According to this article, many lenders of unsecured loans – including credit card companies – are pressuring customers to take out consolidated loans against their homes in order to pay off their debts.
Just think: you owe your credit card some, and perhaps you have other personal loans – all unsecured. If you’re having problems paying these off, what makes you think that taking another loan on your home will make things any better? Sure you’ve made your old creditors happy but now you still have the same problem with another lender and this time, if you aren’t able to make the payments you could lose your home. What kind of solution is that?
This is precisely why debt advice charities are stepping in to warn consumers. They advice that unsecured debt should not be converted to secured ones even if interest rates are currently lower for secured loans.
Lenders of unsecured loans rarely force borrowers with arrears into bankruptcy and having to give up their property, they say. The borrowers could even ask for debt counseling from groups such as Citizens Advice in order to reschedule debts, arrange a debt management plan or make a legal agreement with creditors to repay the debt over a certain period.
So if you are in a similar situation, don’t give in to the bullying. Don’t put your home at risk. Work on how to manage your unsecured debt instead.
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2 comments:
Great post. I have read a lot of articles about this lately. The mortgage industry is getting in a lot of trouble for recent lending practices.
This is of great concern especially for families not earning much. It's also an issue here in the Third World, although on a much lower scale. The increasing popularity and availability of credit cards puts a lot of people in bad debt situations.
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