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Debt Solutions . . .
At times it may seem like there is no way to get out of debt. That
the bills will keep coming and the credit card debt continue to mount.
But there is a way out.
And whatever your situation, however bad things seem to be, we can
design a solution tailor-made to your needs. A solution which not
only takes care of your immediate problems but provides a long term
programme to help you regain control of your life.
Whilst any solution is designed to meet your specific requirements,
it will fall into one of four categories:
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Consolidation Loans
This sort of loan is used to consolidate your existing debts into one
single new loan, with lower monthly payments. The payments being
lower for two main reasons:
(a) The loan is spread over a longer period of time than your
existing debts
(b) The interest rate being charged is less than the average rate on
your current debts.
Whilst this is not the answer for many people, it can be a useful
tool during a period of low interest rates, or when there is
sufficient equity built up in a property so that a second mortgage or
remortgage can be arranged.
Consolidation loans should be avoided by serial consolidators,
those who repeatedly consolidate ever larger amounts of debt usually
including previous consolidation loans.
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Debt Management
For those who do not wish to refinance their existing debts, the
alternative is to approach the creditors in hope of reducing the
monthly payments. This is most effectively achieved through the use
of professional debt managers.
A financial statement will be taken to discover what money you can
afford to pay your creditors after living costs and overheads are
paid for. This surplus is then divided amongst your creditors on a
pro-rata basis and offered as part of an informal arrangement.
Because debt management arrangements are informal they can be
cancelled by any one of your creditors at any time. Whilst this is a
risk, using the services of a reputable debt manager will bring
gravitas to your case and ensure that any arrangements are more
rigidly observed. Additionally, reputable creditors know that should
circumstances deteriorate to the point that a County Court Judgement
or an Individual Voluntary Arrangement is issued, the court would not
look too kindly on creditors who had exacerbated the debtor's problems.
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Individual
Voluntary Arrangements
This is the formal alternative to using a debt management company. A
financial statement is produced and a surplus which can be paid to
your creditors is calculated.
To get an IVA in place, 75% of the creditors need to agree to the
terms and conditions of the arrangement. Get their agreement and the
arrangement is set in stone, an improvement over the informality of a
debt management plan. In addition interest charges will be stopped
and a proportion of the overall debt may be written off.
But there is a downside. The process of getting an IVA in place can
take two to three months and there are large administration fees,
which can run to a two or three thousand pounds. Additionally, it is
primarily useful for unsecured debt only and given the fees that can
be charged, only practical where debts exceed £15,000 or so.
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Bankruptcy
The most extreme option available but one that should be considered,
particularly if things are really bad. In certain circumstances it
can be the best option. But once you are declared bankrupt you are
likely to be locked into it for many years. The long-term
ramifications of which include: being unable to access credit, be in
certain types of business or open a bank current account.
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