London, United Kingdom, November 02, 2010 --(PR.com
)-- Debt Options reacted today to news that the Telegraph had published details of research indicating 1 in 10 UK consumers usually only make the minimum monthly repayments on their credit cards. This figure represents approximately 3 million UK consumers who are currently not repaying the majority of the balance for their credit card debts.
The Telegraph echoed the advice given by Debt Options for many years now that this is a very costly strategy for the consumer. An example was provided with a ‘credit card debt’ of £1,000 subject to an interest rate of 18.13% APR. Should the ‘borrower’ keep to just the minimum monthly repayments, it was calculated this one debt would take around 17 years to repay and accrue a staggering £1,113 interest.
Debt Options staff are familiar with many reasons why UK consumers still opt for this strategy, despite the risk of liability for higher interest charges over time.
Debt Options commented that:
“Sometimes consumers make the minimum monthly repayments when they’re trying to manage multiple debts. Pressure from other creditors means they might find themselves simply prioritising whichever debts are pursued the most persistently by their creditors. And many could be affected by the economic downturn. A sudden redundancy or a cut in working hours can be a factor, with many consumers finding meeting their debt obligations much more challenging. Mortgage repayments, credit card debt and other credit instalments can sometimes simply become more and more unmanageable.”
Whilst Debt Options work with all the major legal debt options, they point out that an Individual Voluntary Arrangement in particular may present a more manageable solution than continuing to pay the minimum amounts for credit card debts when there are multiple debts.
Debt Options commented that:
“There are a number of legal routes out of debt but IVAs are typically used when the total debt is £15,000 or more owed to three or more creditors. IVA
stands for Individual Voluntary Arrangement, meaning a legally binding agreement with creditors. Once in place, it stops all new interest and charges. It also prevents creditors from taking out any new legal action against you and all the demands for repayments. This legal protection can be very important in some cases. A properly arranged IVA essentially creates a manageable monthly repayment plan with a known time-scale that it will run for. IVAs can also be arranged with more relative privacy than some other debt options, as your name will not be published in the newspaper. This can have advantages for those in the type of professions where the stigma associated with debt problems would be particularly undesirable. And unlike bankruptcy, IVAs don’t impose any other professional restrictions upon you.”
“The most important thing for anyone with debt problems to do is contact us as soon as possible for free, confidential advice about your exact situation. You need to gain independent advice on which options are open to you and calm professional support to begin to regain more control over your finances.”
The news also prompted the team to highlight the many information pages on their website about an IVA and other major debt solutions, which consumers can consult at Debt Options before moving on to contact them. Any consumer troubled by debt problems can call in total confidence to receive free no-obligation advice on 0800 234 3605, or contact the Debt Options