Debt Terms & What They Mean...

I found this the other day & thought it was worth sharing with all of you. It was written by http://www.gregorypennington.com, a UK based debt management company.

Whether in debt or not, you’ll probably be hearing quite a lot about the world of personal finance at the moment. It’s an industry traditionally surrounded by complicated terminology, and it’s not always the easiest to understand. Here, you’ll find ten debt-related terms you should have in your vocabulary (or at least understand):

Arrears
Arrears are any overdue payments on a debt. If you have mortgage arrears, for example, it means you have not made one or more of your mortgage payments as set out in your mortgage agreement.

Bailiff
A bailiff is a person (either a court official or employed by a private firm) authorised to enter a property and seize goods that can be sold to repay a debt.

Bankruptcy
Bankruptcy is a legal process for individuals and businesses that can’t pay their debts. Their assets are handed to the official receiver who sells them and distributes the proceeds amongst creditors. The bankrupt usually has to pay an additional monthly sum for a period of 12-36 months until they are discharged. Once the process is over, all outstanding debts are written off.

Charging Order
A charging order secures the value of a debt against a property, ensuring that the debt is repaid upon the sale of the property at the latest. Creditors can apply for a charging order on failure to make a CCJ payment.

County Court Judgment (CCJ)
If you don’t repay a debt, your creditors can ask the County Court to issue a County Court Judgment. If the County Court grants the CCJ, they will order you to repay the debt in a way you can afford.

Debt Consolidation
Debt consolidation is the process of taking out a single, larger loan to pay off some / all your existing debts. Simplifying your finances, this can reduce the interest you’re paying as well. Debt consolidation can also reduce your monthly payments by spreading the loans over a longer term – although this could well increase the total amount you end up repaying, as well as the time you spend repaying it.

Debt Management
Debt management can help you repay your debts in an affordable way without taking out any further credit. It involves negotiating the terms of your debt (such as interest & repayments) with your creditors. Some people do this themselves; others ask debt management professionals to do it for them.

Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement is a government-backed debt solution available to people who:
a) owe more than £15,000 to two or more creditors,
b) cannot afford their monthly payments,
c) can afford to make regular fixed payments for the next (usually) 5 years.

In essence, it’s a legally binding agreement between the individual and their creditors:
a) The individual agrees to make fixed monthly payments – as much as they can afford once they’ve taken essential living expenses into account.
b) In return, the creditors agree to write off any outstanding debt when the IVA is successfully concluded.

An IVA can’t go ahead unless creditors accounting for at least 75% of the individual’s debt agree to it.

Insolvency Practitioner (IP)
An Insolvency Practitioner is a person professionally qualified to handle insolvency cases, such as bankruptcy, IVAs & Trust Deeds.

Insolvent
A person or business is regarded as insolvent when their assets (what they own) are worth less than their liabilities (what they owe).

Debt Consolidation - to consolidate or not to consolidate?

I have been looking into various debt solutions recently (for a family member, not for myself). I didn't realise there were so many! Typing 'Debt Solutions' into Google returns what is almost like a supermarket isle full of different products! Debt Consolidation. Debt Management. IVAs. Remortgages. Trust Deeds... the list goes on.

And with each of those products comes a range of different brands each offering that respective product. Some are cheap like the supermarkets own-brands, some are more expensive. Yet like a supermarket own-brand, does the price reflect the quality? Hmmm...

Anyway, after much deliberation, debt consolidation seems to be the one jumping out, saying "Pick Me!". It doesn't seem as drastic as some of the other options - just another loan, really. I am thinking of suggesting this to my relative, as they are not in any SERIOUS debt - I think they could just do with a few extra quid at the end of the month.

Before I do, I am putting this out to you, my readers. What do you think? Is debt consolidation a wise choice for someone who can meet their debt repayments. They just want to consolidate (pardon the pun) them into one easier to manage loan. They are certainly a far cry away from bankruptcy!

I found the most convincing information about debt consolidation here at DebtAdvisersDirect.co.uk. Have a look yourselves, and be sure to check out the blog too.

I'll wait a week for your responses & then it's either debt consolidation or... well, I don't know yet!

Thanks in advance :)

Debt Consolidation Loans

Debt consolidation loan; a need for debtors!!

If you are unable to manage your numerous debts and is missing your payments with different interest rates, debt consolidation loans is the best option for you. A debt consolidation loan is a personal loan that you may get while you want to opt for debt consolidation.

You may opt for debt consolidation, when you are unable to manage your several debts with different interest rates. There are some symptoms when you can opt for a debt consolidation loan:

1. When you are missing payments and becoming a defaulter
2. When you want to lessen your total payable amount
3. When you are facing trouble in paying different interest rates and want to pay a single interest.

To qualify for the debt consolidation loan you should have:

1. A stable income
2. A document listing your monthly budget.

You may also require some more information, according to the requirement.

Basically, debt consolidation loan has a lot of advantages:

1. It helps you to get out of debt.
2. It helps you to clear your pending debts.
3. It allows you to make a single payment against your multiple payments.
4. It allows you to make reduced monthly payment.
5. By opting for a debt consolidation loan, you can deal with a single creditor than a number of creditors.
6. It lowers or eliminates your interest amount.

However, there are several limitations of debt consolidation loan.

• It allows you to pay low monthly installments and interest rates, but it involves a longer repayment period. And you pay more to become debt free as a result.
  
• If you fail to make payment on time, you can loose your assets (if you have kept your assets as collateral).
  
• It gives short term relief to a borrower, it never stops from taking multiple loans, or cure his bad spending habits.

Mortgage rates - are you worried like me???

I'm on a fixed rate mortgage at the moment which ends fairly soon. Because of this, I have been keeping an eye on the mortgage market & the rates. I found this interesting article the other day which I thought I would share with you. It reveals how the Bank of England base rate affects your mortgage.

Not as expensive as expected

Thankfully, last weekend wasn't quite as expensive as I had thought. A quiet night in on Friday, day trip to Wales on Saturday & tea out at a friends house made for a fairly cheap weekend. I didn't even have to pay for the petrol to get to Wales... :)

Spent: £46.37

Remaining: £116.91

June result & July update

As planned, June ended just inside the budget (£3.36 left in my pocket).

July has started well. 7 days in and I have spent £36.72. I may have an expensive weekend approaching though, so it is a good thing I have had a cheap start.

Remaining: £163.28

In other news, I was reading an interesting article on Gregory Pennington's blog, a debt help site, about the cost of entertaining the kids over a year & how to budget this expense. The average total is an amazing £5000!!! With two kids myself, I was interested in working out my own average spends & looking for ways to save. Read the full article here >

Payday looms

Payday is right around the corner, and I am still in the black!

Two days to go, £12.80 left, things are going swimmingly!