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Millions of Brits end up out of pocket because they are hazy on their rights as shoppers, new research reveals.

Three quarters of people surveyed thought that they were up to date on their consumer rights but the majority do not know what to do when they buy something they do not really want, especially when it comes to the sales, according to Consumer Direct.

It found that 70 per cent of people are unaware that they have no legal right to a refund if they later change their mind about something they have bought.

Shoppers also have no real grounds for complaint if they were told about a fault before buying an item, made a mistake when buying it or caused the damage themselves.

Many also wrongly believe that shoppers rights change during the sales. However, stores are legally able to alter or withdraw their returns policy for discounted items at their discretion.

Carol Brady from Consumer Direct, said: “Its always worth double-checking a retailers refund policy before buying and this is particularly important when sales shopping.

“Although many shops allow you to exchange full price goods that youve had second thoughts about, they do this as a goodwill gesture. Theres no legal requirement for them to do it.

“These goodwill gestures may change or be withdrawn altogether during the sales.

“And remember, your consumer rights are exactly the same during the sales as at any other time. If youve bought goods that turn out to be damaged or faulty, you are entitled to a repair, replacement or refund.”

Individual Voluntary Arrangements (Iva) were introduced onto the financial market in 1986 and were originally aimed at offering small businesses an alternative to bankruptcy.

However, now anyone who has unsecured debts of around 20,000 or more can take out an Iva, in a bid to consolidate their debts and clear them over a fixed term.

This is a fairly drastic action and is usually an alternative to bankruptcy, for those who have maxed out other avenues, such as zero per cent credit cards and taking out a quick loan.

It is a legally binding contract between the person taking out the Iva and the bank or lender and will need to be drawn up with the help of an insolvency practitioner or a solicitor.

How does an Iva work?

Established under the Insolvency Act 1986, an Iva allows an individual who has more debt than they can manage to strike an agreement whereby they pay money into a fund each month, over a five-year-period.

The total amount the debtor pays is normally less than the final amount they owe, but an agreement is reached with the creditors that this will be acceptable.

One snag can be that creditors do have to agree to an Iva, in order for an individual to be able to deal with their debt in this way.

According to consumer debt service Clear Start, 75 per cent of creditors agree to Ivas, so long as debtors do not propose to repay less than 25 per cent of the total amount owed.

What are the benefits?

The main benefit of entering into an Iva is avoiding bankruptcy. This means that debtors are more likely to keep their homes and other assets, i.e. cars.

Furthermore, although there will be lending restrictions on the individual once an Iva ends they will be far less than for someone who has been declared bankrupt.

In more immediate terms, an Iva freezes an individual’s debt and helps give them back some control over their finances.

Realistic payment goals, usually of around 200 per month, are established.

This means that the debt stops accruing interest and furthermore these agreements usually mean that around 20 per cent of the debt is written off.

What is the downside?

Money-saving expert Martin Lewis advises those in debt to think long and hard before taking out an Iva.

He says: “Ivas are not an easy get out of debt card. They are an alternative to bankruptcy and should only ever be considered in that light.”

Furthermore, although in most cases those who take out Ivas will be able to keep their homes they will still be expected to release a significant share of their equity.

Also, if the individual’s income increases over the five-year-term or if they experience a windfall, their repayments will go up accordingly.

There is also a public record of anyone who has ever taken out an Iva and while making Iva repayments debtors will not be granted any further unsecured credit, i.e. zero per cent credit cards.

Finally, if a debtor enters into an Iva they can not keep up with and defaults are made on the payments, then bankruptcy proceedings can be started against them.

Yorkshire Building Society has launched a new offset loan that will allow homeowners to get help making their mortgage repayments from family and friends.

The building society’s new Offset Plus mortgage enables people to link their savings to a friend or relative’s home loan.

The scheme works by reducing the amount of interest the borrower has to pay in return for the reduction of interest from the savings they would have received.

Mortgage holders get a choice of either paying a reduced monthly repayment based on the lower level of interest being charged or paying the usual amount to reduce their mortgage term.

Up to three people can be named on the mortgage and have their savings linked to it.

However, one of the savings accounts would have to be the mortgage holder’s, even if it only had the minimum of 10 invested in it.

Yorkshire believes the mortgage will be of particularly interest to first-time buyers when it comes on the market in mid-September.

It may also appeal to parents who want to help their children buy their first home, but are not in a position to give them a lump sum payment.

Love-struck couples looking to tie the knot are cutting back on the amount they spend on their big day, according to a new survey.

Over half of people think that the cost of a wedding should come in at 10,000 with just nine per cent prepared to splash out more than 16,000, according to Halifax Personal Loans.

Another quarter believes that the budget should be even lower, between 1,000 and 5,000 with nine per cent tightening their belts further to bring the cost of the big day under 1,000.

But younger people are prepared to fork out more than their older counterparts. One in five Brits aged between 18 and 25 would spend over 15,000 compared to ten per cent of those aged between 25 and 35 and just eight per cent of the 35 to 44 age group. Those aged over 65 would try to keep costs down to under 1,000.

Northerners are the biggest spenders with four per cent saying that forking out more than 50,000 for the wedding of their dreams would be worth it. But almost one in five of those in the south-west balk at paying more than 1,000.

And when it comes to the honeymoon, the average couple pays out 2,475 with nearly half of those surveyed agreeing that 2,000 and 4,999 is the right amount to pay. One in five would splash out more than 5,000.

Ian Corfield, head of Halifax Personal Loans, said: “Weddings seem to have been back in fashion in recent years and we have seen average costs increase dramatically.

“However, our survey suggests that there may be a change in opinion as to how much couples should spend. It may be that the costs typically involved have reached a level which is no longer considered reasonable.

“In contrast, people seem generally more comfortable with average honeymoon costs and do not see this level of expense as unreasonable or over inflated.”

Britons have become increasingly adept at managing debt, with a whole generation growing up inured to the fear of finding themselves in the red. Recently cumulative debt in the UK topped 1 trillion, with the rates of borrowing continuing to spiral. As credit card lenders and persona loan providers adopt increasingly competitive marketing techniques and competition drives the available rates down, it has become easier and easier to secure capital. While scare stories abound on the consequences of unmediated borrowing, some say it is now time to revise our perception of debt including the upper limit for loans.

Currently the Consumer Credit Act of 1974 governs the market. Under these terms an upper limit of 25,00 is in place for any agreements between individuals and traders.

Yet as inflation continues to rise and the public become more “debt-savvy” there are those who think it is time to raise the upper limit. This week Mervyn King, governor of the Bank of England, admitted that existing rate of inflation had in fact been an eye-opener even for the experts.

“The MPC has been surprised by both the slowdown and the rate at which inflation has picked up,” he acknowledged.

With prices escalating, it seems 25,000 is not quite the lump sum it used to be.

Indeed, with the average student expected to have debts of 15,000 well into their thirties once the government’s loans for top-up fees kick in, the sum is likely to dwindle even further in real-terms. In this context the limit of 25,000 is effectively only generating an additional 10,000 for a graduate.

One other reason for reviewing the upper limit for loans has been the change in the social stigma attached to debt and its ubiquity. Young people and students in particular are now well-used to managing debt, with the rise of the so-called “rate tart” those who hop from one zero per cent interest rate to another indicative of this.

However, in many respects the fact that the UK is becoming more accustomed to debt is one reason why the upper limit for loans should not be changed. In such an environment, when people as young as 20 can find themselves in insurmountable debts, the prospect of the loans continuing to mount is arguably not the way forward. Not since the last recession has there been such a bottleneck of people in debt, with charities and the credit industry warning of a surge in people unable to foot the bill.

Figures this month released by the Department of Trade and Industry (DTI) show a marked rise in bankruptcies. Crucially those most at risk here are young people, as the Consumer Credit Counselling Service (CCCS) spokeswoman Frances Walker explained to the BBC.

“We are seeing lots of younger people coming to us for help,” she commented this month.

“They are often very heavily in debt as they have been able to borrow far more than in the past.
With no assets to fall back on the repayment of credit cards or personal loans can quickly escalate.”

For older debtors with families the burden can go beyond balancing the books to produce a sense of failure in the face of overwhelming debts. Earlier this year Richard Cullen killed himself after hiding the scale of his debts from his wife of 18 years after credit card repayments began to pinch.

Whatever the rules governing debts, it seems borrowers should tread carefully when looking to secure extra capital.

It is almost impossible to go to university without taking out a student loan from the Student Loans Company (SLC), so the sooner you get it organised, the better.

Handling your finances at university is a serious issue. Most students are inexperienced at the realities of budgeting for themselves, and according to professional bodies many graduates end up with severe debt problems.

Q. Why do I need the money?

The loan is to cover your contribution to tuition fees and to help with living costs. These days the average student borrows around 12,000 to complete a university degree, and thats money that most people cant get from their parents and cant raise by working in part-time jobs.

You should apply as soon as you receive an offer of a place at university because there is a fair amount of administration involved. And of course, because it is a loan, you will have to pay it back.

Q. How do I find out how much I will have to pay a university?

Get in touch with the university or college where you’re hoping to study to find out the costs. Call them or look at their websites to get an idea of fees and average accommodation costs. The UCAS website at http://www.ucas.com has contact details for all universities.

Q. How much will I get?

The amount of money you will be able to borrow is assessed by your Local Education Authority (in Scotland this is done by the Students Awards Agency). It passes your details to the Student Loans Company, a government body which pays out the money and oversees the repayments.

There are two categories for the assessment – Dependent and Independent.

For dependent students, their parents income is taken into account to see if the parents must contribute to tuition or living costs. Independent students are those who are aged over 25 or who may have married, or who have no parents, or who have been funding themselves for three years or more.

The total amount you get depends on the LEA evaluation of your financial circumstances. Whatever your status, you are entitled to 75 per cent of the loan amount, but whether you get the full allocation is dependent on that LEA review.

For 2005/2006 the allowances are up to:

4,195 for students in England and Wales
5,175 for those living in London
3,320 for those who live at home while studying

The money is paid to you directly by the Student Loans Company which transfers the payments into your bank or building society account, usually in instalments.

Q. What about paying it back?

You are meant to start paying back your loan in the April of the year after you graduate but that only applies if you are in a job earning at least 15,000 a year. If you are in that fortunate position, 9% of your earnings will be deducted each month directly from your pay cheque. If you are not earning that amount, you will not make any payments until you do reach that salary.

Q. Presumably if it is a loan, someone is charging interest on it?

Correct. The interest rate is always based on the rate of inflation and yes, interest is added every month. And if you do two higher education courses, and take out two loans, you pay them both back at the same time and there is interest on both.

However, the interest late from the Student Loans Company is cheaper than you would get from a commercial organisation like a bank or building society.

Q. How do I apply?

Get an application form from your local education authority or you can find them online at: http://www.studentsupportdirect.co.uk

Q. Are there any alternatives?

A large number of companies and some industries offer scholarships and sponsorships which can fund students throughout their university life. In most cases this means that in return you agree to work for that company when you finish your studies. To see what might be available, visit http://www.scholarship-search.org.uk/

A version of the same software also runs on the National Union of Students website http://www.nusonline.co.uk and gives a database for searching out funding options, loan calculators, and budget planning guides.

Q. Where can I learn more?

For more information:

Students in England and Wales http://www.studentsupportdirect.co.uk
Students in Scotland – http://www.student-support-saas.gov.uk
Students in Northern Ireland should contact their local education authority.

More Brits are taking out Individual Voluntary Agreement (IVAs) to declare themselves insolvent as a way to escape their growing level of personal debt.

Some 60,000 people in the UK declared themselves insolvent in 2005 as debt levels on personal loans, credit cards and overdrafts reached 1 trillion in 2005, according to PricewaterhouseCoopers.

The average IVA debtor owed some 60,000 with creditors expected to recover only 38 per cent of the total, figures from KPMG show.

Analysts believe that more people are turning to IVAs as a way to settle their debts without having to go bankrupt. These involve negotiating with creditors in order to condense debts into a monthly affordable repayment.

John Bangham, director of personal insolvency at KPMG’s Cardiff office told the Western Mail: “The IVA is an increasingly popular way forward for many people in financial difficulty as it offers them an opportunity to face up to their problems, draw a line in the sand and restructure their finances.

“Creditors, in the right circumstances, also prefer this as a way forward, as they see a significantly greater return on their money than they would do from bankruptcy. Yet we still expect to see a large proportion of the over-indebted decide that bankruptcy is the best option for them.”

But some consumers prefer to take out debt consolidation loans to pay back money owed to creditors. But experts say people considering such a loan should think carefully before signing up as these are secured against the debtor’s property.

Scots have a third more credit and store card debt than all other regions of the UK put together, a new study reveals.

The average Scot currently owes some 7,848 in unsecured borrowings compared to the UK average of 5,993, according to Debt Free Direct.

It found that 27 per cent of Scots had outstanding balances on their credit cards, four per cent higher than the UK average. In some cases, the debtor is paying interest rates of up to 69 per cent.

The Scottish National Party (SNP) has criticised banks for charging “extortionate” rates. It has now called for the Scottish Parliament to be given powers to set maximum interest rates.

MSP Kenny MacAskill told the Scotsman: “There is clearly a debt crisis looming in Scotland as the cost of Christmas returns to many Scottish households with a vengeance as credit card bills arrive.

“Whilst individuals must take responsibility for their spending, they are entitled to protection from outrageous credit card charges. A fair return on lending is one thing, usury and exploitation is another.

“The Scottish Parliament has to pick up the pieces of the Christmas debt crisis through the related problems of poverty, divorce, and even suicide and must be given the powers to protect the people of Scotland from exploitation.”

Almost two thirds of Scots put their Christmas spending on credit cards, according to research by the SNP.

Last year, Citizens Advice Scotland dealt with more than 50,000 cases of people struggling to manage their debts, an 11 per cent rise from the previous year.

People looking for a change in career who cannot afford to study for the necessary qualifications to make the break are being advised to take advantage of a government loan scheme, according to a high street bank.

The Career Development Loan (CDL) scheme, run by the department for education and skills, lets anyone 18 or over and resident in the UK borrow between 300 and 8,000 to study.

The funds, which are available to people who intend to work in the EU when they have finished studying, cover two years of learning and can be paid back on a monthly basis when the course is completed.

CDLs are available through three high street banks: Barclays, The Co-operative and The Royal Bank of Scotland.

“It’s a loan to help people take vocational courses,” said a spokesperson from the Co-operative bank.

“The government pays the interest on the loan during the duration of the course. It allows you to enhance and change the direction of your career.”

The government should speed up plans to offer Debt Relief Orders – a new low cost insolvency solution – to help millions facing a lifetime of debt, according to new research from a national charity.

The Citizens Advice Bureau (CAB), which provides independent debt advice, says their clients owe on average 13,153 (equivalent to 17.5 times their total monthly household income) and it will take around 77 years to pay off the money at a rate they can afford.

Consumer credit debt problems brought to CAB have doubled over the last eight years, accounting for three-quarters of the 1.25 million new debt cases dealt with by the network last year.

“Low income, combined with badly informed and poorly understood financial decisions are at the root of many of our clients’ debt problems,” said David Harker, chief executive of the CAB.

“They need to be given some hope that they can turn things around, with a solution that offers them a fresh start, lifts them out of the poverty trap, and gives them a chance to build better financial skills for the future.”

The Debt Relief Order is a new type of bankruptcy proposed by the government that would offer hope to those too poor to take advantage of other debt remedies such as county court administration orders, bankruptcy and Individual Voluntary Arrangements (IVAs).

People who have less than 15,000 in debt, less than 300 in assets and less than 50 per month available income after they have met all their essential expenditure could apply for a Debt Relief Order which would write off their debt.

You could avoid bankruptcy altogether if you take out a debt consolidation loan today.