Debtors should not “hide the problems”
April 23, 2008 by admin
Filed under News, News-Loans
People facing serious financial difficulties should not try to “hide the problems” or assume that they can solve them themselves by using their credit cards even more, says an expert.
A recent report has found that 400,000 people took out new solutions for unsecured debt in 2007, with over half (58 per cent) deciding to refinance or remortgage.
David Kuo, head of personal finance at Fool.co.uk, has advised people to ask their lenders for help to try to solve the initial problem of having borrowed too much money, which they cannot repay in the time period stipulated by the lender.
A possible solution is to extend the length of a mortgage which will lower monthly repayments making it more affordable in the short-term and giving the borrower “breathing space,” although the total amount to be repaid will be higher.
However Mr Kuo advises against taking out secured and unsecured loans, since they may compound the problem.
“Sometimes people are a little misguided about how they solve their problems and they try and throw money at them,” Mr Kuo concluded.
As debt problems increase for many people and lenders tighten their criteria, a survey has found that 18,000 applications for credit cards are being rejected each day, according to MoneyExpert.com.
