Lifting the Veil on Debt Consolidation UK
Posted by business | debt | Posted on May 1st, 2010
You’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.
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I would seek a financial professional. I met with a Primerica representative and they help me get out of debt. There is no fee to see them and they gave me a free financial needs analysis. Since they don't charge clients anything, they do ask for referrals, which I had no problem with.
greatest film! thanks for sharing! Down usury!
If you are in the US the executors have a time limit to execute the will. I would speak with someone at the Register of Wills in the county where the will is registered. I was an executor once in Maryland I had one year to fulfill the will but I did have the option to petition the court for a 6 month extension.
Wikipedia Probate excerpt:
"After opening the probate case with the court, the personal representative inventories and collects the decedent's property. Next, he pays any debts and taxes. Finally, he distributes the remaining property to the beneficiaries, either as instructed in the will, or under the intestacy laws of the state.
A party may challenge the probate, either by petitioning the personal representative or the court. If the claim is rejected, the claimant may file a lawsuit to prove the claim. Such challenge may force the court to scrutinize the probate in further detail.
The personal representative must understand and abide by the fiduciary duties, such as a duty to keep money in interest bearing account and to treat all beneficiaries equally. Not complying with the fiduciary duties may allow interested persons to petition for the removal of the personal representative and hold the personal representative liable for any harm to the estate".
Americans, Patriots, join the JULY 4th Independence from the FED Day!
From May 13th to June 15th, turn in $250, $500, $1000 or more borrowed FED paper FRN dollars in exchange for public debt-free SOVEREIGN US Mint dollar coins. Exchange rate is 1 to 1 from a bank, or your U.S. Mint with free delivery.
Start circulating on JULY 4th for anything you buy. US Mint dollar coins buy down FED debt!
YES, U.S. Dollars coins can replace FRNs! FED pays us Full Face value.
ENDTHEFED
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 .
@gamewizard even if they teach this in schools, nothing will really change. The guy who made this video did not make any revolutionnary analysis. Simply because realizes things statically and not in a constant evolution.
Try to read “the Capital” of K.Marx. There you will understand what value really is and why this system cannot be perpetual in its current form.
Do not talk with debt collectors over the phone. No mather how smart you think you are, they are trained to get the best of you.
Instead send them a letter stating that the cannot contact you by phone anymore. Any contact has to be by US mail to an address that you specify. Send letter by certified mail and keep copies for your records.
Never reveal any personal information to a debt collector. They will use it against you. Don't appear desperate, just play the waiting game with them. Remember, that you have the power, you have the money, and they are the ones who want to get their hands on it.
If they come up with a settlement that seems fair to you, include a "pay for delete" agreement. Don't pay them a dime before they agree to delete all derogatory information they have placed in your credit files. It is very important that you get the agreement in writing first before you pay.
Good luck.
@gamewizard
i agree , adoph hitler said the same thing
Send a letter to the collection agency, certified mail, return receipt requested, asking for validation of the debt. Keep a copy for your records and also the green card the USPS will return to you showing the letter has been received.
If the debt collection agency cannot verify the debt (give them 30 days), send them a letter stating that per the FDCPA (Fair Debt Collection Practices Act), the debt is invalid and to cease collection efforts. Send copies of your correspondence to the credit bureau along with a dispute of debt letter. Do all of this via certified mail, return receipt requested and send copies.
Lots of detailed info here: http://www.creditinfocenter.com/rebuild/debt_validation.shtml
Do not click on any of the ads on the linked page or fill out the "more info" form. Everything you need to know is already there.
Sample credit bureau dispute letter here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm
You can pull your credit reports free at https://annualcreditreport.com (free reports every 12 months…more often than that and you will have to pay). Make sure you get the report that contains copies from all three bureaus.
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Mo is right in that sometimes these debts turn into "zombie debt" (Google it) but by federal law, these zombie debts must be removed from your credit report if the statute of limitations for collection has passed. If you don't pay, it will be up to you to monitor your credit report and file disputes every time the debt shows up based on that. This occurs even when people have had debts discharged in bankruptcy. Even settling a debt for less than the original amount owed can lead to zombie debt occurring on the difference between the charge off and the settled amount. And zombie debt can arise from something that appears on your credit report through no fault of your own …fraud, identity theft, etc. (read more here: http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/ZombieDebtCollectorsDigUpYourOldMistakes.aspx ). Practices like that are absolutely and positively against the law, but it's up to you to monitor your credit reports and dispute every time it is reported.
lol u have western civ at cw post???
Debt collection companies buy debt from other businesses. The reason businesses sell debt is because they need cash flow, and are quite willing to sell the debts at a discount (anywhere from 5% to 25% off the amounts owed). it is then up to the debt collector to get the payments.
Note; to buy these debts you need to have the money to pay for the debts you can collect, and good debt collection companies don't work on commission based on what they collect – that way they'd finish up with all the really bad debts that will probably never be paid, and they'd go broke!
@gamewizard
You are 100000% correct.
In 1913 the american dream was stolen away while the good people slept,
And on Jeckyl Island the Bankers rejoiced,
As the stirred ghost of old Thomas Jefferson wept.
Woodrow he buckled to financial muscle,
And sold out a nation with the stroke of a pen,
The dark arts of oligarchs and old English patriarchs,
From far and wide they brought liberty’s end.
Air Force uses the "40 percent rule." Any recruit who's monthly consumer debts (not counting debts which can be deferred, such as student loans) exceeds 40 percent of his/her anticipated military pay is ineligible for enlistment
@jvfran2
Google “Federal Reserve Myths Debunked”
This video is TOTAL CRAP!!!
So money is not backed by gold anymore, It’s backed by people. This is bad!!!!! You have actual people controlling the money supply. These people can play God with our lives whenever they want.
@gamewizard We are a slave to this monetary system, there is no going back or changing things, because even though the long term goal would be great, short term would be hell. We are slaves if we choose to revolt, short term would be hell. We as humans dont look toward the future as individuals but as capitalist our thought process ends after we answer these questions How soon, How much.
You are always repsonibile, there have even been cases where peoples social security checks were partially taken until their old student loans were repaid. of course this is extreme but possible.