Repaying a Loan - page 2
Maintaining a good repayment record on your loan is important
If you are struggling with debt repayments it's best to ask for help sooner rather than later.
The younger generations are not alone in this. The small fixed income which many of the over 60s have to survive on inevitably exacerbates the debt situation, with older clients of advisers NancollasGreer having an average debt of over £50,000.
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So there are a lot of individuals and couples with worrying levels of debt, who will face serious problems if and when interest rates climb back to previous levels. Debt repayment could well become the largest single item in their budgets; this could have a major effect on the economy when expenditure has to be cut back. With many already in this situation before higher interest rates appear, the scene is set for an end to the apparently 'easy' life on credit.
The use of the modern version of bankruptcy which is the Individual Voluntary Arrangement (IVA) increased by 150% in just 3 months in 2006, but the take up of credit facilities continues to increase. It seems that the warning signs are being ignored by a large segment of the population who continue with their credit based lifestyle and hope that 'someone' will help them out if the worst happens. This is likely to be a largely forlorn hope.
Should house prices continue with their apparently remorseless increase it could just be that they are right, but the portents are not reassuring. Falling house prices could place many in a negative equity situation, where the sale of the house does not raise sufficient funds to clear outstanding debts. Some could face losing their home, especially where the mortgage taken out exceeded 100% of its value; this has become fairly commonplace in recent years where the extra funds have been used to furnish the house or cover other costs such as stamp duty.
So your situation is in your own hands, and rather than be like the couple in the advert who rejoice because their debts have been consolidated, better to be content that your debts are at a manageable level. The choice is yours, but it would be wise to find your financial limits and stay within them.
