Obviously It Does Appear On Your Credit Rating But It S Not A Form Of Insolvency, So It S Not A Black Mark

Category: Finance, Credit.

Those with seemingly unmanageable difficulties in handling their finances should take the time to weigh up their options, an industry expert has suggested. This in turn could hamper their access to competitively- priced borrowing in the future.

According to Chris Tapp, deputy director of Credit Action, those considering filing for bankruptcy or an individual voluntary arrangement( IVA) after becoming unable to make credit card and loan repayments should be conscious that their credit history is likely to be adversely affected. As a result, he reported that by drawing up and sticking to a debt management scheme with their creditors, Britons may find, rather than insolvency that their credit rating is not damaged as much. Obviously it does appear on your credit rating but it s not a form of insolvency, so it s not a black mark. He said: "There s no real penalty when it comes to doing a debt management plan. It s a real indicator that the person is making a real effort to sort out their finances, but at the same time pay back what they owe" . "With the penalties of bankruptcy staying on your record for six years and making it much harder for you to get credit in the future, depending on what kind of industry you re in, it can have an impact on your employment" However, those choosing a debt management plan could see their creditor accepting reduced repayments, which consequently" means that your monthly payments are affordable. He added that there is still a stigma attached to bankruptcy, with consumers having a fear that by declaring themselves in this position that people will" make an instantaneous judgement" and view them as being irresponsible with their money or" not very good at looking after their affairs" .

You only pay what you can afford to pay" . IVAs, are said to, comparatively have less of a stigma attached to them, with this falling even further for those on debt management plans. Meanwhile, figures from the financial charity showed that Britain s total personal debt was at 1, 354 billion pounds as of the end of June- an increase of 12 per cent, or 107 billion pounds, from the same time 12 months ago. Consequently, he suggested that bankruptcy" is really the option of last resort" , although it could be helpful for those consumers in a position where they will never be able to pay back their debts. Research from Credit Action also indicated that secured lending grew by 6 billion pounds during the month, with consumer credit borrowing showing growth of 9 billion pounds. Earlier this month, findings from MoneyExpert showed that just under 5 million Britons are currently" very concerned" about how much they are in the red.

Those concerned about the level of money owed to various creditors may wish to opt for a debt consolidation loan to reduce all their debts into one single monthly payment. And despite increasing numbers of consumers looking into getting a consolidation loan, one in four of those already in debt were revealed to have furthered how much they were in arrears over the last three months.

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