Wednesday, January 28, 2009
Fabulous Theme
Enjoy the appearence of vista with this free theme.
Debt and Debt Management For Parents
Debt and Debt Management For Parents
Three quarters of parents have debts in the form of loans, credit card debts and overdrafts, according to 'Families and the credit crunch 2008', a report released in November by the Family and Parenting Institute, based on a YouGov survey of more than 5,000 parents.
The average debt, apparently, is £8,400, but parents don't just owe money to companies - according to the survey, a full 25% have borrowed money from (or been given money by) their own parents in the last year.
The survey also reported some other worrying findings. For example: that 1 in 4 parents found their household income wasn't enough to pay the monthly bills; that 1 in 10 are worried about the household's main breadwinner being made redundant in the next 6 months; and that 3.6% of parents with mortgages thought it was very likely or fairly likely that their home would be repossessed within the next year.
Against a backdrop of record personal debt, parents are particularly worried about paying the heating bills (47%), paying the rent or mortgage (36%) and paying the food bills (31%).
Mary MacLeod, Chief Executive of the Family and Parenting Institute: "Families up and down the country are finding it hard to balance their budgets. Many also have a heavy burden of debt. Parents say they feel under stress as they struggle to clothe and feed the children and find money for school trips yet need to cut back to manage within their income. This can put a big strain on relationships. Even more of a strain is the pervasive fear that they will be out of work or even lose their home."
"With today's high cost of living, record levels of debt and worries about the nation's economic health," said a spokesperson for Debt Advisers Direct, "it's no surprise we're hearing such gloomy answers to surveys like this.
"There may, however, be debt solutions which could help some parents reduce their monthly expenditure. A debt consolidation loan, debt management plan or IVA (Individual Voluntary Arrangement), for example, could help them bring their expenditure back in line with their income."
Even though debt consolidation, debt management and IVAs all address unsecured debts (unsecured loans, overdrafts, credit cards, etc.), they can nonetheless help people keep up with payments to their secured debts (mortgage, secured loans, etc.).
With debt consolidation, for example, people basically pay off their existing unsecured debts by taking out a single new loan large enough to pay them all off in one go. This allows them to arrange to repay the new loan at a rate they can afford, freeing up the money they need for their secured debts and other essential expenses.
With IVAs and professional debt management plans, the borrower asks debt experts to negotiate with their creditors, asking them to accept lower, affordable payments.IVAs and professional debt management plans are very different debt solutions, but they do have similarities: if the creditors accept the terms, the individual will agree to pay as much as they can (i.e. their entire disposable income) every month, and the creditors agree to accept that, even though it's less than the monthly payments they originally agreed on.
"Debt management plans, debt consolidation loans and IVAs are very different, and suit people in different circumstances - so if someone's facing debt problems, the first thing they should do is seek professional debt advice from an organisation that really understands the pros and cons of each."
Unsecured and Secured Loans – the Differences
Unsecured and Secured Loans – the Differences
Do you know the differences between unsecured and secured loans? If you are looking around for a loan you will be faced with these terms frequently. Do you know which type of loan will suit you in your current situation?
It can be difficult for the average consumer to make their way through the process of obtaining a loan when faced with all of this terminology, often we simply let whomever is the professional involved guide us. Really we should make it our business to understand the differences between these types of loan and ensure we choose one which suits our requirements; after all we will be paying for it. These two main types of loan can be broken down into simple to understand points.
An Unsecured loan is one which does not require any security what so ever, not even your home. It is not difficult to obtain an Unsecured Loan but the Lender will require that you have a low debt to income ratio and a good credit rating. With a Unsecured Loan the Lender will believe that you will be able to repay the Loan amount as agreed, you will have to prove financial stability. You can expect the interest you pay to be higher than you would be charged on a Secured Loan, this is because this type of Loan is classed as a higher risk by the Lender. Unsecured Loans can take many forms such as Student Loans, Personal Loans and even some Home Improvement Loans.
A Secured Loan involves the Lender requiring you to secure the Loan with something, such as the consumer’s car or home. This means that you are providing collateral to the Lender, which in turn means should you not pay the Lender, has rights to whatever object you have used as security. For many consumers a Secured Loan is the preferred rate as they normally offer a lower rate of interest compared to Unsecured Loans, also many consumers do not have the credit or funds to get an Unsecured Loan.
Which Loan is suitable for you is very much dependent on your circumstances and what you require the Loan for. If you only need to borrow a small amount of money, perhaps you want to completely revamp your garden then an Unsecured Loan is probably the most suitable. Secured Loans have many forms such as mortgages, homeowner secured loans, equity release loans and bridging finance. Other Secured Loans include car and boat loans as well as home improvement loans.
Using a Secured Loan is the best option to buy your home this does not mean you need to put up collateral to purchase your home as your home is the collateral. Should you not make your payments then you could lose your home. The same principal applies if you are purchasing a new or used car, the car is the collateral for the lender and should you not make your payments the car will be turned over to the Lender.
Secured and Unsecured Loans have many uses usually life changing purchases such as homes and cars come under Secured Loans and everything else falls under Unsecured Loans. Obviously you can only obtain an Unsecured Loan if you have a good enough credit score it is best to browse and find at least three comparisons for cost so you can be sure that whatever loan you opt for you are getting the best available deal.
