Is The Credit  Crunch Hurting You?

Background

As the Credit Crunch squeeze tightens, the options open to debtors lessen. The debt consolidation loan option whether secured or unsecured, is increasingly difficult to find as lending criteria becomes stricter. Some might say about time too, but to the debtor seeking a solution this is no consolation. As the value of property decreases equity levels diminish and lenders become increasingly cautious. These factors along with imprudent lending by banks and credit card providers have seen increasing numbers of debtors seeking to make arrangements with creditors.

As numbers grew the preferred option became the IVA (Individual Voluntary Arrangement). The lenders or their agents have become increasingly selective about accepting these proposals. In their defence, there have been instances where the proposals were little more that a fee generation exercise and as the number of IVA’s grew so did the scepticism of the lenders, and the number of IVA rejections grew. The criteria for accepting proposals became more selective and it became clear that another approach to the growing problem was needed. Lenders began to advise defaulters about the benefits of debt advice from Citizen Advice Bureaux or charities which they were funding. Both these options quickly became swamped by the volume of debtors and are struggling to cope with demand.

Companies such as ours were forced to look for alternative solutions to the current problems. Our commitment has been to offer best advice, that is to say, advice that meets the needs of the client and not our need to generate income. Within reason EADM will not charge fees to the debtor, any fees paid to us will come as part of the monthly management charges, which are accepted by lenders as part of our Debt Management Plans.

It is worth noting that consumer debt now totals £1436 billion, an increase of £111 billion over the last twelve months ending in April 2008. As interest rates rise the short term outlook for consumer borrowing looks uncertain which can add to stress. However, when faced with financial difficulty three out of five people do not seek advice. Attempts to deal with lenders are met with “computer says no” responses, which in turn leads to further stress and demoralisation. We offer professional free advice.

Let Your Debts Be Our Problem

Where Individual Voluntary Arrangements or Debt Consolidation loans are not an option we suggest that clients seek protection in a Debt Management Plan. This is an informal plan in which we liaise between you and your creditors and reduce all your monthly payments to a single affordable sum. More often than not, we can also negotiate to freeze interest charges.

The agreed monthly sum is then paid by standing order to our administration centre and then distributed to all your creditors included in the Plan.

Let Your Debts Be Our Problem

Frequently Asked Questions

Will you deal with all my debts?
We will deal with all your unsecured debts. This includes personal loans, credit cards, overdrafts and catalogues etc. Other types of debt, such as rent or mortgage, loans secured against property, hire purchase agreements, council tax and utilities such as gas, electricity and water cannot be included in the program and arrangements to pay them must continue. When we assess your financial situation, allowance for priority debts and day to day living costs will be made, before we calculate the affordable contribution.

Will I pay for longer?
The service allows you to make an affordable payment each month to reduce your debts instead of struggling with missed payments and incurring additional interest charges. The Plan focuses on your ability to pay and although it will take longer to repay the debts, the agreed payments will be affordable.

Will my creditors accept the arrangement?
Many years of experience has shown that most creditors welcome a reasonable payment proposal. We are in daily contact with creditors and have built up excellent working relationships with them. The program is created to fit your current circumstances. Your income, for example, may improve or you may enjoy a windfall such as a legacy. Your creditors are aware of this and will accept proposals which can seem almost derisory. Any changes in your circumstances will be reflected in future payments.

Will the program change my credit history?
If you have been experiencing financial difficulties it is likely that your credit history will have been affected already. Any of your creditors may have issued a default notice to register the fact that your original agreement has not been maintained. Joining a Debt Management Plan will not directly affect your credit rating. Experience of previous credit crunches suggest that damage to credit ratings is rarely permanent and when the banks begin to lend again, restrictions are quickly forgotten as lending criteria ease.

Why can’t I negotiate with creditors myself?
You can. We are here as an alternative. Many people don’t feel equipped to negotiate for themselves because they are too busy, stressed, and emotional or depressed to deal directly with creditors. Sometimes, the relationship with creditors has broken down or their demands cannot be met. We can step in and help on your behalf.

If I wish to leave the program will I be charged?
There is no charge for leaving the program, but we ask for two weeks written notice. This allows time to advise creditors and ensure a smooth transition back to you.

Debt News!

Total UK personal debt at end of april 2008 Was £1,436 Billion, which is an increase of 8% for the previous 12 months. This is equal to an increase of £110 Billion

Consumer credit lending in april 2008 was £230 billion.

Secured lending at 30th april 2008 totalled £1,207 billion

Average borrowing for households who have some unsecured debt is £21,450

Average mortgage for 11.8 million households with mortgages amounts to £102,070

Interest repayments have soared to £94.31 billion in the last twelve months

East anglian debt management offer a variety of solutions which will help arrest a problem. Before embarking upon a strategy which might exacerbate the situation please ring our advice centre for free on 0800 316 1022,  complete our on-line enquiry form

Let your debts be our problem