Beware of Unregulated Loans

By: Tom Heath

People get into debt for many various reasons and this can lead tostress and worries about just how they are going to pay back their creditorsand the creditor’s sometimes very high interest rates. However, there is asolution and a positive way to pay your debts without the stress by having aDebt Management Plan.

A Debt Management Plan is not a loan, it is simply a way to bring all ofyour debts into one monthly payment which is managed by a third party such as aDebt Management Company.

Using a reputable Debt Management Company is a far better option thanbecoming trapped into unregulated loans which are taken out over many years andwhich have extremely high exit charges and penalties written in the small printof their contracts. This is particularly important if someone is consideringhaving a personal loan in excess of ?25,000 as these are not covered under the UK’s ConsumerCredit Act. A far more sensible approach is to have a Debt Management Plan,although it will not be legally binding they do afford a far safer option ifthe debtor shops round to find a dependable and reputable debt managementcompany who will act in the debtor’s best interest rather than their own.

Some debt management companies do not charge a fee to the debtor, theyare paid by commission from the creditors who assume that the debt managementcompany will recover some of their debts for them, however there is usually afee involved. This is another good reason for the debtor to check out differentdebt management companies to find out exactly what fees and charges will beincurred as they can vary widely.? Itcannot be stressed highly enough that in order to reduce debts payments theyhave to be handled effectively and there is no point in adding another debt byway of extortionately high debt management company fees.

A professional debt management company will contact your creditors andadvise them that you are in a Debt Management Plan and that you have all goodintentions to make regular monthly payments in order to reduce your debts. Thishas the added advantage of stopping the creditors from pursuing you andharassing you for money as they will be able to see that you have takenpositive and constructive steps to solve your debt problems.

A Debt Management Plan is for unsecured loans, which means that it isnot possible to include such things which have underlying security attached tothem as with car loan or a mortgage on a house within the Debt Management Plan.Therefore if you fallbehind and default on the payments for your car or home they could berepossessed and taken away from you.? Ifyou are finding you are unable to pay these creditors then speak to the DebtManagement Company and they will be able to advise you on the best course ofaction to take. They may well recommend an Individual Voluntary Agreement (IVA)to prevent you from facing bankruptcy.

Debt, Loans & Business Cashflow
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Debt, Loans & Business Cashflow