If you do not take control of your debts and take a proactive approach to your problems then you may be a slave to your debts for ten years.

According to insolvency body R3,  a quarter of debt management plans will last ten years or more, even though the plans are meant to be a short-term repayment plan between an individual and their creditors.

Peter Sargent president of R3 says: "Debt plans can play an important role in offering a manageable solution to individuals who are able to pay back their debts. However, the sheer length of some plans indicates that the amount of debt these individuals have is too large – these inappropriately lengthy plans people become slaves to their debts."

Having to bow down to debt for years is not the answer – it might mean a decade of no credit and no hope. But by consolidating your debts into one manageable secured loan you could avoid the years of pain. One low payment means room to pay off debt rather than just manage it and it means a better financial life.

Talk to a mortgage adviser about avoiding debt slavery and instead be free of your debt burdens with a sensible, manageable secured loan.
 
SOURCE: R3, 05/03/10

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They have certainly gone out of fashion over the last two years, but secured loans are still a valuable, viable option for plenty of homeowners looking to safely control their debts.

A secured loan is a loan on top of your mortgage, sometimes called a second mortgage. In the past they were commonplace and many people took them out while credit was cheap and spending was easy.

But now, in the wake of the deepest recession in modern times, secured loan lending has all but stopped. Most lenders thought it too risky to offer people even more credit on top of what they already had to handle debts. Also, many people became repossessed or at least got into financial difficulties thanks to having an extra loan on top of their mortgage.

But things have changed in two years. People are much more realisitic about borrowing, less people are spending beyond their means and more people want to get serious and sensible about their debt management.

That's why secured loans are still a viable option. There are still lenders out there who will happily lend to people who want to use the financial products to consolidate their unsecured debts and have a plan to pay off the secured loan in a timely manner.

But those lenders will only offer people a second mortgage if they have a water-tight plan. They will only lend to them if their application is impeccable and they will only lend after the borrower has spoken to a mortgage expert. In the wake of the financial crisis, the watchword is caution and safety, but if you can prove both then a secured loan lender may be happy to help you consolidate your debts and safely manage your money.

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Even though the Bank of England's base rate is at an all time low and has been for nearly a year, rates on risky unsecured debts are at a 12-year high.

Since 2006 as the economic downturn took hold, credit card rates have steadily increased, with the average rate today hitting a 12 year high of 18.8%, according to Moneyfacts, and now they are higher than they were at the end of the nineties.

Michelle Slade, of Moneyfacts says: "The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts. This increased risk continues to be passed on to both new and existing credit card customers through higher rates."

The website says that borrowers with £5,000 debt on the card, who just repay the minimum each month, will now repay an additional £2,289 over the life of the debt than they would have in February 2006.

Of course, on top of that there are charges such as balance transfer, cash withdrawal and foreign transfer fees also continuing to go up, leaving unsecured debt customers paying more across the board.

Andrew Hagger of Moneynet.co.uk says: "Just because you sign up to a card with an attractive rate, it doesn’t mean it’s going to remain that way, with increasing numbers of customers receiving notification that their rate is being hiked even though they are adhering to the terms and conditions of their agreement.
 
"With the UK suffering from a surge in unemployment and the potential of more job losses to come if public spending is curtailed, just as with unsecured personal loans, it’s no surprise to see rates remain stubbornly high."
 
If your unsecured debts are rocketing and becoming even harder to manage it might be time to move your unsecured debts onto your mortgage. By consolidating your unsecured debts onto your secured asset you may find you pay a lower rate. That means you have more money each month to pay off your debt, not just service it. Talk to a mortgage expert about moving your debt to a cheaper, safer alternative.

SOURCE: Moneyfacts.co.uk, Moneynet.co.uk, 16/02/10

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It is not just us regular people who suffer from secured debt problems – according to the Mail on Sunday, even Conservative MPs can wind up having their homes repossessed.

The paper recently reported that one of David Cameron’s rising stars had her house repossessed over an unsettled debt of £324,000. Adeela Shafi opened the 2008 party conference and tipped to be an important MP if the Conservatives came into power this year.

But that did not stop her mortgage lender seeking a county court judgement over £324,000 owed by her after she missed mortgage payments. This led to a judge deciding that the home had to be repossessed. But her miseries didn't end there – the paper says that the property had to be sold for a knockdown price of £250,000 and now Shafi is liable for the remaining £74,000.

This tale highlights two things – one, if you do not keep up repayments on your debts then you can lose your home, whoever you are. And two, if you get into serious difficulty and receive court judgments then you need to find some expert help fast to stop the courts taking your home.

If you are struggling with your mortgage or any other secured debt, talk to a financial professional before you lose your home. It doesn't matter who you are or what job you have, defaulting on your debts is a serious issue.

SOURCE: Mail on Sunday, 06/02/10

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A consumer debt charity has warned that more and more Brits are falling into insolvency because they cannot handle their secured and unsecured debts.

The Consumer Credit Counselling Service recommended insolvency to 39,663 of its clients – that's an annual increase of 93% in overall insolvency recommendations.

More than 20,000 people came to the charity and were recommended bankruptcy, nearly 12,000 were recommended Individual Voluntary Agreements and more than 7,000 offered debt relief orders in the last 12 months.

Delroy Corinaldi, CCCS director of external affairs says: "Although there has recently been positive signs in the economy, our figures highlight the high numbers of people with unmanageable debt, for which insolvency is the most appropriate solution."

There is no doubt that those people who came to the CCCS were in need of an insolvency, but it needn't get that far. Insolvencies are literally the last throw of the dice and are very difficult to come back from. Between that first red letter through the letter box and insolvency there are a world of options to consider.

If you are struggling with your secured and unsecured debts, talk to a mortgage adviser about those options before you run out of them.

SOURCE: CCCS, 04/02/10

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Mortgage lenders of the UK are finally beginning to offer higher loan to value mortgages, so those whose equity was decimated through secured borrowing now have a hope of a cheaper mortgage in the future.

Before the credit crunch, secured borrowing was all the rage. Because borrowing was so cheap and credit so bountiful, everyone borrowed to keep the credit party going. But since then, those who geared themselves up with debt have not be able to get hold of a mortgage because they did not have enough equity left in their home to be considered a prudent bet by lenders.

But things are slowly improving in 2010. According to Moneysupermarket, the amount of 85% LTV products increase by 22% since the end of 2009 and 90% LTV products increase by 11% over the same period. Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, says: "Lenders seem to have started 2010 with their doors open and are clearly more open to mortgage lending than they have been for some time."

This news, coupled with continued house prices increases over the last nine months, means that more borrowers who have been left out in the cold over the last two years now have a chance to get hold of a home loan.

If you have been unable to get hold of a mortgage due to a lack of equity, it might be time to go and talk to a professional mortgage adviser. They will be able to assess your situation now, in 2010, and see whether you would be eligible for a new mortgage.

SOURCE: Moneysupermarket.com, 26/01/10

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The benefits of secured borrowing have been highlighted by new data from Halifax after it found that over the last decade house prices have, on average, doubled.

The data is sourced from the Halifax House Price Index, and despite a fall of more than one-fifth between mid 2007 and mid 2009, house prices increased by more in real terms than in any other decade over the last 50 years. The bank says house prices increased by 105% during the past decade, taking the UK average house price from £81,596 at the end of 1999 to £167,020 at the end of 2009.

Martin Ellis, housing economist at Halifax, says: "The noughties was a significant decade for house prices. Overall, prices increased considerably despite the marked decline towards the end of the decade.

"The majority of towns that experienced the strongest price growth began the decade with lower than average property prices, which provided the platform for bigger price gains. Seaside towns fared particularly well as the attraction of having a home on the coast helped to boost demand."

So why does this highlight the benefits of secured borrowing? Well, proof that house prices doubled confirms that many people have more assets than they think. And while it is foolhardy to think that house prices will rise anywhere near this much in the next decade, houses are currently holding their worth and that amassed equity is safe for now.

To see if you could take advantage of this massive leap in prices you need to talk to a secured mortgage adviser. They can help you assess how much your home is worth and what you can do with your biggest asset. Amassed equity should only ever be spent wisely, so talk to an expert before you unlock any of your most prized asset.

SOURCE: Halifax, 27/01/10

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Experts have warned that store cards and credit cards are not offering borrowers a good deal and are designed to encourage overspending rather than sensible money management.

Website Moneyfacts.co.uk is calling for more transparency and control of credit and store cards and has even gone to the Government to call for a better deal for consumers on credit and store cards.

Samantha Owens, principal consultant for banking and economic insight at Moneyfacts, says: "Credit cards form an integral part of the financial services industry and allow customers to transact with convenience, reassurance of safety and added consumer protection. But credit cards also come with the risk of a greater temptation to overspend. It is one of the most expensive forms of credit and has little or no structured repayment mechanism."

Moneyfacts says there is a real problem with customers' understanding and while more can be done to educate credit card users. People are too quick to take on unsecured credit without being aware of the consequences.

The website is right – easy unsecured debt encourages people to spend without teaching them the consequences. While a carefully managed credit card can be to your advantage and can be a useful way of making the most of your money, it is easily misused and will get you into debt trouble quickly.

If you are worried about your unsecured lending there are secured options out there to help you. Talk to a financial adviser about what you can do to steer clear to unsecured credit and improve your finances securely and sensibly.

SOURCE: Moneyfacts, 21/01/10

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An estimated 12 million Brits are funding their day to day spending through their credit card balances, creating more debt problems for themselves in the future.

According to the Post Office, 38% of all Brits intend to use their unsecured debt in January for daily purchases such as grocery shopping. It says reflects the extent to which the recession impacted on people's finances during 2009, with many more set to suffer financially well into 2010.

Unsurprisingly, 2.6 million people expect they will end up spending more on their credit cards this January compared to January 2009. And it's not just in January when people believe they will feel the pinch – a further 3.3 million expect they will up their unsecured borrowing overall in 2010, with 3% planning to take out another credit card or increase their credit limit.

When it comes to repaying credit, almost half of all credit card holders have no plans to pay off their credit card bills in full each month and six per cent will only pay off the minimum amount. A further one in five believe it will take them over a year to pay off their unsecured debts. 

Az Alibhai  head of lending at the Post Office says: "The continued trend for people to rely on their cards for basic day-to-day purchases is a concern. Whilst the recession has left many with no choice, these debts build up quickly if not paid off in full each month, and can be extremely costly over time when interest is added."

The worst debt you can have is spiraling unsecured debt. By consolidating your credit card balances into secured debt you can reduce your outgoings, improve your credit rating and give you some time and space to start getting back into the black.

SOURCE: Post office, 20/01/10

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You may be able to handle all your secured debts without any risk of defaulting but would your family be able to cope with the debt responsibility without your income?

The average household with dependent children has £91,648 still outstanding on their mortgage now compared to £88,500 last year, according to Scottish Widows. And when it comes to short term debt, the average household with dependent children has carried over £8,653 over the last three months.

These debts may not be huge and are certainly manageable with a good income, but what happens if you get sick for a long time? Or what happens if you are involved in an accident, need surgery or have to care for a sick family member? What happens if you die? Could your family take on the long and short term debt alone?

Millions of households are leaving themselves at risk of being unable to survive financially if one of the bread winners become unable to work – but Scottish Widows says 62% of Brits have not protected themselves for the long term should the worst happen and they lose their household's main income.

Clive Allison, protection director at Scottish Widows, says: "Nearly half of families with dependent children now rely on two incomes to maintain a decent standard of living, and as our stats show, this isn't likely to ease off any time soon. For many families, sacrificing half their income when they have children is a luxury they just can't afford.

"People are leaving themselves exposed to a lack of income should anything happen to the main breadwinner, and large personal debt to repay on top of this could make things even more difficult. Families need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones."

SOURCE: Scottish Widows, 18/01/10

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