Lifting the Veil on Debt Consolidation UK
18 April 2010You’re sitting there one day, off from work due to the stress of your unsecured debts weighing heavily upon your shoulders. Suddenly, in the background noise from the TV you hear a fantastic deal – consolidate your existing debts into ‘one easy affordable loan’. You think wow, just what I need to get my debts under control and you get the sales blurb.
Sounds great doesn’t it?
Debt consolidation in the UK is not a new phenomena these days. It’s been around a while. Lots of people have taken out debt busting consolidation loans. So why is the amount of debt in the UK still rising so fast? And why are bankruptcies, IVA’s and debt counselling services stretched to their limits and running at all time high figures right now? Well people get sold on the advantages but I’d recommend thinking about the disadvantages too!
Advantages of debt consolidation UK
Well the interest rate normally comes down on the unsecured debt amount borrowed making the monthly payments easier to afford.
Your debts come under control quickly so the annoying telephone calls and letters from irate creditors stops.
Disadvantages of debt consolidation UK (this is the bit they don’t want you to think too hard about)
To get a debt consolidation loan usually requires some form of property. By consolidating the unsecured debts to your home some of the equity has now been lost. So what was once an unsecured debt now forms part of a charge over your property. Every legal advert in the UK selling this type of service will point out in the small print that your home is at risk if you fail to keep up payments on (this now larger) secured loan. So you’ve put more risk onto your property. I regularly meet people who have bought their house maybe 20 years ago for figures like £80,000 on a house worth £110,000 to find that a decade on they have a house worth (say) £180,000 with a new debt consolidated mortgage of £150,000. So they still only have a similar amount of equity in the property but also have a mortgage now nearly double in size!
Another disadvantage is that the term of the borrowing is usually increased. Well sometimes the debt consolidation companies in the UK will sell that as a benefit with a line like ‘you can take longer to pay your debt and allow yourself time to get on top of your borrowing over the coming years’. I find that an odd statement. You have doubled your mortgage in a decade and you have found yourself in debt but suddenly your spending habits will change and you’ll be debt free at some point in the future. What are your thoughts as you read that? Another interesting point arises here. Because the term is often longer, you will possibly end up paying much more of your hard earned money for that unsecured borrowing by the time you pay off your new secured lending.
Did the debt consolidation company ask what your lifetime ambitions are? You see, you may have got out of the immediate debt issues but you may just also have signed away the possibility of that early retirement / new car / that holiday to see your family down under too. You see, if the amount you are paying back is higher than you had budgeted for then you may need to work longer to achieve your dreams. Was this discussed with you?
Did you consider at least 6 solutions for getting our of debt trouble before you decided on your debt consolidation loan? Can the company you speak to even name 6 solutions for getting out of debt trouble? If not then you have ignored several other options that may have been more suitable for the financial position you found yourself in. It’s rare indeed to find loan and mortgage brokers that are fully trained in solutions to tackle insolvency and debt issues. They have their offering and will talk about the monthly repayment figures to demonstrate how you could be better off, but is it the best way forward? Well naturally, that depends on your situation.
A final word on debt consolidation in the UK
Now, I do believe that debt consolidation has its place but I also think that there could be more done to understand that there are other options for getting out of debt. Getting the right debt help and advice is essential. Look at the advantages and the disadvantages for each solution you consider for debt resolution and then make a more informed decision.
There are more options for getting out of debt trouble then most people realise, that includes debt consolidation but is not limited to just that course of action.
If you would like to know what the 6 solutions to debt in the UK are then you can get debt help and advice from Ed Pearson at Debt Dr.
This article does not constitute regulated advice. Please remember that any action regarding financial advice should always be taken only after considering the specifics of your own situation.
To find out more about Ed try, http://www.advice4debt.co.uk/debtquiz.htm
Ed Pearson is a Debt Dr offering debt help and advice to individuals and small businesses across the UK.
Whilst you may love the stuff he writes, you should only ever take action once you have considered your own set of financial circumstances with a professional. This article does not constitute financial advice.
Video about debts
Chapter 12 (Debt): Dr. Martenson explains how, since debt is a claim on future money, it is therefore a claim on future human labor. To put it simply, debt is future consumption taken today. Key Concept 7 is introduced, that “ever-growing debts implicitly assume that the future is going to be larger than the present.” Dr. Martenson challenges this assumption, and what it means for us if that condition of growth is not met. www.chrismartenson.com
Question about debts
Is it better to settle my debts or file for Chapter 7 bankruptcy?I get letters from creditors offering to settle my debts for a lower amount. I owe about $17,000. Some debts have been charged off and I don't know who to contact now. Doesn't it still hurt your credit to pay off the debts anyways? Isn't Chapter 7 just easier? Please help from anyone who has gone through Chapter 7. Thanks!
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Tags: advice4debt, Bankruptcy Uk, credit Card Debt Solutions, crisis, Debt Consolidation Uk, ed Pearson, finance, financial, iva UkCategory : debt
A few points, feel free to challenge:
1. If a person is unable to make even minimum payments, how will they be able to settle with the CC companies? Are the CC companies really going to accept lower payment terms without any guarantee of paying? That would be like extending even more credit to a person who who has already shown that they are completely incapable of paying.
If you are able to settle the debt, settle it….Bankruptcy as the last post stated stays on your credit report for 10 years…the debts stay for 7 years, and will show as included in the bankruptcy. If you decide to pay them off, make sure you request a pay to delete so they take them off your credit report. To settle would be easier if you have the available money to do so. In the future when trying to finance anything new, they will look at your current payment and not necessarily the old debts. Chapter 7………no it's no easier, it's easy to pay an attorney, it's easy to file, take the credit counseling and wait to have it discharge…It's hard to re-establish credit, harder to buy things in the future, and harder to find jobs if the check your credit report for employment. There is nothing easy about filing a bankruptcy. If you do file, learn from it and re-build and try not to do it again..there is life after it, but, it's a tough road to climb! Good Luck!
IMPORTANT INFORMATION if your credit sucked like mine did. I used a company called Credit Repair Magic to repair my credit and saw results within just a few days. The main thing that I was able to do with this program was to dispute negative entries on my credit report, which drove my score up as these were deleted. Since most companies cant verify the information on the credit reports, I was able to make my credit score rise dramatically with just a few clicks of the mouse.
I wouldn't use any of them they are rip off artists. They take your money and do nothing, been there done that. Go to Consumer Counseling, in every city or county, it is free, non profit and they don't charge but they will contact all the places you owe money to and get you with lower payments and great ways of getting out of debt !! They are well known by all companies and acknowledge Consumer Credit Counseling as serious and good to work with .
Your bills pile up high.
@NYBankruptcy
Let me guess….you would be the perfect person 2go2 instead of CCCS?
Of course CCCS is funded by credit card companies. Why? Because they rather get paid some rather than none. If CCCS did not exist, consumers would simply TRY to file BK or do use a debt settlement company. If they could not BK, then they would get sued and end up in more financial trouble. CCCS organizations help the consumer work out a payment plan that can work for the consumer not the credit card company
yes, they will.
If you’re going to go the route of a service make sure it’s a law firm. These companies that aren’t law firm based are useless and complete scams.
Things may have changed, but unless a collector has a court judgement against you they can not on thier own take money out of your account without your approval. One major exception to this is the federal government. So, unless your debt is with the government, and you do not have a judgement against you, then they can not touch it.
WARNING! Comex and LBMA are frauds, their gold and silver certificates are frauds, there is no physical gold and silver in their vaults, demand physical delivery immediately or at your next contract expiry date.
Source: GATAorg, Andrew Maquire whisleblower interview on KWN, emails to the CFTC regarding the naked short positions and gold sliver market rigging, by JPM, HSBC, and likwise scam artists.
I really don’t get her saying have them “write paid in full on your account” /”have them say you don’t owe taxes”. Yeah like the IRS will just accept that! But Suzie Orman said ……Plus if they get the money how the hell do you know those companies are going to do all the things she said! Those companies aren’t looking to help you get your credit record to look good!
what propaganda this is.
California Statutes of Limitation
Written agreements: 4 years, calculated from the date of breach.
Oral agreements: 2 years.
The statute of limitation is stopped only if the debtor makes a payment on the account after the expiration of the applicable limitations period.
It looks like these debts are beyond the limitations, hence the reason why they want a payment, to stop the clock from running. It appears they cannot take you to court to collect, all they can do is try and collect.
You could just wait it out. They will be deleted from your credit report after 7 yrs and 180 days from the date of the last missed payment.
Here are some links to help
http://www.fair-debt-collection.com/SOL-by-State.html
http://www.ftc.gov/bcp/conline/pubs/alerts/timebaralrt.pdf
Information on time barred debts.
As a loan officer there are a few things you can do. Off the top of my head you can buy the house and after two years if the home holds it value you can refi and roll whatever other debts you want into your mortgage.
I settled my dept through Precept Financial. It was actually a pretty good experience. I think I ended up paying close to what I owed to begin with, but there was no way I could pay it on the creditors time table, so it worked out for me. Also, I really didn’t want to deal with the collection agencies. Those people are nasty.
Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one – credit-report-free.totalh.com
@brianedwards35 That make sense.
http://answers.yahoo.com/question/index;_ylt=AjQ3uJPmFnH13PeOomd6eS3sy6IX?qid=20070516214023AAgdpay
I asked basically the same question again for you, check out what people say.
court is the only answer
FIND A GOOD LAWYER
your lawyer will cost at least $1500.
and thats just starting off. it depends on how much time it takes to finish in court.
is $1500 worth it? oh wow! you said $25000 jeez!
I'd hire the lawyer
You need to slow down on the credit too. Sound like the credit card companies baited you Real Good.
First, can you produce copies of his signitures on these purchases?
since he's bound to the bill, and he's making payments, I don't believe there is anything you can do.
the creditors like this situation because they make more intrest. They might not help you at all!
NEVER EVER let your next or any boyfriends share accounts with you. Just learn from this experience and don't ever do it again, for me, please. thank you