Debt management – helping avoid repossession

Figures from the Council of Mortgage Lenders (CML) suggest that mortgagors around the UK are finding it harder to manage their debts. At the end of June 2008, 1.33% of mortgages were at least three months in arrears. Three months later, this figure had risen to 1.44% – and by the end of 2008, 1.57% (182,600 mortgages) were in this group.

The basic fact is simple: people miss payments when they don’t have enough money to pay all their bills. However, the ones they’re missing aren’t necessarily the ones that are causing trouble. Many people find they can’t make their mortgage payments because payments to their unsecured debts are taking up too much of their income. This is something debt management can help with.

Debt management – making money available for secured debts

When someone enters a Gregory Pennington debt management plan, we talk to their unsecured lenders, asking them to accept lower monthly payments and, where possible, to freeze interest and / or waive charges.

Basically, we tell them how much our client can afford to pay them per month once they’ve taken into account what they need for their unavoidable expenses, from mortgage payments to food and utility bills. Lenders will normally understand that mortgage payments must take priority over (for example) credit card payments: most would rather accept lower payments for a while than see the borrower lose their home.

Of course, making reduced payments will mean it`ll take longer to pay off those debts – and making smaller monthly payments than originally agreed will have an impact on a borrower`s credit rating, which can make credit more expensive and / or difficult to obtain for a while. Even so, the consequences of making lower payments to unsecured debts are less serious than the consequences of missing payments to a mortgage / secured loan.

Debt management – negotiating with secured lenders

When the situation calls for it, our debt management experts will also talk to secured lenders. If one of our debt management clients is facing mortgage arrears, for example, we can talk to their mortgage provider and try to find a solution that suits both sides – a repayment plan that’ll help the borrower pay off the arrears at a realistic, affordable rate.

More on debt management.