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Debt warning as people turn to secured loans and consolidation

Consumers running themselves into serious debt are often ignoring the root of their financial problems, according to one expert.

A spokesman for Debt Help UK, a firm which offers advice on issues of debt management, said that it is important for people to consider their spending habits and that under these circumstances many seek debt consolidation.

Iain Wrenshall, director at the company, said that in general people were spending outside the limits of what they earn and that reliance on credit was having a negative effect on many consumers' financial situation.

"As they lean more heavily on credit, their ability to afford more credit diminishes," he said.

He added that debt consolidation was one of the ways in which many people choose to act on their debt problems but warned that people seeking personal finance, such as secured loans, should ensure that they are dealing with a regulated lender.

"It is extremely important that people avoid going to unregulated lenders," he said.

Last month a report by Lloyds TSB found that around 165,000 households in the UK had sought financial help from unregulated lenders - or loan sharks.


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