Unsecured loan is a loan you have secured from banks or other finacial institutions without giving them any security.
A good example of unsecured loan is credit cards, personal loans. Few years ago banks in the united kingdom were giving almost anyone
credit cards. All you need is your name, address and few other information about your income to be sent one. One thousand pounds minimum spend limit used to be the norms. If you keep up the repayments, you are guaranteed to have the limit increased within few months. The door is then opened to accumulate bigger debts on the cards. This was the typical situation for many households in the United Kingdom during the boom. Now with the credit crunch and economy downturn, many people are now struggling to keep up with repayments. In fact nearly, everyone is struggling to keep up with the repayments in one way or another. If you are in this position, take heart, you are just one in several millions in the country at the moment.

The question is, what to do with huge debt, huge borrowing? Many people have lost their jobs or they are not making as much as they used to due to the the economic boom.

There are several debt management companies at the moment claiming to have the solution to everyone problem. They are sending mass email and text to get people with debt problems. What they do is ring the banks on your behalf and help get a lower repayment based on your current income. For this they charge a monthly management fees. Just like other industries there are lots of bogus debt management companies out there. There are those that charge 3 month worth of your monthly repayments as your their first commision. When you are struggling with repayments, this could be a collosal amount. Some of these management companies even take money from people and disappear.

When you are in this situation, it can be a very stressfull time. But you need to be calm and think carefully about your next move. You are going to start getting lot of calls from the credit card companies harrassing you for missed payments. Seek help immediately, if you are not sure how to handle the harrassment from the credit card companies, ignore their calls in the short term. Once you have already missed payment, they would have already charge you late penalty fees. Your plan now is to make sure they dont charge you for the following month.

(1)Contact your nearest citizen advice for the best way to manage the situation.
(2) If you have access to internet, visit the consumer action group website for best advice
(3)Since these debt are unsecured, the banks have no asset to sieze from you, so you are in a better position than someone with a secured loan. Yes they will register your name with credit rating company and make it difficult to get loan. Dont worry about this, banks are not lending anyway!
(4)If you want to make use of debt management company, make sure you get one with ministry of justice accreditation.

Important Note:
Make sure to pay your mortgage first before thinking about your credit card bills.
Do your food shopping and put petrol in your car before you think of your credit card bill.
Pay your utility bills ie gas, water and electric before your credit card bills

 
If you manage to solve your debt problem, remember, Credit cards are certainly not a good way to borrow. In fact, a Barclays bank manager once said, he would not have credit card! That says it all about credit cards.