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10-January-2008
Are you controlling your debt...? - Michelle Levin, partner at Levi Solicitors LLP
It is obvious that all is not well in terms of consumer debt in light of the poor sales figures at Christmas in comparison with previous years. This is likely to be a knock on effect of the melt down of the US sub-prime mortgage market and it is unfortunate that this has had to happen in order to tighten current lending criteria in the UK.
The last 5 years have seen the amount of credit available to consumers increase enormously and certainly little attention is paid to the ability of the consumers to repay the sums owed. The property boom has meant that people have had to apply for large mortgages, sometimes way beyond the usual affordability calculation, and so people have therefore found themselves with debts they can hardly service. This problem has further been compounded by mortgage discount periods ending at the time when interest rates have gone up significantly. Subsequently, those with such large borrowings have been placed in an even worse position meaning in some instances mortgage lenders are repossessing, or people are paying their mortgage with credit cards.
Not only should individuals be concerned as to the state of their financial status and their spending, but small and medium business too need to ensure that they have appropriate credit control in place to avoid incurring unnecessary debt. Where possible, payment should be made upfront. Whilst this is not always possible, care should still be taken when looking at providing goods and/or services and payment being delayed. Business will have to also look at their own spending and placing as many procedures in place as possible to streamline spending and maximise cash flow. If the larger companies are experiencing a fall in sales, the impact on smaller business could be disastrous. Not only will demand decrease in certain industries, but increasingly other smaller business or individuals will not be able to meet their financial commitments and this could impact on medium sized business who rely on this type of custom to continue trading. At the end of the day there will be an impact on every aspect of business including employment, as the sales fall, profits are less and redundancies have to be made. It is a sad fact that this could possibly have been prevented had lenders been more stringent in their lending criteria and we can only hope that going forward they have learnt their lesson.
If you need further information on any of the issues mentioned in this article then pick up the phone and call Michelle on 0113 244 9931. Levi’s can help you and your business.
ENDS
About Levi Solicitors LLP Levi Solicitors was established in 1934 and has been part of the legal community in Leeds ever since. With offices in Leeds and Bradford Levi's is a multi-disciplinary practice and is recommended by the Legal 500 and Chamber Legal Directory. Levi Solicitors is a multi -disciplinary and forward-thinking law firm and is recommended by the Legal 500. With offices in Leeds and Bradford Levi Solicitors is a well respected local law firm that has operated in Leeds since opening in 1934 and has been a cornerstone of the Leeds and Yorkshire legal community ever since remaining wholly committed to the region. Our pre -eminence is endorsed by clients and market commentators alike who will testify that we provide a special balance of affordable, practical and legal advice in a responsive way.
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