Debt Management & Debt Consolidation Loans
Are you overwhelmed by your debt problems? Are constant reminder letters and persistent phone calls getting you down?
If so then you're not alone.
In the present financial climate increasing numbers of people are getting into debt. This could be for all sorts of reasons - maybe you have lost your job, are facing rising household bills or perhaps there has been a bereavement in the family? It may not always be your fault that you have ended up in debt - sometimes it's just bad luck!
If you have found yourself in this situation, there's no need to feel ashamed; it can happen to anyone, and there is help available. Debt Management companies can help you to find a debt management solution that is appropriate to your individual circumstances, and will also be able to give you advice regarding your debt problems.
The range of solutions include: debt management plans, debt consolidation loans, debt advice, or IVA's. In some circumstances the best solution is bankruptcy, but this is usually a last resort when none of the other options are suitable.
Debt Management Companies
These are suitable for non-priority debts such as credit cards, unsecured loans and catalogue bills. They are usually appropriate if your debts are in excess of £5000 and you can afford to pay at least £100 a month off your non-priority debts. With a Debt Management Plan your partner needn't find out about your debt problems as the Debt Management Company will deal with all creditors' letters and phone calls.
Debt Management Plans differ from Individual Voluntary Arrangements (IVA's) because they are not a legally binding agreement whereas an IVA is. With a Debt Management Plan, your Debt Management Company will come to an arrangement with your creditors to accept an affordable monthly amount in repayment of your debts, and will administer the scheme.
Individual Voluntary Arrangements (IVAs)
An IVA is a legally binding agreement which has to be administered by a licensed insolvency practitioner who will usually be an accountant or a solicitor. With an IVA a creditors meeting will be held in which the majority of your creditors will have to agree to the IVA before it can go ahead.
IVA's do have advantages in that a percentage of your debt can be written off if your creditors agree, so that you will only have to pay the remaining affordable balance, and you will be free of debt at the end of the term of the IVA. Another advantage is that a creditor cannot take enforcement action against you for settlement of the debt once he has agreed to the terms of the IVA. However, if you default on the payments agreed under the IVA, your creditors can make you bankrupt.
Debt Consolidation Loans
A consolidation loan is used to pay off your existing debts so that you pay one affordable monthly amount instead. This gives you the advantage of being able to deal with only one company and the interest charged is often lower than what you may currently be paying on credit cards, store cards, loans and other debts.
You can shop around for a debt consolidation loan by comparing the annual percentage rate (APR) of interest, and any penalties for switching to this debt loan.
Bankruptcy is usually a last resort; a Debt Management Company will explore other options for you before considering bankruptcy.
The type of solution offered could depend on your total level of debt, or how much income you have in relation to your expenditure. An experienced debt advisor will be able to help you decide the right course of action for you. You can contact a debt management company for free advice without any obligation.