Lee Schofield:Blog

Thursday 19th May 2011

With Government spending cuts looming, higher inflation, tax increases and interest rate rises becoming more likely, it is hardly surprising that banks expect repossessions to increase in 2011.
 
Add to this the cut in measures undertaken by banks and the Government in 2010 that helped keep the actual number of repossessions lower than originally forecast, and you have to hope that Wills and Kate have been able to save up a chunky deposit for when they climb on to the property ladder.

According to the Council of Mortgage Lenders, there were 36,300 repossessions in 2010 but this is expected to rise to 40,000 this year.

One way that a borrower can prevent repossession is to apply for a consolidation loan to help reduce outgoings in other areas and in turn free up more money to pay towards their secured finance.

If this is not an option available, then an alternative solution to consider, such as a debt management plan or IVA, may help the borrower regain control of their finances. Whilst an IVA or debt management plan will have a negative impact on a person’s credit file, this may ultimately be the best option in the long term.

For some people the best advice they can receive is simply to tighten their belts and cut back where they can, but for others this is not an option. They have reached a point where a clean break is needed, and a payment plan can allow them to do this.

The debt management industry has come in for its fair share of investigation and criticism recently, and in many instances rightly so. When a person is at the stage where they require help with their debts, they are usually inundated with calls each day from creditors that they are unable to pay. To be subjected to cold calling at this time also is never going to help.

A debt management plan is something that a person should choose to enter rather than be forced into by someone who has dialled their number completely at random.

While a mortgage broker may not choose to seek this type of client through marketing, they may well have existing clients in their database who have fallen into financial hardship, and a debt management plan may be the only option they have at this time.

* Lee Schofield is the introducer manager for Ashley Park Debt Solutions, who specialise in personal debt solutions