Please can you tell me what, exactly, a secured loan is?

Secured loans are generally tied to a major asset, which could be property. one of the advantages of a secured loan is the cost factor: they are cheaper than unsecured loans. A downside of it is the risk factor: you could lose your property should you be unable to meet the monthly payments on it.

Normally, clients apply for secured loans when they need a large amount of money. These amounts could range from, for example, £10,000 upwards and could be repaid over a long period of up to 25 years.

Although you do not necessarily need to have a great deal of equity in your property to secure the loan, you should have enough to cover the loan amount. It is also possible to have more than one loan or mortgage secured on your property. You would then need to inform all lenders of additional loans against the property.

Lenders feel secure in knowing that the loan is tied to your asset, which could, if there are defaults on the payment, be claimed as compensation. Although secured loans are easy to come by, many borrowers may be wary of applying due to this fact. There is a bright side, though: lenders would normally be sympathetic should you run into difficulty, and afford you some leeway, even if only for a short while.

The benefits are self-evident: it is much easier to obtain a secured loan, the Annual Percentage Rate (APR) is usually lower than on unsecured loans and secured loans have more flexibility on their repayment plans and terms.

Normally, the loan repayments are made through regular monthly installments. Loans that allow you to borrow and pay back at will, or flexible loans, are now more readily available than in previous years, though you could expect to get a slightly higher interest rate.

Decide if you mind whether your property would be tied to a loan when you need to choose between a secured and an unsecured loan. Even though unsecured loans are not tied to a property, you would still incur penalties for non-payment on the loan amount.

Set enough time aside to have your property valued. Secured loans could offer you a more flexible approach to solving your credit problems by consolidating all payments into a single monthly repayment.

Yes, you may! We do not place any restrictions on what you use the money for. You are in full control over it and may choose to spend it on anything you wish. Many of our valued customers use it to settle some or all of their existing debts, as this would reduce their monthly outgoing expenses to a single repayment. This would be a good idea if you are good at managing your finances, however, you could lose your property should you struggle to make repayments on your mortgage.

Another popular way to spend the money is to buy a new car or do home improvements. This could work in your favour, as the interest rate might be better than that of a personal loan or a car loan. Another bonus is that you could negotiate far better with cash in your hand!

Individuals who are unable to meet all of their financial commitments as they fall due, or whose liabilities exceed their assets, may apply to Court to be declared bankrupt.  Alternatively a creditor who is owed £750 or more can petition for a person’s bankruptcy.

Bankrupts who have assets that can be released for the benefit of their creditors are assigned a trustee who will sell their assets and distribute the funds to the different creditors.  Once this process starts, creditors will be unable to claim anything else from you.

How does the bankruptcy process work?
If you want to file for bankruptcy, you have to file a Bankruptcy Petition (Debtor's Petition). Alternatively, any of your creditors can file a Bankruptcy Petition (Creditor's Petition) against you if they are owed £ 750 or more.

Once the bankruptcy petition has been filed, a Court date will be set for the initial hearing to see if a Bankruptcy Order should be made. You will then be declared bankrupt if the Court deems it appropriate.

What are some of the effects of bankruptcy?

• The Trustee controls all of your assets, including your home
  
• You cannot obtain credit of more than £ 500 without disclosing your bankrupt status
  
• You can only conduct business in the name in which you were made bankrupt
  
• You cannot be involved in forming, managing or promoting a company without the court's permission
  
• There are certain public offices that you cannot hold

Before considering bankruptcy, you should investigate your options and speak to a qualified Insolvency Practitioner. Declaring yourself bankrupt is a huge step and the decision should not be taken lightly. There are other options available to you. Just call one of our advisors now and they will discuss your current financial situation with you and help you to find solutions to take steps to resolving your debt problem.

What are the consequences of going bankrupt?
Do not see bankruptcy as the easy way out. There are many consequences to declaring oneself bankrupt, all of which need to be carefully considered, such as:

• The social stigma: your details are published in a local newspaper.
• Future credit: applying for credit or opening a bank account may be difficult.
• Your career: there are a number of careers that exclude bankrupts, or even discharged bankrupts.

Do consider carefully before doing anything. Always seek professional advice

There may be a number of alternatives to consider. IVAs can write off a large portion of your debt and you make monthly repayments, typically over a period of 60 months.

A Debt Management Plan may be another option whereby you only pay back each month what you can realistically afford.

Contact us for more details and we will advise you what your options are and whether you can avoid bankruptcy.

• If the Order to declare you bankrupt should not have been taken because of processes and procedures not being followed correctly when the Order was issued.
• You have managed to clear all of your bankruptcy debts and any associated costs have been paid or have been guaranteed and approved by Court.
• You have taken out an IVA (Individual Voluntary Agreement) therefore making an agreement with any creditors to pay off all or a proportion of your debts.

Since 1st September 2004 student loans are exempt and cannot be included in your bankruptcy.  The repayment of the student loan will be enforced according to its terms and conditions and it is the responsibility of the individual to repay this in full. If you were declared bankrupt prior to 1st September 2004 you may still have to make arrangements for the full repayment.  The Official Receiver handling your case should clarify these matters.