Following on from Ross’s piece about the various options available for clients in debt and the various support structures we have under the one roof here at New Beginning, I felt it might be important to expand on how we in New Beginning Financial Services can help clients through a difficult time.
Financial Planning is about ensuring that our clients encounter “no surprises” financially. Never is this philosophy of ours more important as when we are trying to help clients who have to deal with a debt issue.
As Ross outlined we always explore 4 options when it comes dealing with debt and each of them has a knock effect in terms of your financial planning.
To give you some examples let me outline some of the effects that debt can have on your financial set up.
1. Life Insurance is normally affected adversely. If a client has gone into arrears on their mortgage it is also likely that their protection set up needs to be looked at. It’s important to address this as money can often be saved every month which always helps. Some providers offer 15% discounts on normal markets rates which means that clients can either save on the premium they spend monthly or increase their cover to make sure their arrears are covered for no extra cost.
2. Pension savings are often considered an asset when it comes to negotiating with a lender. Banks tend to want your pension to be part of the discussion about what you can afford to pay. We obviously would like pensions to be taken off the table when it comes to negotiating on your debt situation. We believe pensions are for retirement, not for paying down mortgage debt that is no longer sustainable. However this area requires significant planning as the rules for when pension become accessible are broad and open to interpretation.
Our role is to ensure that your pension is protected insofar as is possible and that your pension savings are used for what they were intended, a quality of life for you in retirement. Please ask for our advice in this area before entering a debt process as being prepared with regard to your pension can often be crucial in ensuring your get to keep it.
Furthermore sometimes a client is at retirement age and it might make sense to convert a client’s pension savings into a regular income for life prior to entering a debt process. This will ensure that our clients will have income for the rest of their days as opposed to having a pension pot which is up for grabs.
Often our clients will have received a restructured mortgage arrangement. This absolutely works in the short term but it does leave an issue in the long term which we still don’t know how it is going to be addressed. Often part of a client’s mortgage debt is left “warehoused” which mean that it will need to be dealt with at a later date. Fine for now but how is this going to be serviced in the years ahead is a question most don’t have an answer for. As part of our financial planning service we ensure that clients have a plan for this. Again let there be “no surprises” financially ahead.
I could give numerous examples, too many to list on this newsletter, but suffice to say that we do consider ourselves the leading financial planning firm in the country when it comes to arranging a client’s affairs where a debt issue exists.
Please don’t just sit and wonder, it’s very likely we can make a positive change so please feel free to get in touch with me directly on email@example.com or call Kathy on 01 531 0571 and we can arrange a call.