Debt solutions – how do I know which one is right for me?
If you are in debt, and are unsure as to how you should clear your debts, you may want to consider a professional debt solution.
Debt solutions are specifically designed to help you get out of debt in a realistic, affordable way. Different solutions may lower the amount you are required to repay each month and/or write off the portion of your debt that you cannot afford to repay.
But how do you know which debt solution is right for you? Here’s a brief look at some of the debt solutions available:
• Debt management – this debt solution may be right for you if you can’t keep up with the repayments to your debts as you had originally agreed, but you could afford to repay your debts within a realistic timeframe if you were allowed to change the way you’re repaying them. Debt management works by asking your unsecured creditors to accept changes to your repayment plan: for example, lower monthly payments and/or a freeze/reduction in interest and charges. Please note, though, that your creditors are not obliged to accept any changes – and that failing to repay your debts as you originally agreed will have an impact on your credit rating, which can make it harder and/or more expensive to obtain further credit during the six years it stays on your credit report.
• Debt consolidation – this involves taking out a new loan big enough to repay your existing unsecured debts. Since this means you’ll have just one debt to pay off, instead of many, debt consolidation can simplify your finances, making it easier for you to remain in control of your debt repayments. Some people take the opportunity to slow down the rate at which they are repaying their debt – by arranging to repay it over a longer period of time, they can reduce their monthly payments to a level they’re sure they can comfortably afford. However, if you arrange to do this, you may end up paying more overall, as you will be paying interest for longer (this also depends on the interest rate on your consolidation loan, and how it compares with the rates on your original debts).
• IVA (Individual Voluntary Arrangement) – this is a form of insolvency that could be right for you if you have an unmanageable level of unsecured debt that you cannot afford to repay. For an IVA to be appropriate, you must be able to commit to making regular monthly payments throughout the agreement – which, in most cases, would last for 5 years. Before an IVA can start, voting creditors accounting for at least 75% of your debt would have to agree to the terms you and your IP (Insolvency Practitioner) set out in your ‘IVA Proposal’. Once you have made your final payment and the IVA has come to a successful conclusion, any outstanding unsecured debt will be written off. Note that you may be required to [...]
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Debt solutions – how do I know which one is right for me?
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Since the start of the recession the enquiries for people looking for debt advice has increased dramatically with many seeking urgent debt help.
Many people have lost their job in the recesion and many more are having to accept pay cuts and the money that they once had before the credit crunch does not look at paying their outstanding debt. Many people who cannot afford to pay their monthly commitements believe that by ignoring their debt problem that their debts will eventually disappear, but sadly when you igonre paying your debt the problems will increase and you will end up being in a worse financial position as the companies that you have the debt with will be sending out letters. There will be a cost involved to you for them doing this and you will also be charged for all your late payments that you have failed to pay. Plus the interest will also increase Not only that but when time goes on and on the company will pass your debt onto a debt collection agency and if you still do not pay they will then take you to court to try and get their money back one way or the other. Doing all this will increase your debt problems and burying your head in the sand will not make your debt problems go away.
There are many debt solutions and advice available to you and the sooner you act the better the situation will become.
There are many debt solutions available such as debt management, IVA, trust deeds, Bankrupcy, consolidation loans etc. etc. and many of these solutions will take you on the road to you being debt free sometimes in as little as five years.
By seeking debt advice and coming to an debt arrangement that is legal all your assets will be safe, such as your property and cars and if you have a debt company to look after your affairs they will look after your creditors and they will not hassle you any more.
To be able to enter into a debt plan, the debt company will take a look at all your household income and then look at your expenditure every month and if you are putting out more than you are earning then a debt plan is for you.
A lot of people have debts but maybe are not eligible for a debt plan as they have the income to support their debt repayments every month. However there are still a debt solution available to you which is by consolidating all your debts into one low monthly payment at a much better interest rate than you are paying just now. This can be a massive saving especially if you have balances on high interest credit card payments. You could save a fortune every month.
There are of course companies which offer free debt advice and this is of course the best solution for you. The company will take a look at all your outstanding debt and look at your affordability and [...]