If you are starting to find it difficult to manage the mortgage repayments, day-to-day bills, or similar financial obligations, you will certainly find there are a wide range of options available to help with clearing debt problems. In order to make the most beneficial decision in relation to clearing debt, a visit to an independent expert is likely to be highly desirable.
Here are some of the options available for those wishing to clear outstanding debt:
Overview of the debt options
Once you start searching the possible debt solutions you will soon noticed that there are a lot of choices in the marketplace. The most practical for you is a likely to vary considerably based on the personal circumstances and the total debt that is outstanding. In the process of looking at the available options, you will likely come across the debt management plan (DMP), administration order, individual voluntary agreement (IVA), debt relief order, and bankruptcy.
If you are able to get in a position of being able to reach agreement with the creditors due the outstanding debt, you will find that it will be much easier to continue to make the repayments in the future. A significant benefit of being able to sign up to the right debt solution is that it is possible to freeze charges and interest rates, so that you are only left with paying back the initial balance on the debt.
Additionally, you might find that some companies or organisations are able to agree a restructuring of the debt, so in future the payback period is longer and you are able to make smaller monthly payments. By making contact with each of the individual creditors you might be able to find out what options are available to you.
Debt Management Plan
A debt management plan is likely to be highly beneficial for those that have several unsecured or non-priority debts and wish to come to a more favourable agreement for making the repayments. An agreement with the creditors will relate to the timeframe and repayments amounts that are expected to be made for the foreseeable future. And rather than making multiple payments to the individual creditors, you will just make the single payment to the organisation that arranged the DMP on your behalf.
Since a lot more people are starting to experience difficulties with making timely payments on their bills, a lot of companies have appeared in recent years claiming offering help in these debt related situations. You therefore want to make certain that you are able to make contact with one of the recognised debt counselling charities or established companies that are able to offer a high quality service.
Individual Voluntary Arrangement (IVA)
If you sign up for an individual voluntary agreement you will have a legal agreement with the creditors in relation to the outstanding balance due on the loans or credit. Once the IVA is in place you will find that the debts are frozen and no further charges or interest can be included, and you given a period of five years in order to make the repayments. If after a period of five years there is any outstanding balance on the debt, that amount is written off.
An IVA can be highly beneficial to those that are into debt by £15,000 or more. In most situations you’ll find that the minimal repayments each month amounted to at least £200, and you will be paying at least 20 pence for each £1 that is due on the debt.
In order to arrange the individual voluntary agreement it will be necessary to use an insolvency practitioner who is a qualified professional and able to offer the necessary help to negotiate the repayment terms with the various different creditors.
It is possible to use the IVA for a great number of different debts, which might relate to tax repayments, council tax arrears, mortgage shortfalls, catalogue purchases, store and credit cards, personal loans, and overdrafts. Also, you will find that certain debts can’t feature as part of the IVA, such as those that are secured against the home, child support, the student loans, and magistrate’s court fines.
Alternative options for debt relief
If you are in a very difficult situation with debt, you might have to look at the more difficult options that are likely to include the debt relief orders and bankruptcy. Prior to considering something like filing for bankruptcy, you really want to make certain that you have covered all other possibilities in an attempt to pay off debts. A bankruptcy petition is likely to be necessary in those situations where there is really no likelihood of being able to pay off the debts in the future. It isn’t likely to be an advisable to make this type of decision alone, and you should get debt guidance from a charity or organisation that is able to specialise in debt problems.