An estimated 3m people owe more than £10,000 on credit cards, overdrafts and loans, new research shows.
Among these people just over 2.5m have unsecured debts of more than £50,000, according to debt solutions company One Advice.
The research found that one in 10 people who owe five figure sums are worried about whether they will be able to repay their debt.
A fifth of people also admitted they had months where they found it difficult to meet their repayments, and 3% said they had problems affording repayments most months.
In 16% of cases people said they were planning to take action to address their financial problems, with 7% claiming they were considering going bankrupt.
London has the highest proportion of people with large unsecured debts, with 9% of the population owing more than £10,000, followed by the North and Yorkshire at 8%.
People in the Midlands were least likely to have big debts, with just 4% of the population owing more than £10,000.
Debt advisors are already braced for a surge in pleas for help when people realise the scale of their problems after Christmas.
Those worrying about their finances should seek professional advice, as taking out the wrong debt solution could make matters worse.
New Bankruptcy Rules have come into force which may enable people with severe debt problems to become debt free much quicker than previously. Bankruptcy may be a better solution than debt management, an IVA or Trust Deed
Indeed, bankruptcy can sometimes appear to be the easy way out for people with serious financial problems. But there are difficulties associated with this that can remain for some time.
Bankruptcy stays on your credit file for six years which can affect your ability to get a mortgage and credit.
An alternative to bankruptcy could be an Individual Voluntary Arrangement (IVA) (or a Trust Deed for Scottish residents). With these solutions you pay back an affordable amount over a fixed period (normally 5 years for an IVA or 3 for a Trust Deed). After this time the remainder of your debt is written-off. During this time no interest is charged on your accounts and all creditor action is suspended. If you have equity in your home you are normally expected to release this by way of a remortgage or secured loan. These solutions may not be available if you have too much equity (because your lenders would then quite rightly expect you to use this to pay your debts) or if your debts are mainly with 1 creditor (because this creditor may choose to vote against the process).
Other solutions available include getting a debt consolidation loan or remortgage. These can help reduce your monthly outgoings but can lead to your overall payments over the term of the loan increasing. You may also be converting unsecured debt to debts secured on your home. A consolidation loan can help save money if the interest rate on the new loan is lower than the interest being charged on your existing debts (especially if these are store cards or credit cards).
A short-term solution may be to transfer credit card balances to other credit cards that offer an interest free period or cash-back.
A less formal route than an IVA is s debt management plan. These can enable you to reduce your monthly outgoings to a more affordable level. A 3rd Party negotiates with your creditors to accept reduced payments and where possible to accept freeze interest / charges. Debt Management plans and advice are offered by Charities including CCCS, Citizens Advice Bureau and PayPlan and from a number of commercial companies including Harrington Brooks, AllClear Finance, Baines & Earnst and Gregory Pennington.
Your creditors may also accept a repayment proposal if you contact them direct.
The key to solving your debt problems is not to bury your head in the sand. Don’t ignore calls and letters from your creditors and if you are unable to cope seek help.
Miles Grady BA (Econ) Hons ACA
Director
Debt Consolidation
Over the last decade Americans have accumulated excessive amounts of debt. Partially fueled by low interest rates and increased equity on houses due to real estate markets driving prices high up. Excessive spending and no financial responsibility often lead to bankruptcy of consumers. Now with the new bankruptcy law in place filing for bankruptcy has become much more difficult and much more expensive.
More and more people have now to look out for different alternatives. Debt consolidation programs can help consumer to get rid of the burden of excessive debt and may reduce a consumers monthly costs by hundreds of dollars each month. Debt consolidation experts can help consumers to assess their individual situation and make recommendations for how to approach the situation.
With the assistance of a debt consolidation professional, a consumer can work out a customized debt consolidation plan Depending on the severity of the situation the debt consolidation professional will contact the credit card companies of the consumer to negotiate a way out of the existing situation.
Debt consolidation is easy to get started. All it takes is a simple phone call or online inquiry. A consumer should research which companies have a good reputation as there are quite a few debt consolidation businesses out there that charge a lot of money and do not provide valuable service. They actually make things worse. A consumer also needs to be honest about the situation and willing to work with creditors. Hiding things will not help getting a consumer back on track.
While filing for bankruptcy might sound like the easier way out, this is not necessarily true. The damage to the credit score and the credit report is worse compared to working the way out of a big pile of debt. In the long run it also does not help. A change of how people think about these things has to be made. Filing for bankruptcy is pretty much somebody else paying for your debt. Credit Card companies and banks will move these losses over into charges and everyone will have to pay more to cover bankruptcy losses. The consumer also does not learn how to work with a budget and often bankruptcy filings are done twice or more by the same people. By biting the bullet and paying off debt a learning process is established that will help to gain more financial freedom in the long run.
About the Author
Christoph Puetz is a successful entrepreneur and international book author. Christoph lives in Highlands Ranch, Colorado. One of the websites he maintains can be found at Credit Repair Help.
A majority of individuals burdened with multiple loans desperately seek a way out of their mounting debt problems. They seek expert services to combine their multiple loans into one. This is of great help to them because they no longer need to make payments against individual loans. They are given the privilege of combining all loans into one with one monthly payment.
Online debt consolidation services are provided by various firms and are one of the most effective ways to save on debt consolidation. All one needs to do is evaluate rates and terms from several lenders before making a financial commitment. Quotes cater to the financial needs of people trying to combine multiple loans into one and opting for a more affordable interest rate. An individual can compare offers from various lenders and decide which one is best for them.
The process starts by filling out an online form and waiting for offers from several lenders. A debt consolidation loan is a dream for those in debt, as it combines many monthly payments into one single payment. This allows those in debt an optimistic outlook that they will pay off their debts in a timely manner. However, consolidating bills is not always smooth. If the debt is substantial, it may be difficult to find a consolidation loan at a lower interest rate.
The main objective when consolidating one’s debt should be to reduce the total cost. This can be done by keeping two things in mind. You must find the lowest interest rate offered by various lenders, and you must stick to their program in order to pay off your debt in a timely fashion.
Online Debt Consolidation provides detailed information about online debt consolidation, online debt consolidation applications and more. Online Debt Consolidation is affiliated with Student Loan Debt Elimination.