How Will I Manage My Debts?

Posted by Tom Doerr on March 28, 2010 · Leave a Comment

There are a variety of reasons why people could end up in uncontrollable debt but when you have more going out than you have coming in; it’s time to find a solution to your debt and there are several main options to choose.

If you simply have too many monthly repayments and you even find the quantity of them hard to keep on to of, you might benefit from a debt consolidation loan. The idea of borrowing even more money might sting but this kind of loan can allow you to reduce your monthly outgoings, spread your payments over a longer time and manage just one monthly repayment. Consolidating your debt won’t even affect your credit rating, as long as you keep up with your repayments, you will be seen as a responsible borrower. Depending on who you buy from, there will be interest added to your debt but unfortunately nothing is free and this is the price you will need to pay to manage your debts.

If you cannot get a consolidation loan, the next best thing is to try and get help with a Debt Management Plan. There are many financial advisers who may not charge for setting up a debt management plan, they can do all the negotiating between you and your creditors and reduce your repayments into a figure you can manage. Although they cannot freeze interest or charges, they can allow you to decide when you pay and how much you can realistically afford. Your credit rating may be affected as a debt management plan is a negotiation of repayments different to an original contract, but this is not always the case.

A Debt Management Plan is a great solution but if you have extremely large debts your only option may be an Individual Voluntary Agreement (IVA) which involves determining a debtor’s priority payments and considering their capital and income. An insolvency practitioner is required to arrange and approve an IVA and they will charge a fee. The arrangement must be approved by the creditors and can be arranged post-bankruptcy. An IVA does have benefits over bankruptcy are as your credit rating is not as damaged, you will be able to continue trading and your property will be excluded from the arrangement.

Excluding all of the above the last ditch attempt at managing your debt is to file for bankruptcy. Although bankruptcy can free you from all of your debts, it does come at a price; all of your assets will be distributed among your creditors and you will be restricted from employment in Law, Accountancy, Justice or Politics. There can be major consequences for your credit rating for many years after the annulment and you will have to obtain special permission to obtain credit over the value of 250. Despite all the drawbacks of bankruptcy it is not as bad as it sounds and if debt is taking over your life it will provide much needed relief from stress, financial burden and anxiety, and after all its only money.

If you are looking for debt consolidation help then visit TheDebtAdvisor.com for online debt help

How Will I Manage My Debts?

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