According to a recently published article by the Financial Services Authority (FSA) on the latest mortgage lending statistic they reported a sharp surge in mortgage arrears. With borrowers continuing to struggle to clear their mortgage arrears, the numbers of arrears have been progressively increasing since the beginning of 2007. By the end of 2008 there were 377,000 mortgage accounts in arrears, which is an increase of 36,000 accounts. This is an increase of 31% on the previous year.
The FSA report comes in light of a recent survey of 1,407 new debt clients conducted by the Citizens Advice Bureaux (CAB). They found the average amount of debt owed by their clients’ was £16,971 in 2008 and one client in ten had ten or more credit card debts. More than 50% of these clients had four or more priority debts like their rent or mortgage, rent, electricity, gas, water or council tax arrears. The Citizens Advice Bureaux discovered that a third of these people spent more than half of their monthly income on housing costs and forty five percent of them had mortgage and secured loans that were in arrears.
So what can you do if you find yourself struggling to clear your debts? If you’re struggling with mortgage arrears, paying your mortgage, credit card bills and loan commitments. Then you will need to seriously speak to a professional debt advisor that is qualified to talk about debt and the various solutions available. You need to speak to someone who offers free and impartial help and advice. It is important that they assess your needs and they are able to explain the different types of debt solutions like Debt Consolidation, Debt Management plans, Individual Voluntary Arrangement (IVA) or Bankruptcy. Ask as many questions as you need to you need to feel satisfied and you need to really understand what you are doing and the consequences. Below is a quick explanation of the four types of debt help you can find:
This is only possible if you are a homeowner and you have sufficient equity in your home. You can consolidate some or all of your debt into a secured homeowner loan. You must think carefully before securing other unsecured debts against your home. Your home may be repossessed if you do not keep up your repayments on your mortgage
Debt Management Plan
This is a great way of getting your debts under control and it helps to protect your home. Debt Consultants are able to negotiate with your creditors (those people you owe money to) and in most cases they are able to have the interest on your unsecured debts (credit cards, loans) frozen to help you pay off your debts faster.
Individual Voluntary Arrangement (IVA)
IVA help is available to most people with debts of more than £15,000 and no way of paying the debts off. This kind of arrangement is a legally binding arrangement and you can be debt free within 5 years. An IVA can help to protect your home so you do not lose it. For one of the best video explanations about an IVA follow the link. An IVA is a serious way of getting your debt under control. If an IVA is right for you then you need to make sure that you find an advisor that won’t charge you any fees.
This is a solution of last resort and should only be considered for serious debt problems when there is no other financial solution. Bankruptcy does protect you from your creditors and it allows you to start again
Think carefully about the advice you are being offered and if you are not happy with the advice you are receiving find a second and even a third opinion. There is a growing number of debt advice websites that are providing questionable debt advice so you do need to carry out your own due diligence. Your thoughts, experiences and comments are welcome. You can join this discussion below and leave your thoughts and experiences.