breaking news on debt consolidation.
a good report on debt consolidation:
For consumers who are considering debt consolidation,
it's just as vital to weigh the pros and cons carefully. For example,
consolidating many debts into a single loan can reduce your number of
payments and creditors, making managing your money and financial
planning much easier.
Those who consolidate can further benefit from reduced
interest rates and even earn tax breaks, since home equity loan
interest can be written off, while credit card interest payments
cannot. On the down side, though, debt consolidation can make it easier
to get further into debt, GreenPath said.
With a lower payment and no more pressure from
creditors, many consumers continue using credit cards and fail to
change the spending habits that got them into trouble in the first
place, the counseling service said.
Another down side to consolidation is that it costs
more in the long run. Most consumers, GreenPath said, end up paying for
the debt over 10 to 30 years, spending much more than they would have
had they kept each individual loan.
Consolidation can also put your home and other assets
at risk since most consolidation loans are secured. That means, if you
fail to pay, you will lose whatever is securing the loan -- in most
cases your home. To keep themselves out of hot water, one of the best
moves for consolidators is to close all credit card accounts to avoid
any temptation to reuse those lines of credit, GreenPath said. On
another front, homeowners and renters also shouldn't forget to document
items they own for insurance, estate planning and sales purposes in the
coming year, says the American Society of Appraisers.
Williams writes: "Debt consolidation is just another name for
borrowing money from one source to pay another. If you are ineligible
for a loan because of poor credit, there is no point consolidating
because that is, by definition, a loan. I think you are talking about
companies that negotiate with creditors to lower interest rates. While
that has some merit, given the fact that your credit is already
destroyed, you should realize that some of these "nonprofit"
organizations not only charge an up-front fee but also a percentage of
what you are paying. While the overall number you pay per month is less
— owing to the company's ability to negotiate with your creditors — I
would be reluctant to pay a continuing fee. I have always recommended
Consumer Credit Counseling Service. They have been around for a long
time — with an excellent reputation."
the Daily Mail:
Many young Britons are committing financial suicide
with a high-spending lifestyle they cannot possibly afford, experts
They are pursuing the lifestyles of A-list celebrities
with only a Z-list income, often displaying a reckless attitude to
borrowing, say the researchers. Many young adults do not view
bankruptcy as shameful, instead seeing it as a tool to escape large
debts amassed though buying fashionable clothes, going on exotic
holidays and socialising.
Twenty years ago, going bust was a mark of shame and a
demonstration of failure. However, the researchers found: "A core
minority saw debt consolidation and insolvency as easy ways out of
problem debt." Chief executive of Standard Life Bank, Anne Gunther,
said: "We are not only seeing people trying to 'keep up with the
Joneses' but also aspiring to a lifestyle more akin to A-list
"Credit is not only freely available but considered a
way of financing lifestyles rather than reflecting need. "A seismic
change in mindset is required to begin to unwind the chronic debt
issues we face in the UK. "Pinning your hopes on housing equity or
thinking that insolvency is the easy way out is financial suicide."
are five fixes for debt problems:
# Get a cheaper credit card. If you’re paying an
interest rate above 20%, you’re paying too much.
# Switch your mortgage. Cutting just 1% off your
home-loan interest rate could save you thousands of rands.
# Reduce your debt payments. If you have a number of
small debts, such as personal loans and credit cards, wrapping them
into your mortgage (known as debt consolidation) could reduce your
monthly repayments. But you could end up paying more in interest in the
# Don’t blow your bonus on treats. Pay off debts (the
money you save on interest payments will pay for treats all year long)
and put the rest into a savings account as soon as possible.
# Get a better bank account. Many people are paying
too much in bank charges. Save money on charges by using your debit
card instead of cheques and pay your bills online instead of at the
A number of young adults thought that debt
consolidation or insolvency were the solutions to sorting out their
debts according to the report from the PFRC. The report also showed
that consumers across all age groups looked upon rising house prices
and increased equity levels as a solution to dealing with their debts.
According to officials consumers have become so
reliant on these 'solutions' that they do not bother to look at any
other alternative, instead relying on credit to fund everyday life. The
research was commission by Standard Life, and an official from Standard
Life said that there had been a dramatic change in consumer attitudes
towards debt over recent years.
One official stated: "Credit is not only freely
available but considered a way of financing lifestyles rather than
reflecting need. A seismic change in mindset is required to begin to
unwind the chronic debt issues we face in the UK. Pinning your hopes on
housing equity or thinking that insolvency is the easy way out of debt
is financial suicide."
An official from the Consumer Credit Counselling
Service was also concerned at the level of people that saw their homes
as what he described as a 'get out of jail card'. He even went as far
as to say that many people that owned a home were at even greater risk
of debt problems, stating: "It's time to put an end to the old
shibboleth that buying a house is always good for you. A large
proportion of the people who turn to us for help are those who have
taken out mortgages which they cannot afford, leaving them highly
vulnerable to interest rate volatility."
a story on debt consolidation:
Have you decided to apply for bankruptcy? If yes, you
should reconsider your decision. It is not in your best interest to
apply for bankruptcy without first exhausting other available options.
Bankruptcy should always be a last resort to tackle your financial
problems. Many lenders offer debt consolidation option to the borrowers
so that they can recover financially. By consolidating their debts,
some people are also able to save money. Very often, people save
hundreds of pounds by repaying their expensive credit card debts with
the help of a new low-rate loan. The best time to do this is after the
festive season ends at the end of the year.
Debt consolidation loans are available for the UK
borrowers in two ways. They have an option to pledge their homes for
securing these loans. If they decide against pledging their homes,
lenders will not oblige them by giving large loan amounts. The
repayment period will also be short in this case.
a UK report:
Credit information experts, Equifax, said many people
relying on taking out a loan to pay off credit and store cards may find
that come the new year they face difficulties getting this kind of
credit. The warning comes as uswitch.com, the independent price
comparison site, revealed UK consumers could save £15 billion in
interest by consolidating all their unsecured debts into a low cost
personal loan. It said this could mean the difference between getting
by or, for those teetering on the edge, being pushed into insolvency.
However with total UK personal debt at the end of October 2007 at
£1,391 billion and average household debt in the UK at £55,877,
including mortgages, Equifax thinks people should exercise some caution
when applying for more credit.
WASHINGTON, DC—Plagued by late fees, high interest
rates, and harassing creditors, the U.S. took out a debt-consolidation
loan Monday, combining the nation's $6.1 trillion debt into a single,
easy monthly payment.
After extensive meetings between E-Z Debt officials
and the Treasury Department, an arrangement was reached which provided
a manageable payment plan—with no threatening phone calls or military
invasions from creditor nations.
"In the end, everybody came to see that E-Z Debt isn't
just another loan. It's a way to get out of debt without declaring
bankruptcy," Daschle said. "Thanks, E-Z Debt. We couldn't have done it
says that debt consolidation means "taking out one loan to
pay off many others. This is often done to secure a lower interest
rate, secure a fixed interest rate or for the convenience of servicing
only one loan. Debt consolidation can simply be from a number of
unsecured loans into another unsecured loan, but more often it involves
a secured loan against an asset that serves as collateral, most
commonly a house. In this case, a mortgage is secured against the
house. The collateralization of the loan allows a lower interest rate
than without it, because by collateralizing, the asset owner agrees to
allow the forced sale (foreclosure) of the asset to pay back the loan.
The risk to the lender is reduced so the interest rate offered is
Here are my recommended links on debt consolidation: