Why it’s important to check your credit report

Why it’s important to check your credit fileRecent research revealed that more than 2000 county court judgements (CCJs) are made every day, often without the knowledge of the individuals and families receiving them.

A CCJ is made when someone takes court action against an individual, saying they owe them money, and the individual doesn’t respond. These orders play a key part in debt recovery for businesses. However, they can adversely affect the credit rating of individuals if they never receive it, perhaps due to a recent house move and the letter being sent to an old address, and are therefore unable to either dispute it or pay it.

As CCJs stay on an individual’s credit file for six years, the fact that it exists at all may only come to light later down the line when a mortgage or similar is applied for and refused.

A credit file is a financial record of every borrower in the UK, showing their repayment behaviour over a six-year period and, with CCJs hitting the headlines, it seems timely to take a look at some of the key reasons why you should review it regularly.

Get an overview of your outstanding credit

Seeing all your current financial commitments that require credit, such as mortgages, credit cards, loans and mobile phone contracts, in once place can help with the management of your personal finances.

Apply for the type of credit that is right for you

Lenders calculate their credit scores on different criteria, so while one may reject you, another may accept your application for credit.

Identify ways to improve your credit score

There are several steps you can take to improve your score including closing any credit cards you no longer use, ensuring you are on the electoral roll and making any necessary repayments on time. Also noted on your credit file will be details of any defaults on loans or CCJs.

Protect yourself against identity fraud

A look through your file will enable you to detect any names you don’t recognise or accounts that aren’t yours. If you find any, it could mean you are a victim of identity theft.

Spot any mistakes and ensure they are corrected

This includes making sure your address details are current and removing any financial connections to people who are no longer relevant, such as previous partners who you may have held a joint account with. Errors should be reported to the credit reference agencies as well as the company responsible.

You can check your credit file as often as you like without it impacting on your credit rating and it’s well worth the time to ensure it is accurate and as good as it can be so you are in the best position when seeking credit at a future date.

Companies such as https://www.clearscore.com/,  http://www.experian.co.uk/ and www.creditreport.co.uk offer free and monthly paid for packages that allow you to keep track of your credit report and score.

PBC invite you to a Charity Craft Fair

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PBC are hosting a Christmas craft fair in aid of the firm’s chosen charity, Ronald McDonald House.

 

The craft fair will be held on Tuesday 22nd November from 6:00 p.m. to 8:00 p.m. at PBC’s Northampton office (9-10 Scirocco Close, Moulton Park, Northampton NN3 6AP).

 

So why not join us for some Christmas shopping, coffee, home-made cake, mulled wine and networking?  RSVP to Lisa Parker on either lisaparker@pbcbusinessrecovery.co.uk or 01604 212150.

 

Launch Party a great success

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PBC would like to thank everybody who attended the launch party to celebrate the merger with Bottomley & Co at the MTC Training Centre in Coventry last week.  Gary Pettit said, “It was great to see familiar faces support the merger, as well as meeting new contacts”.

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Paul Rogers added, “The magician proved a huge hit, especially the trick which produced two live goldfish from a folded bank note and left onlookers stunned!”.  Sadly no photo of this moment was captured.

The event also marked the launch of PBC’s chosen charity, Ronald McDonald, with a speech from operations director Kym Carvell.  Donations of £182.92 were received, which PBC will double and round up to £400.

PBC announce Ronald McDonald as chosen charity

kym-carvell

PBC can announce they will be supporting Ronald McDonald as their chosen charity for the year.

“To be honest with you”, said Kym Carvell, “until recently I thought Ronald McDonald was a clown dressed in red and yellow associated with a well-known burger chain! I knew there was a charity side but had never really thought about it, which is a shame given the good work I now know it does.”

“There are 14 Ronald McDonald Houses as close as is possible to specialist children’s hospitals across the country, from Southampton to Liverpool. They provide accommodation for families whose child is receiving treatment at the hospital, free of charge so parents can stay close to their children.  There is a telephone in each room with a direct line to the ward the child is on so that immediate contact can be made either by the ward to the parent or vice versa.  There are communal kitchen facilities, laundry facilities, playrooms, lounge areas with TVs and each room is allocated secure fridge, freezer and cupboard space. There are staff and volunteers to run the house and provide much needed support for the families.”

“The house at Alder Hey hospital can accommodate 84 families a night & has welcomed over 16,000 families since it opened in 1993. It costs £600,000 per year to run the house and last year that target was short by £150,000.  The house is open 24 hours a day, 365 days a week, is full 94% of the time and looked after 1,723 families last year.  The longest stay has been 2.5 years.”

“On 5th August, my baby grand daughter was born 10 weeks premature with a number of health issues, some which we were aware of before her birth, some we weren’t and some caused by her early arrival. She was airlifted to Alder Hey children’s hospital in Liverpool on the day she was born and my son joined her the same day.  Her mother was quite poorly and not allowed to travel until she put her foot down the following day and joined them!”

“Little Billie-Marie has defied the odds stacked against her and has recovered from internal bleeding, a bleed on the brain and brain surgery to reduce fluid at just 5 weeks old. She’s been resuscitated twice and it has been a roller coaster ride for all of us.  She still has issues with her kidneys, a hole in her heart and a Coloboma in both eyes which may result in her being visually impaired but she’s a fighter and she will be just fine.  She had her first bottle feed last week and was transported to her local hospital the following day.”

“By comparison, my grandson required surgery at Addenbrookes in Cambridge when he was born in 2013 and no such accommodation was available for my younger son and his partner. There is no Ronald McDonald House at Addenbrookes.  The accommodation there had to be booked in advance and cost £50 per night with no facilities or direct telephone line.  Few young people just starting family life can afford that, certainly not for any length of time, hence why the Ronald McDonald charity does what it does.”

“I am in no way, comparing the hospitals, they are both amazing places but I do have direct experience of the difference the Ronald McDonald charity has made. It is because of this experience that PBC have chosen it as its charity of the year.  Alder Hey in particular, treats children from all over the UK, Isle of Man and Europe, over 270,000 young people were treated there last year, hence its association with the Ronald McDonald charity.  A lot of the patients and their families are miles away from home, 143 miles away in my case!”

“Now when I hear the name Ronald McDonald, I no longer associate it with a burger chain but with grateful families facing tough, emotional and uncertain times with their very poorly children. In an ideal world, there would be a Ronald McDonald House at every hospital and I hope we can help with that.”

The team at PBC will be working on a series of fundraising initiatives, so watch this space!

More information can be found at http://www.rmhc.org.uk/

PBC announce large return to creditors

PBC are pleased to announce a significant dividend has recently been paid to the non-preferential creditors of Eldean Ironmongery Limited.

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Earlier this month, the joint liquidators were able to issue a dividend of 61.59pence in the pound to non-preferential creditors, with the amount distributed totalling over £89,500. This had been preceded by full payment to the preferential creditors and a payment of over £67,000 which full redeemed the company’s secured creditor, which in turn safeguarded the directors who had given personal guarantees that will not be called on.

The ability of the joint liquidators to make these payments was down to the sale of the company’s freehold property. PBC worked closely with a local firm of estate agents to ensure a sale of the property at a price 30% higher than the estimated value.

Joint liquidator Gary Pettit said, “At PBC the key word is “Awareness”.  This is not just for stakeholders but is also relevant to the PBC team.  That awareness resulted in us thinking outside of the box when looking to sell the property, culminating in a significantly enhanced price when compared with the initial valuation.  All in all, a good outcome for creditors as a whole”.

The financial cost of debt

The title for this editorial is quite deliberate. When companies and individuals are experiencing debt problems there is a non-financial cost consequence.  I am talking about the pressure, stress, anguish and, in some cases relationship breakdowns.  That is the physical cost burden and is often over-looked in the creditor scramble to get paid before any implications of a formal insolvency prevail.  The more fundamental cost is that of the professionals as every penny they draw down is depriving you, as a creditor, of a better (or any) return.

Notes

Since the Insolvency Act 1986 came into force there has been endless commentary surrounding the fees charged by an insolvency practitioner (“IP”) for handling insolvent estates. Unfortunately, there have been reports that fully justify criticism where even IPs have been known to be shaking their head with disbelief at what another IP is claiming.

So, what can you do to control the costs? October 2015 saw the implementation of remuneration reforms for IPs.  Now, once appointed, the IP must provide an estimate of the costs for completing the appointment if he proposes to be paid on a time cost basis.  Okay, that is a bit like wetting your finger and holding it in the air to see which way the wind is blowing as many things can (and do) arise that were unknown at the time of appointment, but it is the law nonetheless.

Under the reforms an IP can fix their remuneration on a time cost basis, fixed (or capped) sum, a scale rate percentage or a combination of all three. The key point to remember is you, the creditor, fix the basis of remuneration so it is really important you do get involved.  In a recent example I advised a creditor where the liquidator was seeking a level of fees and disbursements that, when you read “Between the lines” was designed to ensure the liquidator took all of the realisations in costs.  Based upon our advice the resolutions sought were rejected and alternative resolutions put forward that promote creditors at least getting a dividend.

In addition to the October reforms the Insolvency Service announced on 1 July 2016 the Official Receiver’s fees were changing. This announcement came out of the blue but, in essence, the Official Receiver will take a lump sum from the first realisations followed by a straight 15% of the remaining assets TOGETHER WITH 15% of the funds available to distribute to creditors.

Fixing remuneration on a scale rate basis can be seen to be the way forward as creditors get a good idea of the likely outcome. However, it can also appear very expensive.  For example, how much does it cost an IP to instruct the bank of an insolvent estate to close the account and send the closing balance to the IP?  I did see one example where creditors approved a global 25% scale rate of realisations, which included over £100,000 in the bank.  A creditor contacted me for advice as they were intending to complain as (quite rightly) they thought £25,000 for closing a bank account seemed a little excessive.  Unfortunately, because creditors did not properly engage with the insolvency and simply allowed a 25% rate on ALL realisations the IP in question ended up as the only happy bunny!

So, if you are unfortunate to be on the receiving end of a notification one of your customers is heading towards a formal insolvency, be involved or, better still, consult an IP to act on your behalf. Ensure the foundations of the insolvency are laid down at the outset.  Complaining later when you are being forced to write off your debt while simultaneously the IP has been authorised to take handsome fees serves no purpose other than to increase frustration.

Can your advisor advise?

Let us start with a question. If a stranger came up to you and asked to borrow your car for a couple of weeks would you simply hand over the keys, walk off and trust the car will be returned in good order?  Hopefully, your answer will be along the lines of “Don’t be daft” or, quite simply, “No.”

So, why is it then, when confronted with an issue that could have serious financial implications, both on your business and you personally, many still refer to unlicensed or unregulated advisors?

gary-pettit

Recently, I have had the misfortune of coming across two examples. The first was a director who was advised his company was insolvent and steps ought to be taken to place the company into liquidation.  So far, so good.  However, that advice included selling the principal business pre-liquidation where the sale included a tidy £80,000 windfall for the directors!  A fee of over £16,000 was demanded and paid pre-liquidation.  That director is about to be confronted with a number of claims where the liquidator can “Lift the corporate veil” and hold the director personally liable.  The second is of a similar tone and with every day that passes the directors appear oblivious to the fact the advisor is steering them towards personal liability claims and, potentially disqualification from acting as a director.

To make matters worse, when using such advisors you have no guarantee of their knowledge or skill. Furthermore, there is likely to be little (if any) redress in the event of a complaint or challenge to their advice.

The Association of Business Recovery Professionals have been so concerned with this (growing) problem they have published two guides:

“Don’t be misled by advice from an unlicensed advisor”

“My business is in financial difficulty”

These can be found on the Association’s website (www.r3.org.uk) or on our website at www.pbcbusinessrecovery.co.uk/Links/.

Every insolvency practitioner (“IP) has to be licensed through a professional body and are regulated by statute, their professional body and the Government through the Insolvency Service. IPs also have professional guidelines to follow and are insured so there is recourse if things go wrong.

Perhaps the anomaly in the capacity of an IP to advise surrounds personal insolvency. If during a meeting with an individual the IP concludes that individual should go bankrupt and, as a result the IP will not be appointed to act the IP must cease the meeting forthwith because he is not permitted to provide bankruptcy advice!  The exception is if the IP holds a licence issued by the Financial Conduct Authority, which I am happy to say PBC are licensed in that respect.

At PBC there are two IPs, regulated through the Institute of Chartered Accountants of England and Wales and the Association of Chartered Certified Accountants. The directors in both Northampton and Coventry have well in excess of 100 years’ experience between them and, as mentioned, licensed by the Financial Conduct Authority.

Personally, if it was my financial welfare on the line I could not comprehend seeking help and guidance from anyone who is not qualified. That is not me being a control freak; merely seeking the best and most appropriate steer.  That is my view so why would you think differently?