How to Escape Financial Difficulties
Strategies to Get to Grips With Financial Issues Facing Families
Nov 15, 2008
According to Peter Kenny of The Thrifty Scot, the UK's debt problem worsens by £1 million every 4 minutes. This problem is largely based around unaffordable mortgages. In order to survive, people have become increasingly reliant on cards, so credit card debt is also at a record high. Overtime restrictions and redundancies have finally pulled the rug from under peoples' feet.
It is essential that people act now to get their finances back in order. This article seeks to provide those who are struggling with a complete solution to their financial difficulties. There is no point in panicking as there is almost always a feasible solution, it is just a matter of identifying it.
Identifying the Source of Financial Problems
Put together a full break down of all incomes and expenditures. Seek to identify the areas where savings can be realised. Whilst it isn't possible to avoid paying a mortgage, it is possible to spend less on clothes, entertainment, cigarettes and alcohol.
Unenforceable Loan Agreements – Under £25,000
The Consumer Credit Act 1974, a UK consumer protection law, has a requirement that all credit agreements must comply with specific implied terms. This means that if the agreement doesn't state the rate of interest, how many payments should be made etc the loan isn't legally enforceable. Ask a specialist solicitor to look at the agreement as 60% aren't enforceable.
Consider a Debt Consolidation Loan
Most people have debt, but the key is working out whether they are in the right place and are minimising interest charged. Combining all different debts under the roof of a debt consolidation loan can help people manage their finances more effectively.
If existing loans are in place, try to avoid increasing the term of the new debt consolidation loan. Whilst there is no doubting the fact that it brings the monthly payment down, it also results in vastly more interest being paid. That is why financial intuitions charge more APR on short term loans as they aren't nearly as profitable.
Remove Credit Card Debt
Making the minimum payment on credit card debt will ensure that it remains there for 40 years. The debt has no logical finish as it doesn't have a fixed term like a loan. Always try to pay more than the minimum each month as that is what the credit card providers want people to do.
Escape Creditor Harassment with a Debt Management Plan if Falling Behind with Payments
If loans, store cards, bank overdrafts and credit cards have become too much, consider entering a Debt Management Plan. It will allow someone with unmanageable debts to make just a single payment that is disseminated to creditors on a pro rata basis by a debt advisor.
Debt problems do feel like an issue that is impossible to escape, but things aren't nearly as bad as they may appear. Talk to a free qualified debt advisor at Pay Plan or The Citizens Advice Bureau and do as much personal research as possible in relation to tackling debt.
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