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5 Myths Of Debt Consolidation Loans

Written by Alex Swindells on . Posted in Uncategorized.

Debt consolidation is a term used when a person has several debts that they decide to merge into one loan. This is done by taking out a new loan to pay off their original debts. Since all of the debt is in one place the interest rate may be lower which should help to reduce the monthly payments. 

You may not fully understand what debt consolidation is, or you may be unsure whether a debt consolidation loan is the right debt solution for you, which is why we have listed some of the myths that are associated with debt consolidation loans below. 

1. Debt consolidation impacts your chances of credit

wallet with credit cards inside

Initially, once you’ve applied for a debt consolidation loan, you will see a dip in your credit score; however, this dip should only be temporary.

If you stick to your new monthly payments as well as continue to keep an eye on important factors that affect your credit report, such as ensuring that you’re enrolled on the electoral register, then you should see your credit score begin to increase over time. 

This means that a debt consolidation loan will not affect your chances of successfully applying for new credit or getting a mortgage in the long term.

2. Debt consolidation allows you to pay back less money

five and twenty pound notes

Many people find a debt consolidation loan to be an attractive option because obtaining one bigger loan with a reasonable interest rate can work out cheaper in the long run. 

However, before applying for a consolidation loan ensure to calculate what you will pay back in total compared to your current repayment arrangements.

Depending on your existing lines of credit and their interest rates, along with your credit rating, there is a risk that you could potentially only qualify for a loan with a high-interest rate. This means that you could end up paying back more than you would have done in your current situation. That is why it is essential to do the comparison exercise mentioned above.

3. They Result in more debt

man calculating debt on calculator

A better way to view a consolidation loan is that you are restructuring your existing debts into a new form that works better for you. As detailed above, whether or not you ultimately pay back more or less in total will depend on your circumstances and the loan that you take out. 

You may want to take a consolidation loan that is of a higher interest rate than your existing credit, if it gives you the ability to spread the payments over a longer term to make them more manageable for you on a monthly basis. Some people find that having one payment to make is much more manageable than having to pay many creditors individually. 

4. You’ll save on interest

interest rates on phone and laptop

Usually, creditors will assess your credit report before deciding on a suitable interest rate for you.  

If you have a high credit score, then you may be able to get a good interest rate deal on your new loan. 

However, if you’ve been struggling to pay your creditors, then it’s unlikely that your credit score will be high which means you may be offered a poor interest rate deal.

5. Debt consolidation is a scam 

police van parked on street in the uK

Debt consolidation is a legitimate solution for those struggling with multiple debts. 

Be wary of any companies that approach you out of the blue, directly offering financial assistance. It is unusual for a reputable lender to approach people directly if you are not already a customer of theirs; or you have not made an application for credit.  

If you are considering consolidating your debts then you should be able to find a reputable lender through comparison websites.

Benefits of a Debt Consolidation Loan:

  • All of your debts will be in one place.
  • Once the original loans are paid off in full, you will no longer be threatened with legal action by the initial creditors. 
  • The debt of your new loan will be repaid through monthly instalments. As it’s only one loan that you’re repaying, the interest rates can be much lower (depending on your credit score), making it more affordable. 
  • Simplifies your outgoings, making it easier for you to budget.

Hopefully, this blog will help you to decide whether a debt consolidation loan is right for you; however, if you’ve been declined a Debt Consolidation loan and are struggling to meet the demands of your multiple creditors then submit your details at Swift Debt Help, and we’d be happy to give you a callback to discuss alternative debt solutions.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

money after payday loan

What To Do If You Can’t Afford Your Payday Loan

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, Uncategorized.

A payday loan is usually a small amount of money that a person can borrow from a lender on a short-term basis. Since people who require a payday loan typically have bad credit, the interest rates are usually high. This can make it difficult for borrowers to pay the lender back. If you’re in this situation, there are steps that you can take and various debt solutions available which can help you out of your financial situation.

Before being accepted for a Payday loan, the lender should consider whether you’ll be able to pay it back. They’ll take into account your incomings and expenditures; however, they can’t advise you whether a Payday loan is the right debt solution for you.

There are debt solutions that may be more financially practical which we’ll provide details on.

However, if you’ve already borrowed money from a payday lender and are struggling to repay them, then consider the below steps:

  • Contact your lender and explain your situation. They are required to advise you on where to seek independent debt advice. They may be able to temporarily freeze any interest as well as accept smaller repayments. 
  • If you’re certain that you’re unable to make payment you could consider cancelling your direct debit so that no further payment can be taken. Before you do this, assess the risks; get in touch with your lender to let them know that you’ll be cancelling. Also, find out if there’d be any cancellation charges. If you’d still like to cancel any further payments being taken, inform your lender of your decision.
  • Keep a record of all conversations you have with the lender regarding your payday loan. A paper trail may come in handy should you ever need it in the future for evidence purposes.
  • If your lender offers to roll your loan over to the next month do not accept it. There will be extra charges to rolling your loan over which will add to your already outstanding debt.

If you think that your financial problems are long-term, then consider the various debt solutions that are available to help you with your payday loan and other unsecured creditors.

Debt Solutions

The debt solutions that may be available to you if you’re struggling to repay a payday loan include the following:

1) Individual Voluntary Arrangement

An IVA (Individual Voluntary Arrangement) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms.

2) Debt Relief Order

A Debt Relief Order (DRO) is ideal if you have limited assets. This debt solution lasts twelve months and if your situation hasn’t improved in this time, then any remaining debt will be cleared. 

Once your DRO is in place, your lender will not be able to take any legal action against you.

To be considered for a Debt Relief Order, you must meet certain criteria, such as your debts not exceeding £30,000. Additionally, you must have resided in England, Wales or Northern Ireland. Also, your surplus income must not exceed £75 per month. If you own a property, you will not be eligible to apply for a DRO. You must also pay an upfront fee of £90.

3) Debt Management Plan

A debt management plan is ideal for someone who is struggling with non-priority debts. This includes credit card debt and unsecured loans, such as a payday loan. 

A DMP is an informal arrangement between you and your lender where a payment plan is set up based on what you can realistically afford. They are relatively easy to arrange; a third-party company will set up the plan and pay any money owed by you to your lender. 

It is worth mentioning that if your lender decides they are no longer happy with the informal arrangement, then they could still take legal action against you.

4) Bankruptcy

If you’ve explored all other avenues and failed to find a solution to pay back your payday lender, then bankruptcy may be an option for you to obtain a clean slate. 

You can file for bankruptcy yourself. When applying, you’ll need to pay £680 to the Insolvency Service. 

Once you’re declared bankrupt, creditors can no longer take legal action against you. However, if you do have any assets, then these can be sold to pay off your debt. 

Your bankruptcy will become public information, and it will remain on your credit report for six years.

Additionally, there are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

If you are considering entering into a debt solution and want to learn more, then get in touch for further advice. Alternatively, we have several guides and articles available online with more information.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Unlocking financial freedom

5 Things That Happen At The End Of An IVA

Written by Alex Swindells on . Posted in Uncategorized.

When you enter into an IVA (Individual Voluntary Arrangement), you agree on a payment term with your creditors. The IVA usually lasts five to six years, after which the debts included within the arrangement will be written off and you will be debt free. Most things will be handled on your behalf by your Insolvency Practitioner, but it is still important for you to understand what happens once your IVA is completed. These are the key things that will happen at the end of your IVA.

1. Your Insolvency Practitioner will check your repayments

Insolvency Practitioner checking repayments on laptop

Before the IVA can officially be concluded, your Insolvency Practitioner (IP) will check that your repayments have been made in full. If they have not, the IVA will be extended and you will make further repayments until you have paid the agreed upon amount. They will also check that you have complied with any other obligations, like the sale of assets or equity release from your home, if applicable.

2. Make your final payment

payment app on phone next to laptop

Provided that you have made the rest of your payments in full, you can now make your final payment to your IP. Once they have received it, the IP will complete any final administration required on your account and make a final distribution to your creditors.

3. You will receive an IVA completion certificate

IVA completion certificate

You will be sent a certificate to prove that you have made all payments towards your IVA and your debts are now officially forgiven.

After 3 months, your name should be removed from the insolvency register. However, you should double-check because this will not always be done automatically.

4. Your debts will be written off

man writing off debts

Once you have received your certificate, the IVA is no longer in force and you’re released from your obligations under the arrangement. Once the creditors receive the certificate, they update their records and write off any remaining balance.  

5. Enjoy a debt-free life!

unlocking padlock

Now that your IVA is completed, the debts that were included are now fully settled and you no longer have to make a monthly payment towards them. The disposable income that you were using to pay your IVA, is now freed up to use as you please. Not only do you have the peace of mind of being free from the burden of debt, but you should also have a more comfortable budget within which to manage your day-to-day living.

Do you require an IVA? Get in touch with Swift Debt Help today and we can support you throughout the process.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Don't let debt ruin your health poster

Improve Your Health – Kick Debt To The Curb

Written by on . Posted in Uncategorized.

Between January and August 2016 the average debt per household in the UK had increased by £412.30 according to TheMoneyCharity.org.uk. This increased pressure of debt felt by so many in the UK can result in both mental and physical ailments that wouldn’t normally be associated with being in debt.

We all worry about debt (worry is an obvious one), but worry alone can make everyday tasks feel difficult and laborious, even going to work can feel like a real strain when you are worried sick about debt.

We’ve listed below some of the less obvious debt related ailments which studies have shown have a high correlation with being in debt. If you suffer from any of these it would be worthwhile using our online debt solution finder to see whether we can help you reduce your debt levels. You may find that we can help you write off up to 90% of your debt.

Do you suffer from any of these?

  • High blood pressure? – Worrying about how you are going to make the next payment? How to ask your family/friends for money? The phone ringing? The postman calling? Bailiffs? All of these can cause high blood pressure which in turn can lead to more serious complications such as strokes and heart disease.
  • Feeling Anxious? – Anxiety can be brought on by the stress caused by being in debt and often goes hand in hand with high blood pressure. All of the worries that can cause high blood pressure can also result in anxiety.
  • Aching muscles? – Waiting for that next credit card bill or ‘red’ letter to drop through the letterbox? Believe it or not, studies have shown that being in debt can also cause muscle aches and strains as well as migraines. Studies also suggest that people with higher levels of ‘debt stress’ are also more susceptible to ulcers, back pain and muscle tension.
  • Depressed? – It’s no surprise that debt can leave you feeling depressed. The kids need new shoes, you’re desperate for a holiday, your gas bill is growing instead of shrinking regardless of how little you use the heating… the list goes on. Not being in control of your financial future can leave you feeling, well frankly, depressed…
  • Catch every cold going? – The last thing that you need when your head is full of debt is having it full of cold as well, but being in debt can also have a negative impact on your immune system leaving you more susceptible to coughs and colds that you’d usually fight off. Chronic stress and staying awake at night worrying about debt can both substantially lower your immunity to infections.
  • Always arguing? – When you are stressed and worried it can be hard to have a rational conversation with your partner. Poor communication within a relationship however can often lead to its demise. Arguing about the debt and consequences won’t help at all… It doesn’t have to be like this though…

If you can relate to any of the ailments above and believe that debt is having a detrimental effect on your health, give Swift Debt Help a call on 0800 211 8790 or complete our simple debt solution finder and we could help you become debt free. We’ve helped hundreds of people just like you (read our customer reviews) so what are you waiting for?

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