Debt consolidation loans still an option
Released
on: August 21, 2008, 6:03 am
Press
Release Author: Debt
Advisers Direct
Industry:
Financial
Press
Release Summary: Despite the reduced availability of credit, a
debt consolidation loan may still be a viable option for worried
borrowers, say debt consolidation experts Debt Advisers Direct.
Press
Release Body: Amid worries about the reduced availability of credit,
debt consolidation experts DebtAdvisersDirect.co.uk
stress that lenders are still offering debt consolidation loans
and other forms of credit.
A
spokesperson commented: “With inflation more than twice
the Bank of England’s target, people in debt are particularly
worried about stretching their household budget further and further,
especially when talk of an economic slowdown is threatening to
reduce many consumers’ income levels as well. When there
simply isn’t enough money in the monthly budget, a debt
consolidation loan or other debt solution could take the pressure
off.
“In
recent years, the easy availability of credit has led many people
to turn to debt consolidation loans as a way of reducing both
their monthly debt repayments and the complexity of their finances.
So the Bank of England’s Q2 2008 Credit Conditions Survey
makes disturbing reading.”
The
Survey provides a summary of what ‘bank and non-bank’
lenders have seen over the past three months, and what they expect
for the coming three months. It reveals that lenders had reduced
the availability of both secured and unsecured credit to individuals
and expected ‘some additional reductions in credit availability
over the next three months’.
“The
key word here is ‘reduced’,” the spokesperson
continued. “The Survey shows that the availability of secured
credit, for example, was down around 45% in Q2, with lenders tightening
credit scoring criteria and decreasing maximum LTV (loan to value)
ratios. Although it’s a significant reduction, it does not
mean credit is unavailable. As long as they have sufficient equity
in their home – and as long as they approach a lender who
specialises in helping people in their situation – many
people still stand an excellent chance of obtaining a secured
debt consolidation loan.”
Looking
ahead, however, lenders do anticipate a further reduction in the
availability of secured credit. Even though they expect Q3’s
reduction to be smaller (just over 20%), the cumulative effect
could well make it harder for certain people to access the debt
consolidation loans they need in the months ahead.
Where
debt consolidation isn’t an option, alternative debt solutions
may still be available. Debt management, for example, can be an
effective way for someone in debt to bring their expenditure back
in line with their budget without accessing any further credit.
“When someone joins a debt management plan, they essentially
ask debt specialists to renegotiate their repayment terms. This
can bring their monthly debt repayments down to an affordable
level, freeing up the funds they need to cope with the rising
cost of living.”
Should
debt management not be appropriate, an individual may still be
eligible for an IVA (Individual Voluntary Arrangement), a legally
binding agreement with their creditors. “In an IVA, the
individual agrees to make fixed monthly payments, based on what
they can afford after essential living expenses, for the duration
of the IVA – normally five years. If 75% of the creditors
(by debt value) consent to the terms of the IVA, they’ll
agree not to take any legal action against the individual, and
to write off any remaining debt once the IVA has successfully
concluded.”
Whatever
an individual’s circumstances, the spokesperson stressed,
their first move should be to contact a debt specialist as soon
as possible: “In the vast majority of cases, debt problems
only get worse when they’re ignored. The important thing
is to seek professional debt advice as soon as you realise you
have a potential problem.”
About
Debt Advisers Direct
http://debtadvisersdirect.co.uk
helps people with financial difficulties, providing debt
advice and tailor-made debt solutions.
Web
Site: http://www.debtadvisersdirect.co.uk
Contact
Details: Melanie Taylor
melanie.taylor@debtadvisersdirect.co.uk
0845 056 6480
Pennington
House
Carolina Way
South Langworthy Road
Salford
M50 2ZY
2009
