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Is consolidating my existing debts with a loan the best option?
This is one of the first debt solutions individuals think about when considering their debt solution options. However this is not always the ideal way to pay off existing debts and the advisers at Debt Plan Direct strongly advise against consolidating your debts.
By consolidating your debts into a loan will increase your level of debt due to the high interest rates and/or by being persuaded to borrow more than you need. Unfortunately there are numerous consolidation companies who know that individuals struggling with debts will struggle to get a consolidation loan elsewhere and will exploit this by charging high interest rates (APRs).
Another reason why a consolidation loan is not the best option is simply due to the fact most consolidation loans will mean securing your debts to your property. If you fall behind on your monthly payments this can lead to the repossession of your property.
There are other alternatives available to you if you think a consolidation loan is your best option such as a DMP or an IVA, contact Debt Plan Direct for further assistance.
I now live abroad, am I still liable for my UK debts?
Creditors will still try to trace debtors and use many tactics such as, talking to neighbours at the debtors last known address as well as tracing all activity via any transactions using cash. Some creditors may even have relationships with creditors in other countries thus making it easier to trace you. Once the creditor knows the country you are now resident in the creditor can trace you relatively easily and pursue you for the outstanding debt. In a nutshell debtors will still be liable and will be chased for debts and will have to pay for any extra charges in tracing you.
You should establish a repayment plan for your debt directly with the creditors before leaving the UK and make this a priority. There are many options to clear your debt and Debt Plan Direct do offer advice on all UK debts even if you no longer live in the UK. Your options include repayment plans through a DMP, IVA or even bankruptcy.
Contact Debt Plan Direct for advice on all UK debts
Is securing my debts to my property a good idea?
Consolidating debts into one monthly payment especially secured against your home is rarely a good idea. This is simply because if you fall behind on your repayments the creditor can repossess your home or property, especially when you do not know what is around the corner when circumstances can change so rapidly.
As I am self employed, what happens to my business debts?
Any liability for business debts will depend on the type of business you are running. Below are the main types of business for which you have debts for:
- A Sole Trader is responsible for all business debts and are treated as though they are personal debts. If you are unable to make payments you may be made bankrupt.
- In a Partnership the initial agreement will have set out the share of each partner and thus will reflect each partners share of the debt.
- In a Limited Company the individuals (the shareholders, Director and Secretary) will not be held responsible for any business debts unless if they have acted as a personal guarantor.
Where can I get an emergency loan or grant from?
Below is a list of the main types of loans given to individuals depending on the circumstances:
- A budgeting loan
- A crisis loan
- Community care grants
For more information please contact your local free advice centre or Benefits Agency.
I am in arrears with my mortgage. What action will my lender take?
Your property will be at risk of repossession if you do not keep up with your monthly contractual payment on your mortgage or any secured loans against your property. For further information please go to House repossession.
My car is in arrears on a Hire Purchase agreement, what can I do?
You will firstly need to establish that your car is definitely in a Hire Purchase agreement and not an ordinary personal loan. If you fall behind on your Hire Purchase agreement payment the creditor can take action to repossess the vehicle. But precisely what action the creditor will take will depend on how much you have paid towards the vehicle.
" I have paid more than one third of the debt”
In this instance the creditor can only repossess the vehicle by applying to the court for a court order. A 'Claim Form' will then be issued giving you the option to return the goods (vehicle in question) yourself. Another form you will receive is an 'Admission form' giving you the chance to make a direct arrangement with the creditor by offering a new monthly payment to the creditor, the form should be returned within 14 days. If the creditor agrees with the new offer of repayment payment you can continue to keep the HP goods. If the offer of repayment is refused the court will issue you with a 'Return Order' forcing you to return the goods.
”I have paid less than a third of the debt”
Quite often if you have missed payments and have arrears but can afford to make the repayments many creditors will stop any action if you contact them and advise them you can continue your normal monthly payment and something each month towards the arrears. Altering the length of the loan, the interest rate and/or the monthly payments could be achieved by asking the court for a 'Time order'.
As with a mortgage or a secured loan, a Hire Purchase agreement is a priority debt so the monthly payments should be made in full before you make your unsecured credit payments.
How can I pay off my debts quicker?
If you cannot afford or struggle to pay the minimum monthly payment on your credit cards or store cards and are unable to get further credit you should contact Debt Plan Direct on 0845 055 8152 immediately.
One of the simplest methods to help pay of debts quicker is to pay an amount greater than the monthly contractual payment. However this should only be done if you can afford to do so as proven through an income and expenditure form.
If you qualify for a new 0% interest credit card (for an introductory period of normally 6-12 months) this can be useful in consolidating as many creditors as possible. During this 0% interest free period you should try to pay off as much of your debt as possible.
Debt Plan Direct will strongly advise debtors not to take out consolidation loans especially any loans against the debtors’ property, as they may not solve your problem.
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