Debt management essential as recession approaches
Released
on: October 31, 2008, 11:07 am
Press
Release Author: Gregory
Pennington
Industry:
Financial
Press
Release Summary: Debt management company Gregory
Pennington have said that now is a more
important time than ever for consumers to get their finances in
order and tackle any existing debt problems, as Bank of England
Governor Mervyn King warns a recession is now likely to occur.
Press
Release Body: Following Bank of England Governor Mervyn
King’s announcement that the British economy is
entering a recession, debt management company Gregory
Pennington have warned that financial hardship is likely
to be widespread in the coming months, adding that the public
should aim to get their finances in order and tackle any debts
as a matter of priority.
Speaking
at a business conference on Tuesday, Mervyn King told
business leaders that the economy faces a “sharp and prolonged
slowdown”, perpetuated by smaller take home salaries, soaring
living costs and limited access to consumer credit.
“We
now face a long, slow haul to restore lending to the real economy,
and hence growth of our economy, to more normal conditions,”
he also said.
On
a more positive note, King said that some of the factors causing
inflation had “shifted decisively”, putting less pressure
on the Bank of England to actively control inflation and instead
giving them time to address other factors, particularly the cost
of consumer lending.
And
addressing those concerned about many lenders’ reluctance
to pass on the Bank of England’s recent
base rate cut, King offered his assurance that the cuts would
eventually have an effect, but said: “It will take time
before the [bank bailout] leads to a resumption of normal levels
of lending.”
A
spokesperson for Gregory Pennington warned of
the dangers that consumers face as a recession approaches. “One
of the biggest dangers is unemployment. Since there will be less
money flowing through the economy, businesses will suffer, and
many will be forced to make job cuts as a result – which
restarts the same cycle.
“We
may also see the availability of credit take a further hit, as
lenders will be wary that the borrowers may be at a higher risk
of losing their jobs than usual. However, the Bank of England
are doing their best to ensure that cash flow within banks improves,
so it remains to be seen how lenders will react to that as things
progress.
“What
we can be sure of is that it’s essential for the public
to address any financial problems they may have, particularly
when it comes to debt. Debt is a burden at any time, but carrying
debts during such an uncertain time for the economy can be very
worrying.
“If
borrowers miss payments, the creditors may pursue the whole debts,
which can lead to court action and even bankruptcy if they are
unable to comply.”
The
Gregory Pennington spokesperson said that there
a number of debt solutions that could help people repay their
debts and limit the pressure on their finances as the economy
enters a recession.
“For
people with multiple debts, a debt consolidation loan can help,”
she said. “Debt consolidation involves taking out a new
loan to cover your existing debts, meaning you only have one creditor
to repay.
“Payments
can often be reduced by spreading them over a longer period, although
you can pay more interest in the long run. Interest rates can
also potentially be reduced, especially if you are consolidating
high-APR debts such as credit cards – but be aware that
if you have extended your repayment period, the additional interest
incurred can reduce the benefit of a lower interest rate.
“For
more unmanageable debts, a debt
management plan may be your better option. If you do this
through an expert debt adviser, they will assess how much you
can realistically afford to repay each month. After that, they
will negotiate with your creditors for lower monthly payments
and possibly a freeze in interest or other charges.
“For
more significant debts of £15,000 or more, an IVA
(Individual Voluntary Arrangement) might be more appropriate.
This involves making monthly payments over a period of five years,
based on how much you can afford. Once that five-year period is
over, your remaining debts will be considered settled.
“However
be aware that an IVA requires approval from creditors responsible
for at least 75% of your debts, and you may be required to release
some of the equity tied up in your home in the fourth year of
your IVA.
“Before
you make any decisions, it’s important to seek independent debt help. A debt adviser will talk you
through your situation and will be able to establish which debt
solution is right for you.”
Web
Site: http://www.gregorypennington.com
Contact
Details: Pennington House
Carolina Way
South Langworthy Road
Salford
M50 2ZY
Melanie
Taylor
melanie.taylor@gregorypennington.com
0845 056 6480
2009
