| Q.
I have spent beyond my affordability and can’t manage
my debts. What should I do to manage escalation of debts?
A. Don’t brood and do nothing. Immediately consult your friend, family members and, if possible, a financial expert. Remember, you can’t get rid of debts by yourself. You have to proceed under the guidance of a consultant.
Q. Should I talk to my lender?
A. Yes. You should talk to your lender. A number of lenders are sympathetic to borrowers; you should ask them to suggest a company which arranges debt management and consolidation plans. All finance companies are willing to arrange debt managers so that borrowers can pay back their loans.
Q. Is a debt consolidation loan better than a normal loan?
A. Of course! Debt management is always
better than a loan. Going for another loan to pay back an old loan can be financial suicide; it should be avoided at all costs.
Q. How does the debt program work?
A. Borrowers having a hard time maintaining balance between their income and expenditures due to heavy expenses on shopping and other type of outgoing bills can get companies to arrange management to take care of the outgoing bills, ask borrowers to pay a single cheque every month. Borrowers save a substantial amount of money as they have a chance for fee waivers also.
Q: Should I take a consolidation loan?
A. Debt consolidation loans, though it looks like a solution, can damage your finances further if you default on payments and don’t control your finances. The proposal is that multiple debts will be simpler if they are "consolidated" into one monthly payment. This may seem like a huge relief for the debt-weary, but debt counsellors advise that you steer clear of them. Interest rates
charged on these loans are normally higher. They often come
with payment protection insurance with unfair terms which
may not cover you if you fall ill or are made redundant. They
also tend to be "secured" loans. This means that
if you are unable to keep up repayments you will lose the
roof over your head.
Q: What bills should
I prioritise?
A. Debt experts counsel people to prioritise
repayments on essential services such as mortgages and utility
bills. If you are paying off a range of credit cards and store
cards, you should pay off those with the highest rate of interest
first. You could also switch your balance to a credit card
which charges a lower rate of interest.
Q: Should I consider
a debt management program?
A. Yes, you should certainly consider a debt management program - loans or mortgages. We at UK Debt Consolidation negotiate on your behalf to help reduce your outgoing payments. We also ensure strict compliance of our commitment to confidentiality in your deal.
Q. How can I determine if a debt
consolidation loan is right for me?
A. You have to start by understanding what a debt consolidation loan is and how it can solve your personal debt situation. If you find it difficult, then there are companies which undertake this task for you and suggest the best deal.
Q. Is there any legal difference between a debt consolidation
loan and a home equity loan?
A. Not in most cases. A debt consolidation
loan in legal structure generally does not differ in any way
from what one might call a home equity loan or a second mortgage
loan.
Q. Is a debt consolidation loan tax deductible?
A. In some cases, depending on the cost basis of your home, the interest may be tax deductible. Potential borrowers should check with their tax advisors to
explore what portion, if any, would be tax deductible for
them.
Q. If things get better, can I pay off a debt consolidation loan early?
A. In most cases there is no prepayment penalty
with these loans, but read your documents carefully. Some
loans will indeed penalize you an extra-prepayment penalty
fee if you pay the loan early.
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