Archive for December 22nd, 2008
Dec
22
Lifting the Veil on Debt Consolidation UK
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Ed Pearson, Debt Dr asked:
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.
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.
Dec
22
Credit Repair and Self Empowerment
Posted by: | Comments
Jim Kemish asked:
Credit Repair and the FTC Smoke Screen
The FTC did not set out to do you wrong. Without a doubt, they are well intentioned and have your well being at heart. Unfortunately, the heavy-handed FTC campaign against the bad apples in the credit repair business has tainted the rest of the barrel and has unintentionally imposed a terrible cost on consumers.
The Credit Repair Conundrum
Credit repair is in a similar class with taxes and healthcare. All of these are of great importance and are somewhat shrouded in mystery. The more important an issue is, the more likely it is to evoke fear. There are few things as important to your financial wellbeing as your credit, and few things as complex. Millions of people ought to be seeking credit repair help, but when they encounter the FTC warnings at the outset of their efforts it is often enough to stop them in their tracks. The social cost of this delusion is enormous.
Credit Repair Good Guys
It is true that there are bad guys in the credit repair business. The last time I looked this was true of every industry without exception. As of the time of this writing the bad guys in the credit repair business are fewer than ever, and a significant number of credit repair good guys have emerged. These white knight companies deliver essential and valuable services in a professional manner to the great benefit of their customers.
The Prevalence of Errors
There are several reasons credit repair is an essential service in today’s world. The product produced by the credit bureaus is enormously influential. You might not think of credit reports as products, but that is exactly what they are, no different really from automobiles or computers. They are assembled, passed through a quality control process, and sold. Unfortunately, like many other products there are flaws.
The Crazy Cost of Errors
The flaws in the credit reporting system can be as dangerous as a manufacturing flaw in an automobile. Your life can depend on the quality of the product you buy and your credit report is no exception. About seventy percent of all credit reports contain errors. Credit report errors can lead to higher interest rates and loan denial; these are life-changing consequences.
Credit Repair Reality
Congress spent years debating the fearful impact of the credit bureaus on our lives. The legislation they hammered out is called the Fair Credit Reporting Act (FCRA). In a way this is a consumer protection law, but it is equally intended to protect the three national credit reporting agencies we refer to as the credit bureaus. It is true that congress was heavily lobbied by the credit reporting industry during the creation of the FCRA, but I can’t cry conspiracy. There are economic realities involved with running any big business and these must be respected.
Look Out For Yourself
Congress had little choice but to attempt to balance the need for credit-reporting accuracy with the economic restrains of quality control. The end result is simple. Credit reports are as accurate as they are going to get, and consumers’ better look out for themselves. The creation of AnnualCreditReport.com, the site where you can get your credit reports once a year for free, is a stipulation of the FCRA and an attempt by congress to provide us with an opportunity to manage our own credit repair efforts.
Overcoming Inertia
You just need to get off your ****. Inertia is natural when we are faced with any confusing task, but like jumping into the water it’s not so bad once you get into it. Get your credit reports. Start your credit repair project. There are numerous ways to do this. Not withstanding the deceptive advertising of dozens of websites that offer so-called free credit reports, AnnualCreditReport.com is the only site you can get your reports for free.
On the Other Hand
This is not to say that it is the best site to get your reports for free. On the contrary, in spite of my approval of the creation of the site, it’s really pretty difficult to maneuver. Personally, I’d spend a few bucks and get a simple tri-merged report. If you look carefully through the TrueCredit.com site (A TransUnion site) you can get a great tri-merged report without joining their monthly program, for $14.95.
Hire a Credit Repair Pro
Many people find the prospect of digging into the credit repair project just too much to handle. If you are busy and have enough going on in your life without taking the time to figure all of this out, just get on line and find one of the credit repair good guys. There is plenty of credit repair help available if you need it. Either way, it’s your credit, so please take care of it!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Credit Repair and the FTC Smoke Screen
The FTC did not set out to do you wrong. Without a doubt, they are well intentioned and have your well being at heart. Unfortunately, the heavy-handed FTC campaign against the bad apples in the credit repair business has tainted the rest of the barrel and has unintentionally imposed a terrible cost on consumers.
The Credit Repair Conundrum
Credit repair is in a similar class with taxes and healthcare. All of these are of great importance and are somewhat shrouded in mystery. The more important an issue is, the more likely it is to evoke fear. There are few things as important to your financial wellbeing as your credit, and few things as complex. Millions of people ought to be seeking credit repair help, but when they encounter the FTC warnings at the outset of their efforts it is often enough to stop them in their tracks. The social cost of this delusion is enormous.
Credit Repair Good Guys
It is true that there are bad guys in the credit repair business. The last time I looked this was true of every industry without exception. As of the time of this writing the bad guys in the credit repair business are fewer than ever, and a significant number of credit repair good guys have emerged. These white knight companies deliver essential and valuable services in a professional manner to the great benefit of their customers.
The Prevalence of Errors
There are several reasons credit repair is an essential service in today’s world. The product produced by the credit bureaus is enormously influential. You might not think of credit reports as products, but that is exactly what they are, no different really from automobiles or computers. They are assembled, passed through a quality control process, and sold. Unfortunately, like many other products there are flaws.
The Crazy Cost of Errors
The flaws in the credit reporting system can be as dangerous as a manufacturing flaw in an automobile. Your life can depend on the quality of the product you buy and your credit report is no exception. About seventy percent of all credit reports contain errors. Credit report errors can lead to higher interest rates and loan denial; these are life-changing consequences.
Credit Repair Reality
Congress spent years debating the fearful impact of the credit bureaus on our lives. The legislation they hammered out is called the Fair Credit Reporting Act (FCRA). In a way this is a consumer protection law, but it is equally intended to protect the three national credit reporting agencies we refer to as the credit bureaus. It is true that congress was heavily lobbied by the credit reporting industry during the creation of the FCRA, but I can’t cry conspiracy. There are economic realities involved with running any big business and these must be respected.
Look Out For Yourself
Congress had little choice but to attempt to balance the need for credit-reporting accuracy with the economic restrains of quality control. The end result is simple. Credit reports are as accurate as they are going to get, and consumers’ better look out for themselves. The creation of AnnualCreditReport.com, the site where you can get your credit reports once a year for free, is a stipulation of the FCRA and an attempt by congress to provide us with an opportunity to manage our own credit repair efforts.
Overcoming Inertia
You just need to get off your ****. Inertia is natural when we are faced with any confusing task, but like jumping into the water it’s not so bad once you get into it. Get your credit reports. Start your credit repair project. There are numerous ways to do this. Not withstanding the deceptive advertising of dozens of websites that offer so-called free credit reports, AnnualCreditReport.com is the only site you can get your reports for free.
On the Other Hand
This is not to say that it is the best site to get your reports for free. On the contrary, in spite of my approval of the creation of the site, it’s really pretty difficult to maneuver. Personally, I’d spend a few bucks and get a simple tri-merged report. If you look carefully through the TrueCredit.com site (A TransUnion site) you can get a great tri-merged report without joining their monthly program, for $14.95.
Hire a Credit Repair Pro
Many people find the prospect of digging into the credit repair project just too much to handle. If you are busy and have enough going on in your life without taking the time to figure all of this out, just get on line and find one of the credit repair good guys. There is plenty of credit repair help available if you need it. Either way, it’s your credit, so please take care of it!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.