Repossession & Bankruptcy: There are alternatives
16th March 2009
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A BBC Panorama programme "Can't Pay, Won't Pay" exploded the myth that you can't lose your house to unsecured debt. The harsh reality is that lenders and debt recovery agencies are now invoking little-known and previously unused laws to force repossessions to reclaim unsecured debts.

Yes, these are extreme situations and in most of them, the debtors haven't helped themselves by ignoring the problem.

The message here is simple: if you're having difficulty meeting your commitments, don't bury your head in the sand and hope it will go away. It won't. You need to take action, and these are the things you should be doing:

The first, and most important thing to do, is talk to your lender. Whether this is a mortgage lender, credit card company or loan company - tell them you are having problems. The majority of people don't do this for various reasons: embarrassment, shame, pride, etc. The bottom line is, if you can't pay your debts the time for embarrassment and shame is past, and if you don't swallow your pride, your debt will swallow you!

Whether you phone your lender or write to them, keep records of everything said, dates, who you spoke to and what was agreed.

If you make an offer to pay something, no matter how small, stick to it. And if you can't then go back to your lender and tell them.

If you are inundated with credit cards and loans (unsecured debt) which you are struggling to pay, then perhaps its time to consider a Debt Management plan. Whilst no one likes to admit they need this kind of help, the fact is, a good debt management company can do a great deal to ease the burden. Talk to your financial advisor or mortgage broker (if you don't have one, then go to to find one in your area), they will help you to find a suitable company to advise you. Whatever you do, DON'T try doing this on your own - don't search the internet for a Debt Management company - you have no way of knowing how good, bad or indifferent they are and you could be making a bad situation worse. Talk to a professional advisor first and let them recommend a company to you.

If the Debt Management company suggests an Individual Voluntary Arrangement (IVA) don't just accept this as the first option. Ask what other alternatives are available. If they insist this is the only option, talk to your IFA again before making a decision.

In some cases, it is possible for you to do some of the things the Debt Management company will do, yourself. For example, they will negotiate with your lenders to freeze the interest charges, reduce monthly payments, and in some instance, reduce the debt if there is a chance of early settlement. There is no reason why you shouldn't approach your lenders directly on these issues. Just remember to remain calm and detached when you talk to them - don't become emotional or confrontational, and don't let them intimidate you. However, if you don't think you can handle this yourself, then let a Debt Management company do it for you.

The next blog will offer some suggestions about ways to cut back on your monthly expenses … some are obvious, some not. Watch this space!

Betty A

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