will get independent, expert advice on the price it should be sold for and the best method of sale.

If the sale of the property results in a surplus after all the money owed to the lender and any other secured lender has been repaid, then this surplus is returned you. Your lender should notify you of the surplus but if you cannot be contacted, the money will either be held by the court or your lender until you can be contacted.

But if the sale proceeds are not enough to pay off the money you owe to the lender, then there is a "shortfall debt" which you still owe your lender after possession.

Interest will usually continue to be charged on your mortgage loan until the property is sold and any shortfall is repaid. There will also be other costs charged to your mortgage account, including estate agents' costs in selling the property and legal costs.

More related articles:

* New pre-action protocol for mortgage possession claims
From "Mortgage solutions" Nine tenths of the law-what happens behind the scenes and the timescales involved

* "Mortgage Introducer" says: Mortgage arrears up but repossession figures stable

Read more...

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