Posts Tagged ‘clear personal loan debt’
Recent data indicates that personal insolvencies in Scotland rose by a dramatic 137% in stark contrast to figures published on Protected Trust Deeds (a Scottish version of an IVA) which suggest a modest 1.6% increase quarter on quarter. This of course reflects only those who have approached a licenced insolvency practitioner to establish such an arrangement. These figures may seem counter intuitive when set against other data that suggests Scottish homeowners have emerged relatively unscathed from the housing price slump this time round with just 1% of owner–occupiers in negative equity.
That may help explain the relatively low ratio of those successfully going through the PTD route. People whose finances are now stretched to breaking point still retain sufficient equity in their property to make a PTD acceptance unlikely as creditors will be inclined to deny any “IVA-like” suggestion and propose that the debts are paid in full when the equity remaining in the property is greater that the total owed.
More immediate and practical action is available to reduce the levels of unsecured debt at least using key changes to the Consumer Credit Act 1974 that apply nationwide.This approach means that the total balance on some credit cards and unsecured personal loans issued before 6th April 2007 could be cleared completely. The strategy of challenging enforceability through scrutiny of “true copies” of agreements has been proven in the English courts, with several recent court cases against well-known lenders concluding that the debts were indeed disputed on substantial grounds and that the agreements were indeed unenforceable.
There is no reason why this approach should not be equally successful in Scottish Sheriff Courts.Indeed a company called Credit issues successfully removed one client’s liability to credit card debt, despite it being assigned to a debt collection agency, and he was able to clear the entire balance of £16,029.50. Irrespective of who the credit card or unsecured loan provider is (even if that debt has been “sold” to a debt collection company), so long as the balance is over £2,000 you could clear your credit card or unsecured loan debt and also reclaim any mis-sold payment protection insurance or accident sickness cover together with interest.This course will at least will take the pressure off and reduce the gross amount of debt outstanding.
When you are looking for an easy way to both minimise and reduce the number of payments you make each month you might consider the option of a debt consolidation loan. Many companies claim that debt consolidation can give you a new start because it permits you to consolidate all your loans into one monthly payment, usually secured against your property.If you’re fortunate enough to be a homeowner, this route can work, and some consolidation loans are also available to tenants.
It’s certainly often the case that the combined interest rates on all the individual loans or credit agreements you have will be higher than the rate of interest on a single debt consolidation loan. Paying off all of the debt you have been juggling for years with a debt consolidation loan while maintaining payments against this one large loan may also help to improve your credit score.
Choosing a debt consolidation loan may have certain disadvantages. A consolidation loan with a relatively low interest rate will be easier to get if you have previously paid your debts on time and in full and do not have any substantial arrears on mortgage payments, personal loans or any credit cards. If you are in the position of juggling your finances to accommodate debt due to redundancy or sudden loss of income you may well have missed several payments or be in arrears with some lenders and your credit score will reflect this. Consolidation loans at an attractive enough rate of interest may prove difficult to get.If you are in negative equity, there may not be sufficient capital “locked up” in your home to get the size of consolidation loan you need to cover all your outstanding debt.
The debt consolidation loan will have to be sufficient to redeem all your existing loans and agreements, so you will be paying the full the amounts outstanding plus any interest and possible early redemption charges as well as PPI sums that may be added to the total. The consolidation loan itself will involve you in new rates and charges going forward.
If your debt is largely in credit cards or unsecured personal loans, then consider challenging and reducing that debt entirely. Key changes to the Consumer Credit Act 1974 means that the entire outstanding balance on some credit cards and unsecured loans issued before 6th April 2007 could be challenged through a now validated legal process.The ability to challenge a regulated agreement on the basis of its non compliance within the strict requirements of the Act has proven to be a winning strategy for Credit issues, with several successful court cases already in the bag.No matter whom the credit card or unsecured loan provider is, so long as the balance you owe is over £2,000 Credit Issues can successfully challenge the debt and investigate possible reimbursement for any mis-sold Payment Protection Insurance together with interest.
So, while a consolidation loan may be an option to consider, before you commit to paying every penny of interest and charges on your debt and get involved with more charges, fees and interest payments on a continuing basis, find out if you could clear your debt in the first place and reduce you outgoings to the point where you don’t need yet another loan at all.