Debt Clear Direct

What Debt Help is Available?

‘Debt help’ can mean many different things – a debt specialist may be able to suggest various ways you could tackle your debt problems. If you are looking for debt help, it is important that you understand your options before you decide what action to take.

Debt advice

This could be all you need to help you get your finances under control. Various organisations offer free debt advice, such as help with budgeting, or information about which debts are priority and which are non-priority.

When you contact a professional debt adviser, they should be able to offer you advice on where you can improve your financial situation now, and how you could keep it under control in the future.

They may also offer advice on whether a debt solution could help, and if so, which one may be best for you.

Debt management plan

A debt management plan might be suitable for you if you cannot make the agreed repayments towards your unsecured debts. Debt management involves negotiating with your unsecured creditors, asking them to accept lower monthly payments, based on your current disposable income (income minus essential expenditure).

You can ask a debt management organisation to act on your behalf, or do the negotiations by yourself.

Debt management plans can be flexible, which means that if your financial circumstances deteriorate and you start finding payments difficult to make, then you or your debt adviser may be able to re-assess your situation and negotiate with your creditors again, asking them to accept lower monthly repayments.

However, creditors are not legally obliged to accept any changes to the original repayment plan – nor are they legally obliged to stick with them if they do.

Plus, when you enter a debt management plan, you are defaulting on an original agreement. This will be shown on your credit rating for 6 years, which could affect the cost/availability of credit for that time.

Be aware that you will be paying your debt off for longer if you reduce your monthly repayments. It may also mean you end up repaying more than you originally expected – this is due to the interest added to your debt each month.

Debt consolidation

If you would like to turn multiple debts into one manageable debt, then debt consolidation may be right for you.

It works by taking out one loan which will pay off the money you owe to your existing creditors. This means that you will now have one monthly payment to make instead of several.

A debt consolidation loan can also let you reduce your monthly payments by repaying the loan more slowly than you would otherwise have repaid your debts. However, this may mean you end up paying more overall due to the interest.

Note: Debt consolidation loans would not be suitable for people who don’t think they can commit to making the loan repayments as well as keeping up with their other commitments.

IVAs (Individual Voluntary Arrangements)

An IVA is a formal agreement between borrowers and their creditors. They are designed to give the borrower an affordable way out of debt, and are often seen as a preferable alternative to bankruptcy.

An IVA may be suitable for you if:

1. Your unsecured debts total around 15,000 or more.

2. You don’t think you can repay your debts in a reasonable amount of time.

3. You want to avoid the risks of bankruptcy, such as losing your home.

The IVA must be accepted by 75% of your creditors (by debt value – creditors who collectively ‘own’ 75% or more of your debt), before it can go ahead. If it is accepted, the agreement will last (in most cases) for 5 years. Once the IVA has ended, any remaining unsecured debt will be written off.

If you can commit to regular fixed monthly payments, then your creditors will allow you to make lower monthly payments, based on what you can actually afford. When entering an IVA, all interest charges are frozen, which means you will know exactly how much you will repay (as no interest is added each month).

However, IVAs also have their drawbacks. For example, it will remain on your credit report for one year after completion, which may make further credit difficult/more expensive to obtain. Plus, if you are a homeowner, you may be required to release some of the equity you own in the 54th month of the agreement. This is so you can repay more of your debt.

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• What to do to get proper debt help?

by kittykatfish…stinking imac!

The rights and wrongs of debt help

Debt can be stressful for anyone, and figuring out where to go or who to talk to can often be difficult.

Getting the ‘wrong kind’ of debt help could mean you stay in debt, or may even make your debts worse, while the right debt help – from the right debt adviser – can help you get out of debt in a realistic and affordable manner.

‘The wrong debt help’
Some people with debts will look into debt consolidation loans – new loans that are used to repay their existing unsecured debts in one go, leaving them to repay the loan at a rate they’re sure they can afford.

This can, in many cases, be a good idea, but it is crucial that you avoid ‘loan sharks’ – they are unlicensed lenders and by definition operate on the wrong side of the law (it is illegal to lend money without a Consumer Credit Licence).

So, if you are thinking about consolidating your debts with a debt consolidation loan, you should speak to a professional debt adviser.

‘The wrong debt advice’
Your family and friends may be there for you during stressful times, but the way they tackled their debts may not be the right way for you to tackle yours.

You should contact a professional debt adviser to make sure you get personalised advice – advice that really takes your personal circumstances into account.

‘The wrong debt solution’
Debt solutions are designed to help people improve their financial situation and get out of debt. However, there are several different debt solutions, and they will suit people in different financial situations. For example:

A tenant with 40,000 of unsecured debt may be advised to look into bankruptcy. However
A homeowner with the same amount of unsecured debt may be advised to look into an IVA (Individual Voluntary Arrangement). Whereas
An individual with around 6,000 of unsecured debts may be advised to look into a debt management plan.

Please bear in mind that whether they’re a tenant or a homeowner isn’t the sole factor to be taken into consideration when someone is looking for a debt solution – and nor is the actual amount of debt they have taken on. It is also a question of commitments, age, job security and income, amongst other things.

Speaking to a professional debt adviser is vital before you make any financial decisions – regardless of how much debt you actually have. You may find that all you need is a bit of help managing your debts, or you may be advised to look into a specific debt solution. Whether it’s a debt management plan, an IVA (Individual Voluntary Arrangement) or a debt consolidation loan, a professional debt adviser should be able to point you towards the most suitable solution for you.

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• What debt help is available?
• Debt Advice Birmingham – Debt Help For The Birmingham Area
• The importance of debt consolidation and debt consolidation loans
• I Need Advice And Debt Help – Advice On How To Deal With Debt Help Companies

by Hamed Saber

What debt help is available?

There are several different types of debt help available to people struggling with their finances. If you are in debt, the choice can be confusing or even intimidating, so it’s important to understand each option before making any firm decisions.

Debt advice

A little debt advice may be all you need to get your finances back on track, and many organisations will offer free debt advice – budgeting tips, for example, or help negotiating with creditors.

When you speak to a professional debt adviser, they should be able to suggest ways you can improve your financial situation now and look after it in the future. They should also be able to advise you on whether or not you require a specific debt solution, and if you do, which one may be most suitable for you.

Debt management

Debt management may be suitable for you if you can’t make the agreed repayments to your unsecured debts. It involves talking to your unsecured lenders, asking them to accept lower monthly payments based on what you can afford after your essential expenses (mortgage/rent payments, utility bills, etc.) have been covered.

Some people will negotiate with their lenders by themselves, while others will ask a debt management organisation to do it on their behalf.

By reducing the cost of payments to your unsecured debts, debt management should also mean you’re able to stay on top of payments to your essential expenses every month.

Please bear in mind, though, that creditors aren’t obliged to accept any changes to the existing repayment plan.

It is important to note that by reducing the amount you pay each month, you will be paying your debt off for longer. This could result in you paying more overall, due to the interest added to your debt on a monthly basis. However, lenders may agree to a freeze or reduction in interest.

By repaying your debts more slowly, you will be defaulting on your original repayment agreements. This can be recorded on your credit report, which could affect the cost and/or availability of credit for 6 years. Bear in mind, though, that this may happen anyway if you can’t keep up with the payments you originally agreed to.

There are several different types of debt help available to people struggling with their finances. If you are in debt, the choice can be confusing or even intimidating, so it’s important to understand each option before making any firm decisions.

Debt advice

A little debt advice may be all you need to get your finances back on track, and many organisations will offer free debt advice – budgeting tips, for example, or help negotiating with creditors.

When you speak to a professional debt adviser, they should be able to suggest ways you can improve your financial situation now and look after it in the future. They should also be able to advise you on whether or not you require a specific debt solution, and if you do, which one may be most suitable for you.

Debt management

Debt management may be suitable for you if you can’t make the agreed repayments to your unsecured debts. It involves talking to your unsecured lenders, asking them to accept lower monthly payments based on what you can afford after your essential expenses (mortgage/rent payments, utility bills, etc.) have been covered.

Some people will negotiate with their lenders by themselves, while others will ask a debt management organisation to do it on their behalf.

By reducing the cost of payments to your unsecured debts, debt management should also mean you’re able to stay on top of payments to your essential expenses every month.

Please bear in mind, though, that creditors aren’t obliged to accept any changes to the existing repayment plan.

It is important to note that by reducing the amount you pay each month, you will be paying your debt off for longer. This could result in you paying more overall, due to the interest added to your debt on a monthly basis. However, lenders may agree to a freeze or reduction in interest.

By repaying your debts more slowly, you will be defaulting on your original repayment agreements. This can be recorded on your credit report, which could affect the cost and/or availability of credit for 6 years. Bear in mind, though, that this may happen anyway if you can’t keep up with the payments you originally agreed to.

Related Posts:

• What Debt Help is Available?
• The rights and wrongs of debt help
• What to do to get proper debt help?
• Avail debt help and tidy up your debts
• When should I seek debt help?