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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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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New statistics have revealed that in the final three months of 2009, secured loan lenders repossessed 37% less properties than in the same period a year earlier.

Figures released by the Finance & Leasing Association show that second-charge mortgage lenders took possession of almost ten percent fewer properties in 2009 than they repossessed in 2008. Overall, they repossessed 1,458 properties in 2009, 9.2% down on 2008 and below the FLA's original forecast of 1,522.

Fiona Hoyle, head of consumer finance at the FLA, says: "Second charge lenders are doing all they can to help customers in financial difficulties and this is reflected in the low number of repossessions. But many people are still struggling with repayments and this looks set to continue during 2010. Repossession will remain a last resort."

If you are struggling to pay your second-charge mortgage you should not assume that your lender simply will not repossess you because they are showing more forbearance – if you do not act right away your property is still in jeopardy.

To make sure you are one of the lucky ones who does get to keep their house, you need to be proactive. Talk to your lender, your mortgage broker, debt advisers or debt charities – do anything, but make sure you tackle the problem head on, right away.

SOURCE: FLA, 11/02/10

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