Debt Clear Direct

by Northern Ireland Executive

Help With Debt
If you are unfortunate enough to be in debt then you are not alone and help with debt problems are available. The most common form of solution is called an IVA. It’s a financial term and stands for Individual Voluntary Arrangement. It’s a contractual agreement between you and your creditors where you both come to an arrangement to the people or company you owe money to. The idea behind an IVA is to make payments towards your debt so that a percentage of your final debt is paid off while protecting you from being charged further interest or charges on the debt.
An IVA repayment plan lasts for is around 5 years although this amount of time can be reduced to a shorter period if you are able to pay off a lump sum, preferably not gained from another means of credit otherwise you’ll end up back where you started.

As an IVA is an official, legal building document, it has to be set up and overseen by a legally licensed professional body.

Typical questioned asked about IVA’s include:

What are the criteria for getting an IVA? You have to be a resident of England, Wales or Northern Ireland with debts totalling over fifteen thousand pounds. Scotland is slightly different as it has a Standard Trust Deed, which is the Scottish alternative.

How much does it cost? It costs you a percentage of the debt you owe via monthly payments. The amount you pay is worked out by The Insolvency Practitioner who will work with you to decide what you can afford to pay each month. The payments will vary depending on your financial situation and how much you can afford after your vital monthly outgoings have been paid (like rent, bills etc). It’s not quite as plain sailing as that, creditors will rarely settle for any total amount offered that isn’t at least 20-25% of the original debt sum.

Do my creditors have to agree to such a payment plan? 75% of your creditors have to vote in your favour to be able to let you enter into an IVA.

Does an IVA affect my future credit? Under the agreement of an IVA you won’t be able to take any credit out for its duration and a year after the final payment is made.

What happens when I’ve completed my payment plan? You’ll get sent a Statement of Completion within 3 months of the final payment.

What if I don’t make the agreed payments? Then you’ll be made bankrupt.

Would I have to change my lifestyle if I entered into an IVA ? There are specific guidelines to ensure that you have a reasonable standard of living. Expenses such as social life, cable TV, drinking, smoking are all viewed as non-essential luxury items. As a result you need to make sure you document all of your essential living expenses when you apply.

Can I pay off my IVA before the agreed time period is up? If you win the lottery or receive a windfall of money then you’ll be able to pay off your creditors earlier than they anticipated.

Why would I fail An IVA? If you don’t keep up your agreed monthly repayments, or if you lose your job will both affect your chances of getting an IVA.

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by Travis S.

How Do I Know If I Have A Debt Problem?

Nowadays, most people have some form of debt, whether it is a mortgage, a credit card, a loan or an overdraft. But the big question is, when does your debt become a problem?

If you find balancing your monthly outgoings a struggle, or you have more money going out than coming in, your debts may have become a problem.

The first step is admitting your debts have become an issue and facing up to the fact that you need to tackle the problem. This is the hardest part of talking control over your finances, but by far the best decision you will ever make. Now is the time to take action, because the longer you wait, the worse the problem will become. Here are some points to consider when deciding whether you have a problem that needs addressing.

- You only ever pay the minimum amount on your credit cards

Minimum repayments offers may look attractive, but they are specifically designed so that you pay off the debt for longer, and end up paying more in interest.

You should always pay as much as you can afford.

- Youre borrowing more to pay off your debts

Borrowing more money to pay off existing debts is very dangerous. The more money you borrow, the easier it seems to be to manage your finances, but it is easy to forget that you will need to pay the money back in future and this could lead to extreme difficulty and even bankruptcy.

- You use your credit card to pay for everyday items

If you use your credit card to pay for food or utilities, you need to cut back and put a budget plan in place. Constant spending on credit cards results in huge amounts of interest being accrued that you will struggle to pay off for years if you cannot clear the full balance on your credit cards each month.

- You find it hard to talk about your situation

If you are embarrassed about your debts, to the point where you find yourself lying to friends and family about how much you earn, spend or how much debt you have, this indicates a denial problem. This can escalate to the point where you are too afraid to read your own bill statements or are afraid to answer the telephone. You must take action now before the situation becomes out of control.

- You have been rejected for credit

This is likely to be because you have damaged your credit rating. This can happen by making payments late, missing payments or you may be rejected because you have too much outstanding credit. If you already have credit cards or loans, or even owe money to a few catalogues, it is wise not to seek out more credit, unless you know you can pay it back.

- You are constantly worried about your finances

New research by talkaboutdebt has revealed that 61% of people in serious debt have seen their health affected by their worries, and 29% have taken up to six months off work due to stress caused by debt. If your finances ever affect your health, your happiness or your career, you need to seek help immediately.

Sterling Green, debt Management Company based in Manchester, has thousands of satisfied clients and helps hundreds of people every day to tackle their debts. The main thing you need to remember is that you are not alone. We have qualified financial advisers who will share their expertise and lend a sympathetic ear whenever you need it.

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by marsmet462

How Do I Know If I Have A Debt Problem?
Nowadays, most people have some form of debt, whether it is a mortgage, a credit card, a loan or an overdraft. But the big question is, when does your debt become a problem?

If you find balancing your monthly outgoings a struggle, or you have more money going out than coming in, your debts may have become a problem.

The first step is admitting your debts have become an issue and facing up to the fact that you need to tackle the problem. This is the hardest part of talking control over your finances, but by far the best decision you will ever make. Now is the time to take action, because the longer you wait, the worse the problem will become. Here are some points to consider when deciding whether you have a problem that needs addressing.

- You only ever pay the minimum amount on your credit cards

Minimum repayments offers may look attractive, but they are specifically designed so that you pay off the debt for longer, and end up paying more in interest. You should always pay as much as you can afford.

- You’re borrowing more to pay off your debts

Borrowing more money to pay off existing debts is very dangerous. The more money you borrow, the easier it seems to be to manage your finances, but it is easy to forget that you will need to pay the money back in future and this could lead to extreme difficulty and even bankruptcy.

- You use your credit card to pay for everyday items

If you use your credit card to pay for food or utilities, you need to cut back and put a budget plan in place. Constant spending on credit cards results in huge amounts of interest being accrued that you will struggle to pay off for years if you cannot clear the full balance on your credit cards each month.

- You find it hard to talk about your situation

If you are embarrassed about your debts, to the point where you find yourself lying to friends and family about how much you earn, spend or how much debt you have, this indicates a denial problem. This can escalate to the point where you are too afraid to read your own bill statements or are afraid to answer the telephone. You must take action now before the situation becomes out of control.

- You have been rejected for credit

This is likely to be because you have damaged your credit rating. This can happen by making payments late, missing payments or you may be rejected because you have too much outstanding credit. If you already have credit cards or loans, or even owe money to a few catalogues, it is wise not to seek out more credit, unless you know you can pay it back.

- You are constantly worried about your finances

New research by talkaboutdebt has revealed that 61% of people in serious debt have seen their health affected by their worries, and 29% have taken up to six months off work due to stress caused by debt. If your finances ever affect your health, your happiness or your career, you need to seek help immediately.

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Being in debt with a number of creditors can be a stressful situation. Not only do you have the inconvenience of having to make several payments every month, it can become a balancing act if your payments become unaffordable trying to pay off the most important debts first.

Of course, when youre in debt, its important that you pay them all back. Thankfully, there are a number of debt solutions that can make that an easier task.

Here we take a look at the advantages and disadvantages of two debt solutions well-suited to dealing with multiple debts: debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Debt consolidation loan
A debt consolidation loan is essentially a new loan used to repay your existing debts. This means that instead of repaying a number of creditors, you will make a convenient single payment each month.

Many people take out debt consolidation loans to lower their monthly outgoings, and this can work for two reasons. Firstly, it potentially reduces the amount of interest you pay (especially if you are consolidating high APR debts, such as credit cards).

Secondly, repayments can be spread over a longer period of time, meaning you pay less each month although this will mean you pay more interest than if you had repaid the debt consolidation loan in a shorter period of time.

Debt consolidation loans can even be used for smaller debts some people simply prefer the convenience of a single monthly payment.

BEST FOR: People with multiple debts who do think they will be able to pay them back within a reasonable period of time. Also, people who just want to simplify their finances.

IVA (Individual Voluntary Arrangement)
An IVA (Individual Voluntary Arrangement) is typically for people with over 15,000 of debt who do not think they are able to repay the full amount.

Your IVA is a legally-binding agreement, usually taking place over the course of five years, in which you will agree to make monthly payments based on how much you can afford. Once the terms have finished, your remaining debt will be considered written off.

Because creditors do not receive the full amount they are owed, an IVA must be formally approved. Creditors accounting for at least 75% of your overall debt must approve the proposal for your IVA to go ahead. If this happens, even those who voted against the IVA must accept the terms.

BEST FOR: People with over 15,000 of debt who do not think they will be able to pay it back within a reasonable time period. IVAs are usually considered a preferable alternative to bankruptcy.

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Why has debt consolidation become such a common phrase nowadays? Unfortunately, the answers straightforward its because debt has become a way of life for so many. Its a sorry reality for even the youngest adults in our society, as illustrated in a recent publication from Rainer, the national charity for under-supported young people.

Published in May 2008, the report looks at credit, debt and other financial issues confronting todays youngsters. It picks apart some of these challenges and, drawing on the direct experience of the young people facing them, sets out the action required to overcome them.

Unavoidable route into debt
Joyce Moseley, Rainers Chief Executive, talks of the often unavoidable route into debt. On Rainers behalf, research and consulting organisation YouGov found that 90% of the young people questioned were in debt by the age of 21. One in five 18-24 year-olds had already found themselves more than 10,000 in debt.

As they start their adult lives, most young people find themselves with very little disposable income anyway, so once debt repayments start taking a slice, its all too easy for their finances to deteriorate rapidly. This goes a long way towards explaining the popularity of debt consolidation loans among young people

Consolidation a route out of debt
For many young borrowers, the most important benefit of debt consolidation is simply a reduction of monthly outgoings. Replacing multiple debts with a single consolidation loan gives them a chance to arrange affordable repayment terms. This can mean the debt will take longer to pay off and possibly cost more in the long run but cost less each month.

At the same time, a consolidation loan may well come with a lower interest rate than the debts theyre paying off, especially if theyre high-interest debts from (for example) credit cards, store cards and overdrafts.

Consolidating debt also makes it simpler to manage. Remembering one payment per month is much easier than remembering five. Lenders often issue penalty charges for late / missed payments, so a consolidation loan can actually help people keep their debts from growing.

Consolidation do it the right way
However, there are risks involved with debt consolidation. When someone pays off their debts (overdraft, credit / store cards, etc.), they have to be careful they dont let these debts start growing again. In fact, its often a good idea to cancel cards and overdraft facilities, since its all too easy to borrow a bit here and a bit there until theyre in a worse situation than they were before they consolidated their debts theyll have to make payments to the consolidation loan every month as well as to the new debts theyve run up!

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