Don’t Struggle Alone – Get Debt Help
Trying to repay problem debts can be a daunting task. More people than you may think face the dilemma of how they can afford all of their commitments each month – and many people are left wondering how they are ever going to get out of the situation.
That’s why debt help is so important. An expert debt adviser can offer guidance on how to improve your situation – whether it’s simple advice, or a more specific debt solution.
How a debt adviser can help
When you first call a debt adviser, they will discuss your situation in confidence in order to establish the best course of action for your circumstances. It may be that a few words of advice are enough to help; it may be that you simply need a bit of help with budgeting and getting your finances in order; or, if your circumstances are a little more serious, you may benefit from a more specific debt solution.
There are a number of debt solutions available to suit a range of financial circumstances – and choosing the right one could make it much easier for you to repay your debts.
Debt consolidation loan
A debt consolidation loan allows you to ‘consolidate’ several debts into one with a new loan, which can make managing your finances more simple.
You will repay your debt consolidation loan to your new lender in single monthly instalments. It’s often possible to reduce your monthly outgoings by spreading repayments out over a longer period than your original debts – but be aware that this could also mean paying interest for longer, and therefore paying more than if you had chosen a shorter repayment period.
However, you could still save money on interest overall if the APR on your original debt is higher than that on your debt consolidation loan. And even if you don’t save money, some people are happy to pay a little more overall if it means lower and more manageable monthly payments.
Debt management plan
A debt management plan is an agreement between you and your creditors for lower monthly payments, based on how much you can afford each month.
IVA (Individual Voluntary Arrangement)
An IVA is an alternative to bankruptcy in which you agree to repay a set percentage of your debts to your lenders, based on how much you can afford on a monthly basis, and the remaining debt is written off. It is typically only used for more serious levels of debt.
You will work with an Insolvency Practitioner to put together an IVA proposal, which will then be sent to your creditors. This must be approved by creditors accounting for 75% of your total debt for the IVA to go ahead.
If the proposal is approved, you will begin making regular monthly payments to your Insolvency Practitioner, who will divide the money amongst your creditors. On successful completion of the IVA (usually after five years), your remaining debt will be written off.
