Debt Help and options for getting out of Debt

Help with getting out of Debt
Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

The type and the amount of debt you have can affect which is the best choice of debt solution for you. In England there are a number of different ways to start taking on your debt problems. These solutions are discussed below and further information is provided on where to get debt help.

Debt what are some of the main options?

Each method of debt resolution has it’s own advantages and disadvantages and the most suitable solution depends on your own personal situation. It is always advisable to talk through which option is best for you with a qualified professional. The Debt Help Page is one such place where you can find debt charities and organisations so you can talk to someone about your debts and find the most appropriate solution.

When you enter into a solution for your debts you will damage your credit rating, which could be a problem further down the line. However the chances are that your credit rating is already damaged unless you have managed to maintain all your repayments.

Below are three of the most common debt solutions. There are others that are less common but when you seek further advice about your debts, if these are more suitable then it is likely they will be recommended.

Bankruptcy

You may have already heard about this type of debt solution. However Bankruptcy is not something to consider without serious thought about the consequences of it.  Your credit rating will be damaged for a number of years. Your job may also be affected if you work as a Solicitor, a trustee of a charity or a role regulated by the Financial Services Authority. You could also lose your home or other assets to help repay your debts.

Bankruptcy is usually appropriate for someone with a lot of debt who has little assets and no way of repaying their debt for the foreseeable future.

IVA – Individual Voluntary Arrangement

Another common form of debt solution is an IVA. An IVA is a formal agreement between your creditors and you. An IVA will typically last between five and six years after which you are normally debt free.

An IVA is more appropriate for someone who is unable to make their contracted payments but is able to make a smaller payment after paying other expenses

DMP – Debt Management Plan

A Debt Management Plan is another way to manage your debts. You pay one monthly payment to the company or organisation acting on your behalf and they disperse the repayment fairly amongst your creditors. As a DMP is an informal solution it does mean that a creditor can still add interest and charges. This means you could end up repaying your debts for a very long time.

A DMP is usually suitable for someone who has a good amount of income left after other expenses and can clear what is owed in a reasonable amount of time.

Who can you talk to about Debt?

The Debt Charities are a good place to start as they will act in your best interests. Please visit the Debt Help page to find a list of organisations who can help you.

Comments

  1. says

    Good overviews Rob. We have a debt management plan and it’s working ok for us although we’d like to get it paid off sooner than the term of the agreement! Quick question on IVA’s as I always get confused on this. Is it true that if you own a mortgaged property, should the value of it rise, the creditors can take equity out of the property in order to clear the debt? Can they force you to sell your house?

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