Will you be skinny-dipping in 2010?

A wealthy City Banker was soaking up the winter sun, moored off the beach in his boat “the Shameless Bonus”, as his attractive guests were contemplating skinny-dipping in the warm blue sea, when he was reminded of the words of financial guru, Warren Buffet “you can only tell whose swimming naked when the tide goes out”.

He looked out over the people swimming and wondered whether they were wearing swimsuits or if when the financial tide of 2010 rolled out, leaving increased VAT; increased interest rates; the continued non-availability of cheap credit; restricted mortgage lending and the prospect of an election, and change of government, would their financial shortcomings be exposed?

He recalled the last financial crisis and remembered how more businesses sank during the recovery period after the recession had ended than during it! Those firms that had survived were then faced with debt repayment and increased competition from new start up companies and businesses competing for their market share and customers. They were also faced with the threat from bankers like himself, who had waited on the edge of the economic pool until property prices and asset values had improved before diving in to puncture their lilos.

He saw in the distance some people wearing wetsuits and smiled, thinking they had sorted out their own personal balance sheets and were suitably attired to weather any storm that 2010 may hold. He then saw a gentleman in what appeared to be skimpy Speedos and arm bands and smiled again, wondering whether he had made the right financial and dress decisions over recent years. Only time will tell, he thought.

In reflective mood, despite his Bank having lost billions and being propped up by the Tax Payer, he had had a good 2009 and with that he raised his glass and wished all the assembled swimmers rude financial health in 2010.

So don’t be embarrassed when the tide goes out. If you get into financial difficulties in your individual or business lives, don’t sink, catch a lifeline and seek early advice so as to protect your assets and your modesty. For a free confidential consultation about beating the recession in 2010, speak to Martyn Evans at brains solicitors, the only Solicitor and Appointment taking Insolvency Practitioner in Cornwall. Tel: 01726 68111.

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Western Morning News, February 2010

Prompt action on debt is important

Economic recovery could spell even greater danger for those battling with loan repayments, warns insolvency lawyer Martyn Evans, of Brains Solicitors. Rising prices could make your assets all the more attractive to creditors.

Now the economy seems to be showing faint signs of recovery, you could be forgiven for thinking that the worst of the pain is over for those struggling to repay mortgages or business debts.

After all, with improving commercial activity comes better job prospects, greater earning potential and, correspondingly, a higher likelihood of meeting future repayments on time. Surely now lenders can afford to be just a little more flexible and understanding?

Sadly, nothing could be further from the truth.

Indeed, for many, the light at the end of the economic tunnel will turn out to be nothing more than an oncoming train.

It is an unfortunate fact that, as a country leaves recession, rates of insolvencies, loan foreclosures and home repossessions invariably undergo a sharp rise. More businesses fold during recovery than the downturn itself.

The explanation is simple. While the slump continues, property prices and asset values are low, so a lender has little incentive to repossess.

However, any upward trend in prices or sales suddenly makes the option of foreclosing on a mortgage or business loan a far attractive proposition.

Coupled with rising interest rates and VAT, reduced mortgage lending and the continued absence of cheap, available credit, 2010 looks set to be a perilous time for businesses and homeowners alike.

So, even though the headlines may seem encouraging, it is vital not to let your guard down for a moment.

If you can, Be absolutely scrupulous about any loan repayments, meeting your obligations in full on or before the due date.

Nonetheless, there will be those for whom things aren’t so easy; and who, possibly through redundancy, reduced hours or business problems, begin to fall behind on repayments.

In that situation, the crucial thing is how you respond – it can make all the difference to your home, your personal and family assets and, perhaps even more importantly, your livelihood and earning potential for years to come.

So, what should – and shouldn’t – you do?

1. Don’t be ashamed.

Whether at home or in business, insolvency issues are rarely entirely our own fault. Perhaps there has been an unforeseen turn of events a work; maybe a house sale has fallen through; or, often, it’s linked to a family breakdown. Likewise, many businesses find themselves in difficulties because one of their own debtors has become insolvent, or failed to pay for work.
A sense of shame over the situation doesn’t help. It can tempt us to try and cover things up and soldier on, when in fact the responsible thing to do is to take action.

Financially, as in other parts of life, accidents will happen: what really matters is how we react.

2. Take the initiative.

Deep down, most people can tell when they’re in real financial trouble. Don’t try to hide from it, or hope your creditors won’t notice. If there’s even a chance of insolvency, the smart move is to act before it becomes a certainty.

Being the first to move broadens your options, improves your ability to make good decisions, and gives you the best chance of setting out a solution that suits you.

3. Get good advice, early.

Whether you approach an insolvency lawyer or simply your local Citizens Advice Bureau, it pays to have good people in your corner. Look for someone experienced, ideally without a vested interest in pushing you into one solution, like a pre-packaged payment plan or deal, unless you’re sure this is the most appropriate thing for you.

Some places offer an initial, free consultation: this is an excellent way of seeing whether they’re a good “fit” for you and – more importantly – gives you an opportunity to seek help as soon as you think you have a problem, rather than waiting until you know you do.

4. Keep your options open.

Usually, you have more options than you think. Especially if you’ve acted early, you may be able to avoid official insolvency procedures altogether.

Often, informal routes, like negotiated agreements, suit everyone – particularly if your problem is only a temporary cash flow issue. Many fast-acting businesses manage to trade their way successfully out of trouble.

Similarly, there are avenues like Individual Voluntary Agreements (IVAs) Debt Relief Orders (DROs) and Debt Management Plans, which provide an alternative to personal bankruptcy. Each one has its own strengths and limitations, and the key is to find someone who can give you the widest, fairest view.

5. Negotiate!

Be prepared to take an active role in finding an answer to your problems; your creditors usually want to protect their investment, so there can often be a way forward that suits you both.

One piece of good advice that is rarely given, though, is this: if you know you’re not a strong negotiator, ask someone who is to do it for you.

After all, you are likely to be legally bound to the results, which could influence the rest of your life – why wouldn’t you make an effort get the best deal you possibly can?
The financial guru Warren Buffet said: “You only find out who is swimming naked when the tide goes out.”

Economically, the tide seems to be turning right now. Unless you want your financial shortcomings exposed, do try to make sure you’re well covered.