Debt Clear Direct

by Center for American Progress Action Fund

Money Problems

Do you have money problems? Struggling to pay off your loans or store cards? A debt management plan or IVA can help you. If you owe at least 2000 to unsecured creditors and you can’t afford your repayments, then this is a great way of getting you out of your debt problems. It means you don’t have to pay back 100% of the debts you can’t afford.

An unsecured creditor means one who cannot take something back off you if you can’t pay them. For example if you have a car loan then the car can be taken back, or if you have a mortgage then your house can be taken back. Debts like personal loans, store / credit cards and payday loans are classed as unsecured.

A debt management plan is an informal arrangement between you and your creditors to ensure you pay them back something rather than end up paying them nothing at all, which might happen if you went bankrupt.

It is beneficial for both parties – they get something, and you get your repayments reduced. It is managed by a third party, called a debt management company, who negotiate with your creditors to help you pay less each month. They also spread your payments out between all the people you owe money to.

An IVA is very similar to a debt plan, but they are a formal arrangement (you sign a contract) and they are managed by Insolvency Practitioners. You can also have some of your debt written off with an IVA.

Both options are excellent solutions to your money problems as long as you maintain discipline while paying back your debt.

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by David Michael Morris

House Price Deflation Exposes The Real Scale of the UK Personal Debt Problem

According to the Land Registry’s figures the annual rate of house price deflation in April 09 was approximately 16%, the biggest drop on record. This reduction in prices is generally accepted as being bad for the economy. If home owners see the value of their properties reduce, this means that their perceived wealth in the form of home equity reduces and on the whole they feel poorer. This in turn reduces their economic confidence and has a negative effect on the amount that they are prepared to spend on the high street.

In addition to this wider economic problem, house price deflation and the credit crunch is starting to expose the extent of personal debt problems in the UK. Over the past 10-15 years, as house prices have increased, so has the growth of home owner’s equity. With the comparative availability of mortgage credit, home owners have been able to realize this equity in a way not seen previously.

This situation has turned home equity into a realizable asset which could be accessed without actually having to sell the property.

I believe that this accessibility to home equity was a significant contributor to the growth of personal debt in the UK over the last 10 years. People have been confident to take out personal loans or use credit cards to purchase cars, household goods and holidays because they have felt that if required, they could fall back on the equity available in their properties. As a result, the number of remortgage deals sold to home owners with the purpose of releasing equity to consolidate unsecured debt massively increased.

In itself, one could argue that releasing equity to consolidate unsecured debt was not a significant problem.

After all, the incremental monthly mortgage payment was normally significantly lower than the monthly unsecured debt repayments thus saving money on a monthly basis. However, in my view, this process of consolidation significantly fueled consumer confidence and as a result drove up the amount of unsecured debt individuals were prepared to take on.

Unfortunately, the rapid reduction in house prices has meant that many homeowners have seen the equity in their property drastically reduce. Worse than this, figures released this week suggested that 10% of all home owners were now in negative equity. This situation coupled with the credit crunch has meant that the ability of home owners to release equity to consolidate debt has dramatically reduced.

This turnaround in homeowner fortunes has happened so quickly that individuals have been taken unawares and have not had the time or the inclination to reduce their unsecured borrowing appropriately. Of course, if unsecured borrowing is sustainable and monthly repayments are made on time, there is no issue. However, the pressures on the family finances have never been greater with a shrinking economy and increasing numbers of people taking reductions in their income and at worst losing their jobs all together. This situation will inevitably lead to increasing numbers of issues when it comes to repaying debt.

The problem that we face as individuals and an economy is that as and when the repayment of unsecured debt becomes unsustainable, homeowners will not be able to fall back on home equity to bail them out in the way that they have been used to in the recent past. As a result I believe that the number of people facing insolvency problems in the coming months will significantly increase. I expect this will be reflected in the Insolvency Services next set of insolvency figures due to be published in August 09 which I expect to show a significant increase in the number of personal bankruptcies and IVAs.

Worse still, as I highlighted in my May article “Is the Insolvency Problem being pushed underground”, I believe that even these figures will not properly reflect extent of the personal debt problem in the UK. The majority of insolvent cases are dealt with via informal Debt Management which is not officially recorded. As such, the problem will be far larger than even the governments own figures suggest. With large numbers of people likely to default on their personal unsecured borrowing in the coming months, the government should be justifiably concerned that a consumer lead economic recovery still seems a very long way off.

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by watchingfrogsboil

How To Handle Cash Flow Problems And Debt Management
Every once in a while, a person is forced to apply for financial assistance to get through life. There are times that a person finds themselves deep in financial problems. This situation can get out of hand and a person finds themselves unable to repay money owed to others. This is the point at which the services of debt management companies come in. They offer their clients advice on how to reduce the amount of financial problems that they have.

As the interest keeps accumulating, the payments keep on increasing leading someone to default on their payments. Once a person defaults on any payments, their credit score is affected. It is important for the client to understand how the whole process works before they commit to it.

Whenever a person is struggling with financial problems, they are advised not to approach such companies unless they have run out of options. This should be seen as the only way out of filing for bankruptcy. The programs are only applicable to people who have unsecured loans. These loans are usually taken against personal loans or credit cards.

The consultant will help their client reduce their financial problems by recommending practices that will result in saving. They will also help the client find ways of managing their existing funds responsibly. They will expect the client to avail all the relevant financial transactions that they have been involved with in the past. This is the information they will work with when structuring a repayment program.

The consultants then develop a report about the current condition of their client’s finances. This report is then submitted to the creditors in order to come up with a reasonable payment plan. The plan is presented to the client once the creditors have approved it.

The role of the service provider is only to assist their clients manage their finances. They are in no way obligated to provide financial assistance to get the client out of their problems. If the recommendations offered are good, then the client is able to improve on their credit scores eventually.

The greatest advantage of securing such services is that an individual can be able to avoid filing for bankruptcy. This means that they have the opportunity to regain their financial independence with time. Working with the consultants ensures that the client is able to save face with the creditors. It is also an indication that the individual is determined to take care of their finances.

When a client is working with a good plan, they find it very easy to repay all their loans. This is because the consultants are able to advise them on the order in which to pay off the loans. With time, the interest accumulated will reduce and the client will not have to struggle with the acquisition of cash flow.

Debt management plans are used to improve a person’s credit score successfully. These programs are utilized by both private individuals and companies. The companies are able to manage their finances even when their revenue reduces and net profits are low.

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by eyewash

The Particular Problems With Credit Card Debts

The developed world’s population is indebted to a level never seen before, with the majority of people owing money to banks and other financial institutions. Mortgages and home loans account for a large part of this record debt – after all, with the recently ended surge in property prices, how on earth could the average person ever afford to buy without getting deeply into debt?

Bank account overdrafts and personal loans also form part of the debt mountain, but one of the most common forms of unsecured debt is that owed on credit cards. Unfortunately, given the widespread nature of credit cards, this type of debt has particular problems which make it one of the most difficult to deal with.

Firstly, for most people the interest on a credit card is pretty high by the standards of many other kinds of finance. Of course, you’ll see advertisements for cards offering less than 10% APR, but these are aimed at the financial elite, and most of us are paying rather more than that.

This alone means that credit cards should be seen as a priority debt to clear, as a lot of your repayments are swallowed up in interest.

Another problem with card debt is that there’s no fixed repayment period after which your debt will be cleared. You keep spending however long you want so long as you make your minimum monthly repayments and stay within your credit limit. This means that the debt will be with you potentially for the rest of your life, unlike say a mortgage which has a fixed repayment schedule and a date when payments will stop.

Perhaps the most dangerous aspect of borrowing on a card though is the concept of the minimum repayment. Back in the early days of credit cards, this figure was typically 5% of your balance, and making this payment actually did reduce what you owed by an appreciable amount. Over time, the minimum repayment figure has drifted steadily downwards, with 2% of the balance now being common.

This might seem desirable, as your monthly outgoings will be less, but the problem is that a 2% payment is barely enough to cover the interest charges incurred that month, and your actual balance is more or less untouched. This means that you’re effectively treading water, paying just a little more each month than what you’re being charged – and sticking to this schedule will mean your debt takes much, much longer to be cleared and cost you thousands more in interest.

The best advice then is to concentrate all your debt repayment fire power on your most expensive cards, paying as much off as you can each month, and avoid sticking to the minimum payment amount. Even a little extra on top of that each month can make a dramatic difference to the overall cost of your credit card debt.

In this edition of News Analysis the topic is the depth of the US debt crisis. The guests are the binary economics professor, Rodney Shakespeare, editor of Culture Wars magazine, Eugene Michael Jones and managing director of ArcXeon International, Roger Von Hanwehr.

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by eschipul

Credit Card Debt Solutions – How to Eliminate Credit Card Debt With a Debt Settlement

Credit card debt solutions do exist and are becoming very popular among people who want to eliminate debt and take advantage of an economic environment where credit card companies are more than willing to negotiate a debt settlement. The large banks and financial institutions have recently been stimulated with a large influx of cash thanks to the financial bailouts the national government have been handing out. While these financial bailouts were at first thought to have only helped out Wall Street, the effects are now reaching Main Street and there has never been a better time to eliminate credit card debt.

It is estimated that the average American has 5 credit cards in their wallet. These credit cards can quickly spiral out of control with the ridiculous fines that credit companies impose on consumers. After a while the debt builds up so high that paying the entire amount seems daunting if not impossible for the average American.

If you have around $ 10,000 or more in debt then it would be financially prudent to consider a debt settlement and eliminate credit card debt. The best debt settlement companies can settle your debt for 20 – 30% of the outstanding balance. So if you are $ 10,000 in debt you can settle for $ 2,000 – $ 3,000 and eliminate credit card debt.

So you may be thinking that a debt settlement will damage your credit score. The truth is that your credit might take a little hit in the beginning but not nearly as bad as declaring bankruptcy. Plus your debt will be reduced and you have a much better chance of getting new lines of credit or personal loans.

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