Simple Financial Solutions has released a new study that reveals that almost all of its debt advice cases are composed of some form of consolidated loan, echoing recent concerns by the Citizens Advice Scotland about the impact of roll-over loans on personal finances, leading many into IVA’s and other similar debt schemes.

This is no surprise to CAS, who believe many lenders encourage these roll-overs this is a direct cause of the growth of personal debt mountain.

Citizens Advice Scotland’s chief executive Margaret Lynch said: “Sadly, ‘roll-over’ loans are a problem in the debt cases we see in the CAB. The pattern is very familiar. You are short of money one month, so you take out a quick payday loan, but the interest rates are so high you soon find can’t repay it, so you have to take out another loan to pay it off, and then another one to repay that one.” The full article can be read here.

However it’s not just payday loans that encourage rolling over unaffordable debt. Traditional loans are also being used to consolidate debts with credit cards and overdrafts.

A spokesperson for Simple Financial Solutions said: “Once someone starts consolidating debt and rolling over loans they are on a very slippery slope. People are usually optimistic about their ability to pay off a new rolled or consolidated loan when they take them out, but unfortunately the reasons behind why they needed to do so is very rarely addressed.”

“Almost every person in debt who has come to SimpleFS.co.uk for help has had at least one consolidated or roll-over loan in the past.”

Of particular concern to the industry is the deliberate selling of roll-over loans to people already in financial trouble.

“One of the worst aspects of this is that some lenders deliberately target vulnerable people with roll-over loans,” said Margaret . “For example, a customer contacts the company to say they can’t make a payment, and the company responds by offering them another loan. This is the sort of thing that we need to stamp out.”

About Simplefs.co.uk:

Simple Financial Solutions provides advice on the Individual Voluntary Arrangements debt solution.

Los Angeles-Long Beach, CA (PRWEB) November 17, 2014

National Debt Relief recently discussed in an article published November 9, 2014 how bankruptcy and student loans work. The article titled “Wiping Out Student Loan Debt Through Bankruptcy – The Pros And Cons” talks about how the student loan amount got so big and how bankruptcy deals with the problem.

The article starts off by explaining that there are multiple reasons why the total student loan debt now amounts to about $ 1.3 trillion. Part of the reason is the increase in the cost of going to college. Cost of attendance have been increasing at a percent higher than the inflation rate at times. The miscellaneous expenses are not that too far behind as well.

Another reason is the ease by which students are able to get student loans for higher education especially the federal student loan types. As most private loans like mortgage and payday loans including private student loan, the ability to repay or the credit score is a primary tool. But for federal student loans, there are not much check done on credit scores as it is a need-based loan.

The article also points out that the pervasive advice that everyone should go to college has been deeply ingrained in the minds of people that they feel college is always the way to go. It does have advantages over those with high school graduates but there are other options as well. But with society dictating that college is the way to go, people force themselves to the point that they take out loans just to get a degree.

Student loan borrowers who end up with high loan amounts and a not so promising financial situation cannot use bankruptcy to get out of their situation. It is still considered a non-secured loan item but the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was created to limit the abuse of bankruptcy to discharge student loans.

The article points out that the one exception to this is if the student loan borrower can prove to a bankruptcy judge that he or she has what’s called an undue financial hardship, which is almost impossible to do. To read the article, click this link: http://www.nationaldebtrelief.com/wiping-student-loan-debt-bankruptcy-pros-cons/.

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