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Get your debts under control this year

admin — Wed, 24 Mar 2010 10:49:01 +0000

Whilst most of us would love to be free of debt many of us have had little choice but to borrow money for various things other than our mortgages. Credit cards, loans, store cards, overdrafts, and catalogues have all become a part of life for most people, and many people get themselves into a spiralling level of debt getting to the point where they can barely manage to keep up with their repayments.

Whilst getting into debt is unavoidable for most of us it is possible for those that are struggling with their debts to take action to try and ease the situation. The measures and options that are available to you will depend on a number of things, such as your personal situation and circumstances to the level and type of debt that you have. It is a good idea to look at the various options that are open to you, as some resolutions will work more effectively than others.

Over the past couple of years in particular many people may have found themselves deeper and deeper in debt, with financial problems having affected their finances to the point where they have been living on credit. Being in debt so deeply can really drag you down, and this is why it is so vital to take action as early as possible in order to get things sorted out with your finances and ease the stress that debt can cause. Some of the many solutions available are outlined below:

Consolidation: Consolidating your debts can prove to be one effective option for those that want to try and reduce their monthly repayments and make their debts more manageable.

This is an effective solution for those that have a range of different unsecured debts such as credit cards, loans, overdrafts, etc. In order to get a good rate on a consolidation loan you will need to have a pretty good credit rating, but if you are able to get this type of loan you can wrap up all of your other debts into one, cut the number of creditors that you are dealing with, and reduce the amount that you are paying out each month.

Debt management plans: If you are in a situation where your debt repayments are taking up a large chunk of your income, leaving you short of money for other essential payments, it is worth considering a debt management plan. There are various debt charities and agencies that can help to set these up, and you should find one that does not charge a fee.

Under a debt management plan you could reduce the amount that you are paying to each creditor by a significant amount and simply pay over a longer term until it is paid off. The interest on your debts is often frozen under these plans, and you usually make one payment to the debt management company which will then distribute the payments to your creditors.

IVA: If you are really struggling with your debts, you have over £15,000 in unsecured debts, you or your partner is working, and you meet the necessary criteria you may be eligible for an IVA.

This is known as a softer alternative to bankruptcy, and is not something that should be taken lightly to escape debt. However, for some people that have no other option it can be an effective solution, and in most cases you will pay a reduced monthly payment to be distributed amongst your creditors for five years, after which time the remainder of your debt will be written off.

Get your debts under control this year is a post from: Nicon Debt Management

What are the options for consolidating credit card debt?

admin — Mon, 08 Mar 2010 09:45:03 +0000

A number of recent reports have revealed that credit card debt in the UK has been rising, and on a per person basis the level of credit card debt in the UK is said to be over £5000 each. The credit crunch and the recession have both taken their toll on households across the UK over the past couple of years, and this has resulted in many people struggling financially.

During the recession many people did their best to cut back on the amount that they were spending, and rather than accruing debt they decided to make payments to try and clear existing debts to ease their financial situations. However, inevitably there were many people who were unable to do this as a result of their finances, and in order to cope with essential payments such as their mortgage repayments, rent payments, and day to day essentials had to turn to their credit cards.

On top of this the recent Christmas period has also affected the level of credit card debt, and following another turbulent financial year many people did not have enough money put aside to pay for their Christmas purchases and once again had to turn to their credit cards. With credit card bills having now been sent out after the Christmas period a large number of cardholders will found that they cannot cope with repayments on their cards.

As a result of all of these factors industry experts are now expecting the number of credit card consolidations in the UK to increase, as consumers rush to take action to make their credit card bills more affordable and relieve the financial strain. The soaring number of personal insolvencies in the UK has already given an insight into the problems that consumers are facing with their debts, and for many consolidation may now be necessary to cope with their finances.

There are a number of options available to those that are looking to consolidate their credit card debts, and in some cases this can be a really sensible solution as it can mean reducing interest and cutting repayments, which can subsequently mean reducing the risk of missed and late payments, CCJs, and black marks on your credit report. A consolidation loan is one of the solutions that consumers can go for, and these loans can be used to wrap up credit card debt as well as other smaller, high interest loans, catalogues, store cards, etc.

Another option is to go for an interest free balance transfer credit card, and with these borrowers can transfer debts from multiple existing cards up to the new credit limit, and can then enjoy a generous period of interest free credit to clear the transferred debt. For those that think they may need longer to clear their transferred debt a life of balance transfer is another option, and whilst these do charge a low rate of interest on the transferred balance the interest rate is far lower than the standard and it means that the low rate will be applied for the life of the transferred balance providing more time for the balance to be cleared.

What are the options for consolidating credit card debt? is a post from: Nicon Debt Management

Using the low base rate to clear your debts

admin — Sun, 09 Aug 2009 08:14:51 +0000

Just a couple of years ago the crippling base interest rate in the UK meant that many homeowners were unable to keep on top of sky high mortgage repayments, and many others had to default on other unsecured debts in order to ensure that they could keep on top of their mortgage repayments and avoid losing their homes.

However, the ongoing financial crisis and slumping economy resulted in the Bank of England deciding to slash the base rate in a series of dramatic cuts last year, and between October of last year and April of this year the base rate fell to just a tenth of its level, dropping from 5 percent in October to just 0.5 percent by April.

Of course, for those on variable rate mortgages this has resulted in repayments plummeting. After a period of financial hardship the cut in base rate came as a welcome relief to many homeowners, with some finding that their repayments have been cut by a huge amount due to the lower base rate. Since April of this year the base rate has remained unchanged at 0.5 percent, which is the lowest level in the three hundred and fifteen year history of the Bank of England. Furthermore many industry officials have predicted that in the current climate the central bank plans to keep the rate at this level until around the middle of next year, at which point rates may start to rise again.

This means that consumers who are saving money because of the lower interest rate should think carefully about how to most effectively use this extra money before rates start to rise again, and there are a number of options open that could really benefit you in the future in terms of your debts and finances. Many homeowners who have seen their repayment requirements drop through the floor have already realised just how invaluable this extra money can be towards their future, and have found far more effective ways of using this cash than just blowing it.

One obvious and very effective way in which you can use this extra money is to overpay on your mortgages, and this will benefit you in many ways. You can save huge amounts of interest to the tune of tens of thousands of pounds in some cases simply by overpaying on your mortgage repayments each month. What’s more you can also reduce the term of the mortgage by a significant number of years, so you will pay far less and clear your mortgage debt far earlier.

If you do not wish to use the extra money to make top up payments of overpayments on your mortgage there are also a number of other effective ways in which you can use this extra money. If you have credit card debt hanging around your neck then it can be very beneficial to make extra payments on your credit card balances with the extra cash, as this will help to release you from this burden of debt, and could save you years of repayments and a fortune in interest.

You could also put the money towards other debts such as loans and car finance, which again would rid you of debt far earlier and could mean big savings in interest. Using the extra money to pay off your debts will help to release you from repayments far more quickly, and the very low interest rate at present provides the perfect opportunity to do this. For homeowners the general consensus seems to be that overpayments on mortgages is the best option, so this is definitely something that you should consider.

Using the low base rate to clear your debts is a post from: Nicon Debt Management

Homeowners can be forced to sell even for unsecured debt

admin — Tue, 04 Aug 2009 07:25:02 +0000

As a result of the increased take up of charging orders by lenders more and more people may be forced to sell their homes even to pay unsecured debts such as credit cards and loans.

Traditionally, forced property sales have been enforced as a result of non-payment of secured loans that have been secured against the home, but one report suggests that over recent years lenders have increasingly turned to charging orders to force the sale of a property to repay an unsecured loan.

There has been a seven-fold increase in the number of charging order applications since 2000 according to the Citizen’s Advice Bureau.

These charging orders can result in the forced sale of a home through the courts even for the payment of unsecured loans. This may prove a particular worry for homeowners in the current climate, with many people falling behind on repayments on unsecured finance due to the difficult financial climate and the ongoing recession.

A report from Citizen’s Advice, entitled Out of Order, goes on to claim that in some cases lenders are threatening homeowners with these charging orders in a bid to make them pay far more than they can reasonably afford to pay.

The charity also warned that lenders are finding it increasingly easy to apply for charging orders, and in the current climate an increasing number of lenders are looking into using this route.

One CAB official said: ‘The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.’

Homeowners can be forced to sell even for unsecured debt is a post from: Nicon Debt Management

Nearly a century to clear a £5000 debt with Barclaycard

admin — Mon, 27 Jul 2009 07:37:20 +0000

A shocking recent report has shown how it could take consumers nearly a whole century to clear as little as £5000 worth of debt on their credit cards with Barclaycard.

This means that some consumers would never be able to clear the debt in their lifetime, reflecting just how long credit card debt can linger for some consumers. It is reported that as a result of the credit card giant cutting the required minimum monthly amount it could take some cardholders with a balance of just £5000 a whopping ninety eight years to clear the debt.

Barclaycard recently announced that it was reducing the minimum level of repayment required from cardholders. The previous minimum level was 2.25 percent of the balance or £5 minimum repayment.

However, this has now changed to just 1.5 percent of the balance of £5 minimum repayment depending on which is the greater. For those that plan to make only the minimum repayments on their cards it could take them much more than a lifetime to clear their relatively modest credit card debt with Barclaycard.

Officials from Barclaycard have said that the reason that the minimum monthly amount required has been reduced in this way is to help consumers who may be struggling to keep on top of their finances in the current financial climate.

They claimed that the reduction in minimum monthly required payment would mean that consumers could free up cash to make other payments such as bills or to meet their mortgage repayments and avoid losing their homes.

However, many officials are sceptical about this, and feel that the credit card giant is trying to make millions of extra pounds in interest by letting consumers’ credit card debts fester for longer.

Nearly a century to clear a £5000 debt with Barclaycard is a post from: Nicon Debt Management

Helpful Advice for Those Drowning in Debt

admin — Sun, 17 May 2009 08:56:59 +0000

Did you know that March 25 was Debt Freedom Day? Chances are you missed it. This is the day that Unbiased.com figures that the average working person has now paid the interest on their debts for the year.

Statistics of the amount of interest that UK wage earners pay on an annual basis takes up until the end of March before you can say that your earnings are actually going to start paying on your outstanding balances.

The majority of consumers in the UK are struggling to keep their heads above water with the debt load they are carrying. This has been further compounded in the last year with the downturn in the economy resulting in thousands of companies shutting their doors and the employees being laid off.

If you are drowning in debt and are having trouble making ends meet, it is good to know that there are ways you can get out from under this heavy load and the accompanying stress. The first thing you have to do is admit that you are in financial difficulty. The problems won’t solve themselves and they won’t go away simply because you choose to ignore them and not make any changes to your lifestyle. You do need to respond to any requests for payment by at least explaining to the creditor why the payment is late and even offering to make a partial payment. By ignoring the constant requests you are not only deceiving those who extended you credit in good faith, but you are also deceiving yourself.

In order to get a handle on what you actually owe, you need to sit down and make a list of your debts. Include the outstanding balances on each one, the rate of interest charged and the due dates. Include your mortgage or rent payments, and the amount you spend on groceries, clothing and leisure. This will help you plan how you can repay the debts. Start with the ones that are the most urgent, such as accounts that are in arrears or ones that have high rates of interest.

By making a budget for yourself for the month, you will be able to see how much money you do have left over for discretionary use at the end of the month. You can also go over the list to see where you can cut some corners to cut out wasteful spending, which is something that everyone has. Use the extra money to make extra payments on some of your accounts, such as the one with the highest interest or the one with the lowest balance so that you can have it repaid sooner and this will free up more money.

There is always help available from professional counsellors in the field of debt advice that won’t cost you any money. Such services are free and if there is a cost involved, you should avoid using this service. Consumer Credit Counselling Service is one such charity that specializes in helping people with their debt problems and have ways of helping you repay your debts.

Try to pay off any store cards first because these do carry a high rate of interest. You can also shop around for a credit card with a lower rate of interest or possibly one with no interest charges for a specified period of time. This will enable you to pay off more of what you owe instead of paying it away in interest.

Look into switching energy and telephone providers. It is quite possible you can save yourself a lot of money by taking advantage of special offers for new customers with different companies. Switching your mortgage to a different lender is also an option and is not as daunting a task as you may think. With interest rates at an all-time low, there has never been a better time to switch to a fixed rate mortgage and have a lower monthly payment. If it is a possibility in your financial circumstances, you may even be able to switch to an interest-only mortgage giving you the extra money you need to clear away your other debts.

Take a close look at the amount of money that you spend in luxuries. For example, if you usually dine at restaurants several times a week, you can cut this back to once a week. You will be amazed at how much money you can save in this manner. You may have some extra time on your hands and be able to take on a part-time job, which means you can make more money to pay your debts.
You do have to realize that it takes a lot longer to get out of debt than it does to get into debt. It will take time and patience to turn your finances around.

Helpful Advice for Those Drowning in Debt is a post from: Nicon Debt Management

What is Debt Consolidation

admin — Tue, 27 May 2008 13:06:36 +0000

Debt in America is growing at an alarming rate and along with it bankruptcies and foreclosures. With more and more of us turning to such bleak ends it is crucial that people with debt know all the options available to them before accepting defeat.

One option is debt consolidation.

Debt consolidation is a popular service that essentially gathers all of your debts into one place with one interest rate and one monthly payment. Those that consolidate their debt benefit from the ease and convenience of having only one payment as opposed to multiple payments. Debt consolidation can be the answer to most of your debt problems but it does present its fair share of problems.

There is no such thing as a cure all for credit problems. The debt you incurred must be paid off and unless you can convince the lenders to forgive it in its entirety the debt is your responsibility. With the aid of debt consolidation you may be able to negotiate better terms and interest rates to ease the burden but it will certainly not make any of the debt disappear. It is also possible to receive a fixed rate interest with debt consolidation. A fixed rate is a set amount of interest that will not fluctuate. While a fixed rate of interest can be of benefit during times of high interest rates it will not be during historic lows.

Of course there is the possibility of debt consolidators taking advantage of those that find themselves in financial hardships. If you do seek debt consolidation make sure to shop around and find rates and terms that are agreeable to your unique situation. If you do seek the aid of a debt consolidation company then discuss all the terms, fees, and rates that you may end up paying. Most of the time, however, it is more advantageous to consolidate your debt on your own.

For some, debt consolidation is simply not a wise move especially if you are faced with bad credit since you will have to pay much higher rates, rates that may even be higher then you are already paying before consolidation.

Another option can be a home equity loan. With a home equity loan you are borrowing against the equity of your home. This will present very low interest rates when compared to the rates of debt consolidation and lower monthly payments.

Refinancing your car can also provide the needed money to pay off your loans and is often times overlooked. One major draw back to refinancing your car is that an accident may total your car and you will still be expected to pay off the loan.

Debt consolidation is certainly not all bad and in fact can actually help out many who find themselves in severe financial hardships. If you do seek debt consolidation as an answer then you will have to understand that you can negotiate the terms of the consolidation. While your financial hardships may look bleak you should still do as much homework and research as possible. Look into other solutions like equity loans first and then discuss the possibility of consolidation.

Most find it beneficial to discuss their credit debt options with a representative from the National Foundation for Credit Counseling of the NFCC. The NFCC is a non-profit organization with the aim of helping anyone facing financial problems with debt management.

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What is Debt Consolidation is a post from: Nicon Debt Management

Debt Consolidation Or Debt Negotiation – Which One Is Better

admin — Tue, 27 May 2008 11:17:43 +0000

If you are in debt, you are probably trying to find a way out of it. Sometimes, the options seem limited or you may be looking around for a fast fix. Isn’t that why so many people play the lottery? Yet, such an option is really not that practical. The chances are so small of winding a sizeable enough amount to deal with your debt to be practically nonexistent. Other schemes are being pushed out there online and in the media all the time, but how many of them are legitimate? What you need are some practical solutions for alleviating your weighty debt problems.

This article seeks to shed light on two of the top solutions to debtors’ woes: debt consolidation and debt negotiation. Depending upon you circumstances, either if these methods may be effective for you. Let’s briefly look at each to see what advantages and disadvantages these solutions carry with them.

Debt Consolidation

With debt consolidation, there are actually a few options that you use. Both creditors and credit card companies have adjustable debt repayment programs that allow you to consolidate all of your outstanding debts under a single payment. You can also choose one of many debt consolidation loan companies that specialize in developing appropriate debt assistance plans for their clients. These companies offer custom debt consolidation services as well. The payments are lower and the interest rates may be lower than what many creditors charge. This can be helpful since you will be able save more money each month and put that money towards future payments.

With debt consolidation plans, you will have some minor disadvantages. The first one is that you must cancel all credit cards that are part currently being included in the consolidation. Second, there will be some administrative fees attached to the monthly payments. They may be established as a flat rate or one associated with each creditors that is involved in the debt consolidation program.

Debt Negotiation

Debt negotiation or debt settlement is related to debt consolidation because they are actually the second option that is available to those who are unable to meet the monthly payment requirements of a debt consolidation loan. Since this is a genuine situation for many debtors, debt negotiation is gaining wider usage. These types of settlement plans exist to help reduce the burden of the debt or eliminate it entirely.

If you have enrolled with a debt negotiation service, you can effectively stop paying creditors. The company you have signed with will act as a representative in all credit and debt matters. They go to the creditors, representing the client, for the purposes of negotiating some sort of agreement or settlement to wipe out the total amount of your debt. You pay the negotiator a fee that is used to compensate them and also kept in an account to be used for future payment on the settlement amount once it has been reached.

The disadvantage of a debt negotiation services is that often you’re association with them can have an adverse affect upon your credit score. At the same time, this con can be neutralized if creditors are asked by the settlement companies to take out a revised credit report, which shows that the debt has been completely paid off. (You can also contract the assistance of credit repair services to alleviate the affects of the debt settlement.)

Debt Consolidation Or Debt Negotiation – Which One Is Better is a post from: Nicon Debt Management