Debts & Loans

Offers to clear or consolidate debts may seem attractive to consumers with multiple debts, particularly following the festive season and in the current economic climate. In reality, however, the publicised deals can be misleading. Consumers can end up paying more than the amount that they originally owed. 

Debt consolidation companies promise a way for consumers to consolidate debts into one monthly payment. They do this by arranging a new loan to replace existing debt. Somerset County Council is warning local residents that by signing up to this service they could end up paying more overall. 

A fee is often charged by the company for setting up the loan. This may be secured to the consumer's house at the risk of them losing their home if they cannot keep up with their payments. 



Whilst debt consolidation companies may offer reduced monthly repayments, the consumer may be required to make these payments over a longer period of time or at a higher interest rate. This can mean that they end up paying more overall. 

Councillor Henry Hobhouse, Somerset County Council's Portfolio Holder for Community Safety, said: "Somerset County Council works to protect local residents through providing information that allows them to make informed choices. Personal finance is a key issue at the dawn of 2009, and it is important that Somerset residents are alerted to misleading advertising that promises more than it can deliver." 



Howard Burnett, Group Manager of Somerset County Council's Trading Standards team, added: "Debt consolidation may seem like an attractive prospect to consumers with multiple loans. Somerset County Council's Trading Standards team is keen to help local residents make informed choices about handling their finances."