As Repossessions Rise by 70% Debt Management Expert Sees Increase in Homeowners Seeking Help

February 2009

EuroDebt, a leading debt management provider, is reporting a 113.5% increase in the number of homeowners coming to the company for debt advice for the period November 2008 - January 2009 compared to November 2007 - January 2008.

Whilst this number has increased significantly, EuroDebt believes that there has been a positive trend in individuals and families taking prompt action when they are facing potential debt problems. The number of homeowners coming to the company with existing mortgage/secured loan arrears has remained static at 21%. However, the level of unsecured debt for a homeowner, comparing December 2007 with the same month in 2008 rose from £37,087.36 to £38,683.33. Both were peak months for both years.

"We have seen a very significant shift in the number of clients who are homeowners looking for help from debt management in the last 6 months" confirmed Kevin Still, Director, EuroDebt. And the fact that 21% of these are already in arrears is extremely worrying, as paying the mortgage should be the highest priority for homeowners.

"The increase in the average level of unsecured debt for homeowners clients who signed up to our debt management plan is also a concern. This is highly indicative of the spiralling debt that families are facing, particularly with the spectre of job losses or loss of income making it hard to see how they can stay on top.

"Clearly many people are struggling under the current financial pressures, making it more important than ever that individuals take stock of their situation before it reaches a critical point. Falling behind on mortgage payments is a difficult point to come back from - although we have considerable success in helping clients who are at this stage. But much better is to start to address financial difficulties when they first become apparent. Indeed, with household debts continuing to increase, it is time for consumers to reassess their finances and make some positive changes. With some careful planning it is possible to take control of the monthly budget and get out of financial trouble."

EuroDebt aims to help consumers take a responsible position with their creditors, especially where they have multiple credit cards and loans, by notifying the unsecured lenders that they have entered a Debt Management Plan. This involves no further borrowing and in the majority of instances lenders agree to freeze interest & charges, meaning that recovery activities stop, the debt balance will begin to reduce at a rate based upon the negotiated reduced payments to creditors and the consumer can begin to take control of their finances again. Payment proposals are presented to creditors in a consistent manner and all the figures quoted in the income and expenditure analysis will have been verified through a home visit.

A Debt Management Plan may be for a relatively short period ranging from 12 months to 3 years or a long-term plan that enables them to become debt free, potentially with some equity release for home owners in the future. The flexibility of a Debt Management Plan sometimes allows clients to resume contractual payments where creditors accept EuroDebt's proposals of a reasonable offer for a transitional period until the client's circumstances change. For example; find new employment, return to work from long-term illness or maternity leave.

EuroDebt, unlike any other fee charging Debt Management Company, is the only debt management business that makes home visits a core component of its 'fact find' process, ensuring a complete picture of each individual's situation is gained. "This is crucial" continues Still. "At this visit, the debt advisor is able to assess not only priority expenditure, like mortgage or rent, council tax and utilities, but any arrears on these payments. Repayment arrangements to clear arrears are a priority to protect a client's home and family. There are also instances where critical insurances have been dropped, like life insurance and home insurance, which may need to be re-prioritised. And to help support its clients even further, we provide Energy Switching Services, enabling families and individuals to save money on their energy bills in order to accelerate the rate at which they become debt free."

• Share
• 
• 
• Store
• 
• Follow
•