You happen to be sitting at the part for the whole day, off from work as a consequence of stress and anxiety of unable to repay your piled up unsecured loans.
All of a sudden, you notice the advertisement showing from the big screen TV hanging on the wall of the building across the street with an incredible deal advising you to consolidate all your current debts into a single manageable loan. At that time you would think, ya, that’s what I’m looking for right now to ease my burden from drowning in a pool of debts.
What is Debt Consolidation in the UK?
Debt consolidation in the UK is actually been around for a while and many consumers have applied for such financial debt eliminating consolidation loans. But, how come the total debt amount in the UK still growing so rapidly? Also why there are so many IVA’s, debt counselling services, and bankruptcies extended to their boundaries, and right now is running at all-time high figures? Certainly, people applying loans for their own enjoyment but do they ever think about any shortcoming which might come to them?
Advantages of debt consolidation UK
Normally the rate of interest tends to go down for the unsecured debt and caused the amount that ones borrowed able to afford to make his/her monthly payments. As a result, your debts are under control and you can stay away from irritating telephone calls and threatening letters from creditors.
Disadvantages of debt consolidation UK
Generally, some collateral such as a home is needed for you to get a debt consolidation loan. Through the consolidating of all your unsecured debts to your house and some of the collateral is going to lose. Therefore, what used to be an unsecured debt now becomes part of a charge over your property. Almost all legal mortgage loan companies in the UK are having this type of loan service. They are going to show to you on the fine print that your house is going to be at risk in case you are not able to afford to maintain your secured loan payments which are now larger compare to your initial debts. Due to this, you are going to face an even higher risk to lose your homey. There are many cases already happened for people who have purchased their property for more than twenty years by paying the price at that time for about £80,000 on a home which net value was worth £110,000 and after a decade the house is worth say about £180,000 with a new debt consolidated loan of £150,000. Therefore, the consumers nevertheless have only the same equity amount in the house but the mortgage for the house has now nearly doubled in size!
One more drawback for the debt consolidated loan is the term and condition of the borrowing tend to keep increasing. Even though occasionally the debt consolidation agencies in the UK will advertise the service as for consumers benefit by saying that consumers now can have a longer time frame to pay back their debt and provide more time for them to get on top of their loan over the coming years. However, that seems to be a strange statement. You’ve doubled your mortgage loan in ten years as well as discovered yourself struggling with debt but all of a sudden your spending behavior will change and you will be free of debt at some stage shortly. What exactly are your opinions when you look at this? One more intriguing point takes place here. For the reason that the term tends to be longer, you’ll probably find yourself having to pay a greater portion of your hard-earned cash for your unsecured loan once you pay off your new secured loans.
Did your debt consolidation company check with you about your lifetime ambitions? You should know by now that you may have to get rid of the immediate debt troubles however you could also have signed away the probability of your new car, early retirement down under too. The truth is, if the amount of money you need to pay back is higher than you had allocated for you very well may have to work for a longer period to achieve your dreams.
Do you ever think of a minimum of six different solutions for you to get out of debt problem prior you to choose a debt consolidation loan? Can the debt consolidation company that you contacted name at least six solutions to help you to resolve your debt issue? If the answer is no, then you maybe should stay away from them and find some other options that can be more suitable to fix your current financial situation. You are going to realise that it is actually very hard to get any well-trained mortgage and loan officers to deal with issues related to debt and insolvency. What they can do is only talk to you to offer you the monthly repayment amounts and show to you how are you going to get better off, but do they really know what they are doing? After all, these all still depends on your financial situation.
A final word on debt consolidation in the UK
Today, I do think that debt consolidation loan has its term for surviving in the financial field but I also believe that there are many more could be done for people to know that there are actually many other options when dealing with debt. It is very important for people who are in debt to get the right consultation and advice. They can check out the positive and negative points for every solution when thinking of debt resolution and this will enable them to make a wiser decision.
You will find many other options for you to get rid of your debt problem. That includes debt consolidation loan however is not limited to just one solution.
Turn To UK Debt Resolution When You Owed Money
When someone is in your debt, owing to your money and refusing to pay, it can be very stressful to know what to do next. Therefore, it is wise to know the best cause of action available when relatively small sums of money are in contention.
Firstly, the most important thing you can do to counteract this scenario is to prevent it from happening in the first place. Regardless of circumstance, seeking professional advice from regulated financial planning authorities, such as Coles Financial Planning, shall alleviate any worries you may presently have and prevent situations requiring resolve emerging in the first place.
However, if grievances are unavoidable there is an easy route for all to take that will guarantee a victory for those who deserve it. Unfortunately, this may come at a cost that is more than financial. For example, if you are a freelancer with a highly lucrative client who is refusing to pay, you should seriously consider the reasons behind their decision and whether or not it is worth pursuing a legal route and relinquishing any further contracts with this organization in the future. Do not let the mists of anger force you into a legal struggle where you will actually lose out in the long run due to loss of business. Sadly, you occasionally have to cut your losses.
Conversely, if you have loaned money to a family member or a friend, the consequences can be equally troubling should legal proceedings be unavoidable. Even though your losses shall be repatriated, the bad blood that will inevitably linger can cause severe personal problems for both yourself and your social circles, so always try, wherever possible, to meet some beneficial compromise out of court.
The final scenario that is very common in the UK is that of unreceived payments from previous employers. When leaving a company, many businesses get confused by the process and fail to pay the departing staff member everything they owe. Should this not come to the attention of either party until a while later, problems can occur as the proof perishes with time. The best thing you can do in this situation is to act fast and correspond with your former employer as soon as you can. However, try to keep it civil and friendly – or as merry as humanly possible. The more pleasant the exchange, then the more chance the issue shall be dealt with out of court, an outcome always preferable by both parties.
Should the issue not resolve itself through any of these channels then it is time to follow the legal route and take the guilty party to court.
In the UK, this is easily achieved through a small claims court. Here, the process will not cost the claimant the earth and in many cases will not require either party to formally hire a solicitor. In small claims, court hearings are ostensibly smaller, with the risks being ostensibly smaller – generally resulting in a simpler and more straightforward process for all involved.
To begin the process you need to ‘register as an individual’ by visiting the HM Courts and Tribunal Services website. The process will then begin, and you can expect to see a proposed hearing date in several weeks. During this waiting period, we highly recommend that you seek professional advice from debt recovery experts. From there, the process should be relatively straight forward, just bear in mind that the cogs of the due process move very slowly.
Where there is ample evidence of the complaint in question, a fine shall be imposed upon the defendant and they shall be forced to pay a fee administered by the court. In cases where the interest can be added on, such as in money lending disputes or where the value of a service is relative, this can (and shall usually) be taken into account.
Whatever your individual circumstances, the only way to truly protect yourself against these situations is with wise and responsible financial planning. However, hindsight is a beautiful thing and most of us will get caught up in a struggle like this at some point during our lives. The best thing you can ultimately do is be calm, assertive, and moral about your grievance and fight for an outcome that is just, and not fight for an outcome as punishment.