Debt Advice And Debt Myths

"All debt is bad debt" is not necessarily true. Debts such as mortgages, car loans and overdrafts can be deemed as necessary. Mortgages are often a cheaper option than renting, it is also usually an investment in the future. Setting up an overdraft can be useful in order to avoid missed direct debits and standing orders, and to avoid the penalty charges that will accrue if this happens.

Some people assume that a Bad Credit Rating is for life. This is one of the many common debt myths surrounding credit references is that bad credit ratings are with you for life. Bad credit records have a limited life span on your personal credit file, usually around six years. There are many ways to rebuild your credit rating, and you can have a spotless credit record within a very short space of time.

If you have Bad Credit you cannot borrow - not always true! Bad credit will usually mean that you will not get offered the low interest rates that people with good credit ratings can receive. Lenders will look at your credit rating and use the information to decide if you are a good lending risk or not. In most cases a poor credit reference with regards to credit card defaults will not hamper your chances of gaining a mortgage. Taking on high interest debts such as store credit cards, and then making prompt repayments, and more than the minimum payments, can see your credit record improving.

So not everything you hear about debt is true - it is well worth doing your research and to establish if you need debt advice or debt management.

Is Debt Advice Right For Me?

If you are struggling with severe debt problems – usually £15,000 or more – sometimes an IVA (Individual Voluntary Arrangement) could be the right solution for you.

An IVA involves making reduced monthly debt repayments to your creditors, this will be based on your available income, usually for five years. Once the IVA is finished, your remaining debt will be considered settled.

Who is an IVA best for?

An IVA is best suited to people with very large debt problem that will not be repay within a realistic timescale. They are a legally-binding debt solution, an IVA requires full commitment to repaying your debts. Your payments will be based on how much you can afford after paying your essential household costs, meaning you will be left with no disposable income for the duration of the IVA (usually five years).

An IVA is widely considered a preferable alternative to bankruptcy, since it avoids several of the disadvantages. For example, unlike bankruptcy, you will not lose your home, although if you are a homeowner you will be expected to release some of the equity in your home in the 54th month of the IVA.

Should I consider other debt consolidation?

Before choosing any debt solution, you should always speak to an expert debt adviser. They will be able to discuss your situation with you to help decide the best course of action. Just because you have debts of £15,000 or more does not necessarily mean that an IVA is the most appropriate debt consolidation – it really depends on your circumstances. So long as you can afford to repay the debts in a realistic amount of time, another debt solution, such as debt consolidation or a debt management plan, might be your best option.

Debt Free With Debt Consolidation For Christmas

Christmas has many meanings to many people but unfortunately some see it as another burden on their finances and they will need to get into debt to be able to have a good time.

Christmas isn't about spending huge amounts of money – it is obviously much more than that. What better way to spend Christmas than to know that come the end of the festive period you will start the New Year free from debt. How?

There is still time before this Christmas to get some debt management so you can tackle your debts and look to reduce your monthly outgoings before Christmas arrives. A simple online enquiry will enable a qualified advisor to give you a quick call and discuss with you what debt management you need – if any at all.

If you are keen to proceed with debt consolidation then paperwork can be with you within days and you can be on your way to having a much more relaxed Christmas because you will be safe in the knowledge that your debts have been handled professionally and you have less outgoings coming from your wages every month.

Debt Advice Can Easy Long Term Mortgage Worries

Currently the popularity of fixed-rate mortgages is going down, this may cause long-term debt problems for the rising number of people on tracker deals - something a debt consolidation plan could tackle is caught early.

Fixed-rate loans made up just one-third of the total number of mortgages granted in September.

This may mean more people are getting tracker mortgages to take advantage of the current low base rate which is just 0.5 per cent.

The interest rate will inevitably rise - which could leave the UK struggling to meet repayments in the future.

One way to increase the chances of avoiding such a problem is by getting debt advice now to help wipe out unsecured loans.

A debt help plan could deal with unsecured debts, such as credit card bills, by reducing interest rates and altering the repayment structure based on what a debtor can afford.

This may give cash-concerned UK residents an easier route to clearing unsecured debt in preparation for any future base rate rises.

Problems With Debt And How To Get Debt Consolidation

People do say, in many walks of life, that your first step to realising you have a problem is admitting that you have the problem. Easy to say and it makes a lot of sense – but a lot of people in society do use forms of denial as a way of avoidance on many subjects.

Debt is no different. It is so easy to assume all is well and that you don't need debt advice. Avoidance of the requirement of debt advice often falls into 2 categories:

1. Cut spending but cannot make significant inroads into clearing the debt.
2. Completely ignore the debt and continue borrowing on new or existing credit limits.

Both are a clear sign you need help with debt management – however it is clear to see that point number 2 is the worst situation to be in.

Write down what you owe and to whom. Then write down how much you pay on the debts per month. If you think that you're paying too much on unsecured debt then you need to get debt management.

Another step that you should take is to stop borrowing. If you have more credit available on your credit cards – don't spend it – if you do you are spiralling towards more debt and higher monthly payments on this debt.

In times of low interest rates on savings you will save money also if you move any savings that you do have to clear existing debt – chances are you're earning none or very little interest on your current savings.

Issues With Borrowing Money And Debt Management

People have always been in debt. There will always be borrowing and many don't consider a mortgage to be debt – but of course it is. If your property was to half in value and you had a 100% mortgage then the bank would still want their money back – and rightly so. However, just because borrowing has become more difficult does this mean that people are no longer getting themselves into debt problems like they were a few years ago? I think not and here is why...

I have 2 credit cards. I used to use them a lot but now I don't. They used to have a large amount owing on each but I have managed to reduce the balances massively on them both now so there is very little outstanding. So, I'm in a good position with my credit cards – I owe hardly anything on them so therefore my debt is low and I'm not paying a significant amount of interest. I'm sure I'm not alone in this situation.

Here's my point though. I can borrow up to £7,500 on Credit Card 1 and £6,000 on Credit Card 2. I'm not going to – but say I was to suddenly use all this money and treat myself. I would then owe £13,500 and with a minimum payment of 3% a month I'd be paying £405 a month – with the majority being interest. Now let's say I now lose my job, let's be honest, many are at the moment. I'd be absolutely stuck and be seeking debt advice urgently – possibly even debt management.

Uks Unsustainable Debt Problem And The Growing Need For Debt Help

A report by the European Commission on the long-term prospects for Britain's public finances warns that unsustainable debts are a real risk to Britain. This implies that the nation will be unable to manage its debts and that only default or high inflation can relieve the burden.

The Commission's 2009 Sustainability Report says that Britain will suffer a "sustainability gap" of 12.4 per cent of GDP – meaning tax rises or spending cuts amounting to close to £200bn a year.

The Commission says the black hole in the British public finances is far higher than the EU average of 6.5 per cent. It implies that, as Britain's population ages and makes increasing demands on the NHS and state pensions, governments will have to make even more painful decisions on public services and taxation in the decades ahead than so far envisaged. The Chancellor, Alistair Darling, currently plans a tightening of 6.4 per cent of GDP by 2017. The Commission's time horizon stretches to the middle of the century.

The existing crisis in Britain's public finances will be exacerbated by long-term population and social trends such as a pattern of high borrowing followed by debt management, says the Commission: "To put public finances on a sustainable path, the United Kingdom should improve its structural primary balance in a durable manner by 12.4 per cent of GDP. In principle, this adjustment could take place via both an increase in revenues and cuts in expenditure. Alternatively, the social protection system would have to be reformed to decelerate the projected increase in age-related expenditure."



Ignominiously for ministers, Britain is placed in the same sin bin of fiscal profligacy as the Czech Republic, Cyprus, Ireland, Greece, Latvia, Lithuania and Romania. The Commission says that by next year four EU members – France, Hungary, Portugal and Britain – will have debts between 80 per cent and 100 per cent of GDP.

Since it is continuingly difficult for the public to get consolidation loans the only viable option for many is to seek debt consolidation.