One of the biggest problems people with multiple debts face is being able to actually pay off the debt while managing the interest – indebted borrowers don't have the freedom to pay off their debts.

Car loans, personal loans, mortgages, credit cards and store cards on top of all of the other bills life throws you mean you do not have much money to actually save and pay off the debt – many Brits are therefore doomed to a life of continuing debt.

If you can manage the demands each month this isn't necessarily a problem, but if you suffer a loss of earnings or are hit by an unexpected payment then you may find you miss a payment on one of your debts and then you could be in real trouble. One missed payment means a fine, a penalty charge or an increase of a rate – then all your debts are at risk as your outgoings suddenly increase.

The only way to solve the problem is to get some space and time to be able to save money and actually work off your debts. That can only be done by consolidating your debts into one, affordable loan – a secured loan.

By using your home's equity to consolidate debts you reduce the number of interest rates you have to service considerably – and because the one debt is secure, that rate is lower. So from many high rate payments to one, low payment means you have room to save and pay down the secured loan in good time and you reduce the chance of losing control of your finances.

So if you feel like your debts don't give you room to breathe, talk to a mortgage adviser about using your home to give yourself some freedom.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

Many people who fall into bankruptcy and repossession are proven to have unsecured debts like credit cards and store cards – risky unsecured expensive debt can be the end for some people.

A survey by insolvency practitioners R3 shows that 66% of those who deal with bankruptcies and insolvencies have dealt with cases where people have signed up for a store card without understanding what they had let themselves in for – nearly 80% of insolvency practitioners believe that consumers view spending on store cards as less ‘real' than spending in cash and so unwittingly go over budget.

Unsecured debt like store cards is bad for so many reasons. It was designed to make people spend way beyond their means, it doesn't often show the real rate of repayment people will be saddled with after a spending spree, and it only adds to a person's negative credit score – the more unsecured debt someone amasses the less chance they have of securing good debt like a mortgage in the future.

Peter Sargent, president of R3 says: "Offering store credit at the point of sale means that many vulnerable consumers do not grasp that they are entering into a legally binding contract. Store cards must be handled just like any other credit card. This advice guide was designed to make consumers stop and think. We can't stop people from using store cards but we can show them how to make sure the store card works for them."

If your store cards are too much for you, talk to a professional mortgage adviser about moving your risky debt onto your mortgage. By consolidating debt you may find that your outgoings shrink, your worries diminish and you have the chance to finally pay off debt instead of massing it.

SOURCE: R3, 23/02/10

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On average, the money earned by Brits over the first 50 days of the year was just enough to cover the interest payments on their debts for the year, according to Unbiased.co.uk.

That is the equivalent of one day's wages a week going towards servicing debts – for many this is just too much. It's hard enough to cover the interest payments let alone work towards paying the debt off. Unbiased says figures show that credit card debt has increased by just over £4bn in 2009, reached over £54bn because people just can't pay it off.

For some people the answer may lie in secured consolidation. By using your home to pay off your unsecured debts you are able to reduce all your outgoings to just the one payment. This means less outgoings from one month to the next and more importantly it means the borrower has time and space to pay off their debt, not just manage it.

Karen Barrett, chief executive of Unbiased.co.uk says: "Debts can quickly mount up to a considerable sum and this date demonstrates that debt is something that we need to take control of and actively manage.

"Tackling your debt doesn't have to be a daunting task and you don't have to do it on your own. With interest rates at an all time low, now is a better time than ever to action. Seeking independent financial advice will make sure you are making the right choices on your finances."

SOURCE: Unbiased.co.uk, 19/02/10

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It seems that the credit crunch and resulting great recession has done little to teach many Brits of the dangers that come from over-leveraging oneself with risky, unsecured debt.
 
Research from moneysupermarket.com has discovered the depth of reliance Brits have on unsecured debts – the research found that one in five of us carry more than three credit cards and that 17% of credit card holders use their card at least once a day.
 
The research also discovered a worrying trend in that over 14 million Brits are using their credit cards to fund day to day expenses. People have still not learned that unsecured debt is a short-term solution and is not the answer if you cannot afford something.
 
Peter Harrison, credit cards expert at moneysupermarket.com, says: "Credit cards are still playing an important role in the nation's finances. Our research makes clear the extent to which many of us rely on credit cards at frequent intervals in our lives although it's alarming to see that so many people are using credit to pay for day to day expenses as this can be a dangerous habit to get into.
 
"Also, holding more than two cards does expose you to a large amount of credit, which may not be financially healthy and could make it difficult to obtain further credit in the future."
 
If you are relying on unsecured debt to get by day-to-day then you need to seek out some expert help. Talk to a mortgage adviser about restructuring your debt and using safer secured options to get by. Credit cards will only lead to more debt pain and will only result in not being able to afford more, for longer.
 
SOURCE: Moneysupermarket.com, 15/02/10

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If you have found that you can no longer jump about from one credit card to the next it might be time to begin managing your debts with a mind to scrapping them later.

Traditionally, many cardholders transfer balance to a new 0% balance transfer card. However in the current market, many people are finding it increasingly difficult to access new deals, with only four out of ten applications being accepted, according to moneysupermarket.com.

So if you can't move the debt it's time to handle the debt. The first thing to do is to check your credit rating – make sure you have a good credit rating before doing anything. If you have a bad rating you will be limited in what you can access, credit-wise, and you may have to come up with another plan to clear your debts.

Realistically plan your budget for repaying your debts – If you are looking to switch a debt to a zero per cent deal, then aim to pay off this debt before the balance transfer period ends. First make sure you can afford the monthly repayments to clear the debt and then come up with a sensible plan of action over the year.

If you are unable to find a new card deal, consider a secured loan. A loan will allow you to move all your debts onto your mortgage, giving you a smaller repayment over a longer period. This is a perfect option for those looking for room to save and to move back into the black over the long term.

If you are unable to move your debt, then aim to pay off the balance as quickly as possible. Paying off £150 a month on a £3,000 balance on a card with an average rate of 18.31% would take just two years.

Peter Harrison, credit card expert at moneysupermarket.com, says: "It is extremely difficult to switch cards at the moment so you need to be savvy about tackling your existing debts. The best approach largely depends on your credit rating and how much you are able to repay every month. Careful planning is required to ensure credit card debts are cleared in the most efficient way possible."

SOURCE: Moneysupermarket.com, 12/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

If you have unsecured debt it's better to pay it off when you can so as to be able to get hold of secured, cheaper debt when the time is right.

Figures released by the Bank of England have shown that in November, borrowers repaid £376m of unsecured debt and while that was £215m less than the total repaid in October, it's good to see that people are trying to pay off unsecured debt rather than amass it.

Howard Archer, chief UK and Eurozone economist at IHS Global Insight, says: "The fifth successive net repayment in consumer credit in November is clearly the consequence of many consumers` desire to reduce their debt. It is yet another example of consumers looking to improve their financial situations in the current difficult and worrying economic environment."

If you have unsecured debt problems, lenders cannot trust you to be able to pay off secured debt. In their eyes they see someone who has taken short-term solutions instead of thinking carefully and saving instead of borrowing. Too much credit card debt, store cards and personal loans points to a borrower who may not be able to deal with a bigger, long-term loan.

Talk to a financial professional about working off your unsecured debt, either through sensible budgeting or through secured debt consolidation to allow you to become a better potential borrower. The person who has worked off debt, budgeted wisely and has listened to sage advice is the person who will be accepted for future secured loans and mortgages.

SOURCE: IHS, BoE, 07/01/10

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Sometimes it might not feel like it, but there are options out there for homeowners struggling with secured loan debts.

It's particularly hard at this time of the year, with many consumers looking to reduce their New Year debts, but by talking to a financial specialist you may find that your January blues can be solved.

One option is for a secured loan. According to Nationwide, in January 2009 alone, almost 60% of all loans issued were for debt consolidation purposes. By consolidating debt, you reduce your outgoings and give yourself some much needed room to begin saving and move back into the black.

Richard Napier, Nationwide's head of credit cards and personal loans says: "For those already in debt, the New Year can signal greater money worries. Money worries are made worse if the debt is spread across many sources such as credit and store cards, overdrafts and loans."

Napier says that with additional mortgage borrowing, existing debts could be rolled into lower and more manageable monthly mortgage payments. So if you already have a mortgage, it may be worth speaking to a mortgage expert to see how they can help you.

Moving debt onto unsecured cards will only lead to more fees, more bills and more financial worries. But by rolling debts into a mortgage, your monthly payment becomes your only outgoing. That means you can save money, can breathe easier and can be safe in the knowledge that your lower rate debts are safe and secure.

SOURCE: Nationwide, 06/01/10

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The Government has announced new proposals to ensure that people who are saddled with unsecured debts like credit cards and store cards are given a fairer deal.

Right now, if you have unsecured debt you are at the mercy of the lender. They can change rates and they can even increase credit limits without your consent, both of which could be detrimental to borrowers already struggling with debt and with a bad credit rating.

But that is set to change. Consumer Minister Kevin Brennan says: "Card companies have to get their act together and do more for consumers. The Government is putting forward new measures which we believe will give consumers a better deal."

Brennan says the Government may enact new rules that mean unsecured lenders cannot increase credit limits and cannot increase interest rates without prior consent from the borrower.

Also, the Government wants to make sure that lenders are not allowed to change the rules that set out the order in which debts built up on a credit card are paid off – most credit card companies make customers pay the cheapest debt off first, but in the future this might be reversed, meaning those with unsecured debts will be able to tackle the biggest debts first. There are also plans to make sure people to pay off their debt faster by banning interest-only repayments – servicing a debt rather than trying to pay it off can means years of unsecured financial problems and thousands in unnecessary interest.

Joanne Garcia, head of credit cards at Confused.com says: "Like it or not, a lot of people depend on credit cards, so anything that can be done to protect them from the credit card companies and themselves, is good news.

"If the credit limit is increased or credit card cheques are issued, some people cannot resist using what is on offer.  But this can lead to terrible spiralling problems, especially when the interest rates rise, so this move by the government could potentially give more power back to consumers and allow them to regain control over their finances."

The sooner people can be clear of unsecured debt, the better. Debt needn't be a bad thing, but credit card and store card debt is never positive. If these changes do come through it will mean people will be able to pay off debt faster, consolidate easier and will become better credit candidates sooner.

SOURCE: Dep. of Business, Innovation and Skills, Confused.com, 27/10/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

It may not be an option to consolidate all your debts right now while secured lending is so tight, but there are things you can do to ensure that your debts don't stop you accessing secured loans in the future.

The first thing to do is to make a budget plan. Lay it all out – incomes, outgoings, necessities and luxuries – then begin to make some really tough decisions. Look to see where you can cut back and look to see where money is simply being wasted.

After that, look at all your necessary bills and see where you could save money. Could you move to a cheaper mobile phone plan? Could you do without digital TV for a while? Have you tried to compare your utility bills alongside other providers? Have you talked to your mortgage adviser about cheaper insurance packages?

There are so many things you can do to cut back your outgoings so as to start saving and start overpaying on your mortgage. The longer you can do that, the better borrower you will be in the eyes of the lenders in the future.

So when the fog lifts from the UK economy and when house prices have risen once again, the borrower who has kept their outgoings under control and has worked towards increasing the equity in their home will be the borrower who can take out a secured loan. This loan could be for home improvement, for a new car or to help their kids through high education – whatever you need the money for, if you work hard to attain it, it's yours.

Talk to a mortgage adviser about preparing for better days – they can help you budget, they can help you plan long-term and they can assure that saving is the single best way of becoming a secured loan borrower in the future.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

No one wants to have to face debt in their retirement after a long working life, but unfortunately that's the case for many pensioners in the UK – something has to be done now to stop the elderly becoming too indebted.

EuroDebt says within its current client base of those over 60, almost one in three still have a mortgage and the average unsecured debt for these homeowners is just under £40,000.

Kevin Still, director of EuroDebt says: "The big question is what happens to these people if they are forced to retire? The analysis of our client base indicates a worrying trend, as more and more over 60s appear to be getting into serious debt, struggling to cope with the pressures of the recession. For some their savings have been hard hit as a result of the interest rate cuts and for others the prospects of living off the equity of their properties has diminished.

"The prospect of retirement should be a happy and relaxing time, after a lifetime of work. But our figures reflect that not only are some older workers going to stay on in their jobs for much longer, but for those forced to retire there are real concerns of managing their financial commitments."

EuroDebt says the figures for debt in the over 60s has gone up quite considerably since the recession really took hold – this age group is really struggling to keep on top of finances as their income has dropped and cost of living has risen.

If you are worried about your debts as you look to retirement, the sooner you can begin sorting them out, the better chance you have of being debt free by the time you leave work. Talk to a mortgage adviser about your secured loan, remortgage and equity release options. Your home is your most important long-term asset, but it's also your best chance of getting out of debt.

SOURCE: Eurodebt, 07/10/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.