Consolidate Debt
5 Ways To Consolidate Debt

If you’re having problems making payment of all your outstanding debt, and are looking for ways to consolidate debt, why not consider consolidating your debt using one of the following common debt consolidation methods:

Consolidate Debt – Credit Card

If you have more than one credit card, chose the credit card that has the lowest annual percent rate and annual fees (look at the APR rate quoted) and then consolidate all of your credit card debt on the one card.  If you consolidate debt onto one credit card, you’ll find it much easy when it comes to time to make your monthly repayment.

Consolidate Debt – Personal Loan

If you still have a good enough credit rating to obtain an unsecured personal loan from you local bank, you could find this a useful tool to consolidate debt as, although you still don’t offer any security over the outstanding debt, you’ll likely find that the interest rate is much less than as a consolidate consumer debt – say in the form of store cards or credit cards, which are much more expensive to fund.

Consolidate Debt – Home Loan Refinance

A home loan refinance is where you ask a lender to lend you money in return for you providing the lender with a mortgage.  The proceeds of the loan can then be used to pay off your existing home loan, with the excess used to pay off your outstanding debt.  All of your debt will then be consolidated debt in the form of a home loan refinance.

Consolidate Debt – Second Mortgage

Another way where you can use the equity in property to consolidate debt is by means of a second mortgage.  Unlike a home loan refinance, when you consolidate debt by means of a second mortgage you are not looking to repay your original home mortgage lender but are providing a new lender with a second rank mortgage over the equity in the property.  As with a home loan refinance, choosing to consolidate debt with a second mortgage will, most likely, mean that you have less interest to pay to service your debt as you have provided the lender with security in order to consolidate the debt that was previously unsecured.

Consolidate Debt – Equity Lender

One final, and some would argue risky, means to consolidate debt is to borrow against equity and then use the proceeds to repay your outstanding debt, leaving one larger consolidated debt to be repaid.  Equity loans work by allowing the debtor to borrow against investments; such a mutual trusts, shares, pension fund payments, etc.  Again, though, this is often a criticized means to consolidate debt as it offers few additional advantages, beyond immediate rest-bite from your creditors, whilst risking your economic future.  Nonetheless, there are a number of people who would prefer to consolidate their debt in this manner rather to consolidate debt by means of a second mortgage or home loan refinance.

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debt management program
Debt Management Programs

At a time when consumer debt reaches records levels, housing prices reach ever new highs, and education costs spiral, each and every one of us needs to keep a very careful eye on our debt management. After all, in nearly all cases of personal debt, if interest rates were to rise by 1 percent across the board, we would no longer be in a position to manage our debt levels. What should you be doing though if the amount of your debt has already exceeded your debt management capabilities? In other words, you no longer have the means to service your day-to-day debt? If this applies to you, the first thing you need to be aware of is not to feel too guilty about this; it applies to more people than you may think. The second, and more important, thing you need to consider, quickly, is what of the debt management programs you need to be adopting.

Successful Debt Management Programs

Step 1: Stop Creating More Debt

Having come to terms with the fact that your debt is now at unmanageable levels, in order to be able to implement a successful debt management program, you need to understand that arranging to repay your existing outstanding debt, by means of one of the successful debt management programs, is not going to be as easy as it was to obtain the debt in the first place. Consequently, you need to stop making any more debt – now! So, put those credit cards away in a safe place, where you cannot get to them too easily, but hold off cutting them up at this time – you never know, you may just need them again in the future.

Debt Management Step 2: Where’s The Money?

The second step you need to take in order to implement a successful debt management program is to find out where you are spending your income. Unfortunately, one thing your level of debt will clearly show is that you have been living beyond your means. Clearly, in order for your debt management program to succeed, this is going to need to change. In order for the debt management program to stand a chance, you now need to reign in your belt, find out where you are overspending, and to cut back on this expense. You should also keep in mind that if you are going to implement a successful debt management program, it is extremely likely that you are going to need to find another form of revenue with which to service your debt levels – so start looking for ways to earn some extra pocket money!

Debt Management – Step 3: Talk With Your Creditors

If you believe your debt has now got to such extreme levels that you’ll not be able to meet the minimum repayments on your debt, you need to arrange to manage your debt repayment with your creditors as soon as possible. Here, you’ll usually find that creditors are fairly understanding people. It’s not that they want to see you in court – far from it. What creditors want is for your to be honest about your debt and to enter into a debt management program with them whereby all creditors, and you, know that all that must be done to manage your debt levels is being done.

Debt Management – Step 4: Obtain A Credit Repair Report

Once you have implemented one of the successful debt management programs, the time will come for you to obtain a credit repair report to see the level of damage that you have done to your credit rating. Once you the credit repair report, review it very carefully to see if there are any inaccuracies or errors. If there is an error, make sure you report this and put it right.

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Reduce Your Debt and Stop its Accumulation

reduce debtIf you are really serious about your goal to reduce your debt, you’ll have to scrutinise the methods by which you manage money and shop. There are so many tempting ways to spend money unwisely but you will never reduce your debt unless you maintain consistent discipline with spending and saving. You might have just recently seen the need to reduce your debt because you realize that it is snowballing. Here are some areas to focus on that will help you reduce your debt.

Stop going deeper into debt before you work to reduce your debt. Getting off the credit cards is somewhat like quitting an addiction. When you have finally kicked the credit card spending habit and begun to reduce your debt, you’ll wonder why you ever got into this situation in the first place. Today people have debit cards with major credit card logos and there really is no need for the plastic loan instrument. Even if your checking account runs low, it is better to utilise overdraft protection rather than accumulate interest and make no progress to reduce your debt.

Earning more than you spend is a very effective way to reduce your debt. You have to stop utilising credit cards as an extension to income for making ends meet. This requires finding creative ways to supplement what you already make. You can find a part time job, do some freelancing on the Internet, sell stuff at a car boot sale or sell unwanted items on the bidding sites. Of course cutting unnecessary expenses is another way to increase the power of your present income and reduce your debt.

Reduce your debt by finding new ways to shop. Don’t buy so many pre-cooked items the next time you go to the grocery store. You’ll save money that can be used to reduce your debt by learning to cook your own meals using fresh ingredients. This is also much healthier for you in the long run. Also remember to never go shopping at the grocery store when you are hungry because you will probably end up buying extra items not on your list.

Cutting back on unhealthy habits is a sure way to increase income and reduce your debt. Smoking is a very expensive habit in terms of both the price of cigarettes and the effects it has on your health. You don’t want to end up with high health care bills while you are trying to reduce your debt. People who smoke typically catch more respiratory illnesses requiring more visits to the doctor. Likewise alcohol is very expensive in terms of buying the product and the time wasted consuming it.

Learn to walk away from buying things you know you should not. This is a critical strategy to learn in order to reduce your debt. When you know something is out of your budget, do not buy it. Product vendors have all sorts of gimmicks to get you to buy and they really are not interested in seeing you reduce your debt but you must resist. Resist even if they are giving away free prizes just for watching one of their demonstrations. Never buy on impulse and sleep a night before making a decision. Also never carry your credit cards to avoid impulse buying and you will begin to reduce your debt very quickly.

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The Pitfalls To Look Out For In Debt Management

debt consolidationIf you didn’t already know it – debt management is a huge growth industry. There are more of us experiencing debt, and there are more of us who are experiencing the pain of repaying that debt. As with all growth industries though, there are some who are involved in debt management who have less scruples than others do. For this reason, it is always helpful to keep one eye open for some of the pitfalls you may come across in debt management.

Pitfalls of using a credit/debt counseling service in debt management

It should be stated at the outset that most credit/debt counseling services are reputable. However, there are those who make their living help to manage the debt of defaulting debtors – and they do little to “help”. As such, if you are thinking of seeking the assistance of a credit/debt counseling service, keep in mind the following:

  • Always try to use a non-profit credit/debt counseling service.
  • Make sure the credit/debt counseling service is registered.
  • Check that the debt being managed by your credit/debt counselor really needs to be managed. The reason you need to do this is because most credit/debt counselors who are not non-profit will charge you a commission and monthly fee on the overall debt being managed; therefore they have an incentive to boost your total managed debt amount.
  • Make sure that your credit/debt counselor is working in your interests, not your creditors; for example, have they tried to obtain a reduction (sometime known as “haircut”) on your interest rate and outstanding interest repayment amount?

Pitfalls when doing your own debt management
If you decide to manage your own debt, rather than using the services of a credit/debt counselor, make sure that you keep an eye on the following:

  • You are not paying any hidden fees for restructuring your debt or making early repayment of your debt;
  • That the overall Annual Percentage Rate of the interest repayment is less than you already pay;
  • That any security you provide is not going to be lost.
  • Where you consolidate debt, that by putting all your eggs in one basket you are not giving your new creditor complete power over your financial affairs; for example, what happens if they call-in the refinanced loan? If you have lots of creditors, it could be harder for your creditors to achieve this.
  • That your overall total repayment amount is not going to be significantly higher than if you continue paying the debt now – albeit in areas. This should be carefully reviewed even if your monthly repayments are significantly less. For example, if you now pay £1,000 per month for 1 year, you’ll end up repaying less than if you have to pay £500 per month for 3 years. Although the second system may sound more attractive when looking at bottom line, when you consider the total period you have not actually done yourself any favors.

Whatever you decide to do, please make sure that you have at least one conversation with your local consumer affairs bureau before you embark on your debt management program to get some guidelines of whether or not you are doing the right thing.

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Dealing with debt collectors

Debt collection agencies are leeches who make no positive contribution whatsoever to society. The finance industry is morally degenerate, banks and credit card providers want to have their cake and eat it. If they make a mistake the taxpayer pays for it. However if you make a mistake you pay for it big time.

If the banks were prepared to work with people in financial trouble, so many problems could be solved.

Debt collectors use telephone harassment as one of their major weapons. Everything they do breaches the OFT guidelines and breaks several laws, and yet no one will ever do anything about it.

Below are a series of videos that will help educate you on how to deal with Debt Collection Agencies

Debt Collection Agencies – Background Part 1

Debt Collection Agencies – Background Part 2

Debt Collection Agencies – Banking Security 1

Debt Collection Agencies – Banking Security 2

Debt Collection Agencies – Communication Security 1

Debt Collection Agencies – Communication Security 2

Debt Collection Agencies – Telephone Harassment 1

Debt Collection Agencies – Telephone Harassment 2

Debt Collection Agencies – First Contact 1

Debt Collection Agencies – First Contact 2

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Trust Deeds

A trust deed is employed in Scotland and is a voluntary but legally binding formal arrangement between a debtor, a trustee and their creditors. A debtor, an individual who often has a very large sum of debt they need to clear, volunteers to transfer their assets to a professional Insolvency Practitioner, known as a trustee. It is then the responsibility of the trustee to administer these assets between the creditors.

A Trust Deed represents an alternative to sequestration and is a far less formal process. It can also enable individuals to avoid some of the legal aspects which follow from being made legally bankrupt, as is the case with sequestration.

Advantages of a Trust Deed
The main advantage of a Trust Deed is that it lessens the stress on the debtor. Because all correspondence and creditor queries go through the trustee, the debtor is no longer forced to deal with them all. Therefore, a trustee needs to be someone who is dependable and reliable.

It gives the debtor control over the situation rather than the creditors. A Trust Deed is also a much cheaper and far more flexible option than segregating your assets to pay off your creditors.

As long as specific requirements are met, a Trust Deed is able to be documented in the Registrar of Insolvencies and deemed ‘protected’. This means that all creditors, whether they agreed to the terms or not, are unable to petition or try any other method to retrieve the money that is owed to them, as long as the debtor adheres to the Trust Deed terms.

The duration of a Trust Deed is fairly short compared to many debt management options and the debtor will be free from their debts approximately 3 years after the date it was granted.

Disadvantages of a Trust Deed
Once a Trust Deed has been granted, but not ‘protected’ it only binds those creditors who agreed to the terms and therefore it means than any other creditors will still need to receive their payments. Therefore, those creditors not bound by the Deed are still able to petition for the debtor’s sequestration. As a result, if a home owner is unable to pay their unbound creditors in full via another source they may be forced to sell.

One condition of your Deed becoming ‘protected’ is considers all of your property, and any property the trustee holds may be sold by them should it be in the interest of the creditors. Your trustee is also able to file for your sequestration if you are unable or unwilling to co-operate with them. Additionally, it may appear that your trustee is working with your creditors best interests in mind as they are able to sign for your petition if they feel it would be a better option for them.

Going through the process of a Trust Deed will result in the debtor being unable to hold the Director position of a limited company, additionally; several other public offices shall also be off limits.

For help with getting a trust deed please contact us here

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Paying back CCJs?

I have been paying back a county court judgement (ccj) for over 2 years. I now want to pay it back completely to allow my credit score to start improving, will this work or am I best off just paying it back monthly which will take me 2 more years?

The reason I want to improve my credit score is that my mortgage fixed term ends in 2 years and I want to get a good rate if I change lenders. Could I get an early settlement amount from the solicitors?


You may be able to get an early settlement, although its not as likely as a normal debt. With a normal debt, they offer a lower amount to encourage the person to pay up. With a CCJ, you have been ordered to pay anyway, so they don’t need to offer incentives. Some do though, so its worth a try.

Its not going to make that much difference in terms of credit whether you pay now, or over the coming months. When you pay in full, you can have the CCJ marked as satisfied, but it does not come off your credit file. Having it satisfied is better obviously than it not being, but either way it still has a big negative effect on your credit. You aren’t going to be clear until 6 years after the CCJ was added to the credit file.

It is probably best though to clear it, purely because its one less bill to pay, and you do get a sense of release when its paid off. You can then put it behind you and move on.

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Mortgage company debt

Can a mortgage company ask for a debt be repaid that is over 10 years old since anythings been paid?


They can ask you for the money at time, until the debt is cleared.

However, under the Statuate of Limitations Act, if there has been no contact between a debtor and a lender for a solid period of 6 years, then the debt can no longer be taken to court to get payment. As a result, if the debtor refuses to pay there is nothing that can be done, as there is no way to force them to pay. In this case the debt becomes statuate barred.

Its actually down to the lender to prove that the debt is not statuate barred.

However, if there is anything which counts as contact, then the statuate barred protection is lifted, and the 6 year period starts all over again.

As a result, on any communication you have to be very careful and state that you do not acknowledge the debt, and don’t sign any letters, just print your name.

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Debt is this right?

Does debt cease to exist if 6 years have passed since it was last asked for?


The debt does not cease to exist, however after a solid period of 6 years of no contact between the debtor and lender the debt becomes statuate barred.

This means that although the debt still exists, the lender cannot take the debtor to court to recover the debt. In real terms this means that if the debtor refuses to pay, theres nothing the lender can do it about it.

You have to be careful, as in any fresh contact in which you acknowledge the debt will break the statuate barred status and the 6 year period starts again.

As a result, in any letters you should put that you do not acknowledge the debt, and don’t sign them. Don’t mention anything about payment.

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How do you clear a bad credit history from my current address?

The previous people who lived here before me were in so much debt they had a bad credit history.Whenever I want to get a catalogue or anything similar they wont let me as they just look at the address. Is there anyway I can clear it from my address so i can get catalogues?


Although years ago bad credit history was linked to an address, and a person with bad credit living there could affect everyone else at the same address, it was stopped a couple of years ago as its was so unfair.

Now debts are only linked to a person, not to an address, and the debts move with the person. Anyone living at an address does not affect anyone else there, unless they are tied in some way like husband and wife.

Unfortunately, this means that there is something wrong with your credit rating. It may be that you simply haven’t had much credit before, so you are an unknown quantity, or there is a mistake on your credit file, or something on there you didn’t know about.

I would get copies of your credit file from both credit agencies, experian and equifax, to make sure the info on there is correct. If its not you can write to them and get it amended.

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