Numerous people these days are having a problem keeping their on top of their finances, because their salary does not cover their bills. Having to borrow from Peter to repay Paul, and wondering how you will meet your repayments each and every month, not only causes financial problems but can also be damaging to you health. It is a vicious circle that is hard to recover from once you are caught up in it. The purpose of this article is to identify what choices are open to people who find themselves struggling with their finances.
Debt consolidation loans: consolidating all your debts with a consolidation loan at a lower rate can have a massive impact on your monthly outgoings. Rather than having to find the money for several different loans and credit cards each month you take out a larger loan and pay off all your outstanding debts, leaving you with one lower repayment to find every month. This not only leaves you with more cash in your bank account every month it also removes all the stress and worry that comes with it. On top of all that by choosing this solution your credit record will not be adversely affected, in fact so long as you maintain regular repayments it will help your credit score.
Debt management: when you take advantage of a debt management plan with a debt management provider, they will try to instigate a minimised payment plan with all the companies you owe money to on your behalf. They will also request that they freeze charges and any interest you are paying, although they do not have to agree if they choose not to. You will then pay one payment every month to the debt management provider and they will repay your debts at the agreed amount. This eradicates all the stress of having to talk to the lenders yourself as all contact will now be through your advisor. Most debt management companies will charge you a fee and using debt management will have an adverse effect on your credit profile.
Individual voluntary arrangement (IVA): Entering into an IVA is similar to a utilizing a debt management plan except for the fact that an IVA is a legally binding agreement and so long as you get a majority vote from your creditors they all have to accept the agreement (75% by monetary value). The agreement is drawn up and managed by an Insolvency Practitioner (IP). All interest charges will be frozen and a reduction of your debt will be negotiated, a maximum of 70% will potentially be wiped out. The agreement will normally run for 5 years and you could have to remortgage your property to settle any remaining debt on its expiry. You will be charged a fee by the IP and entering into an IVA will have an impact on your credit score.
Bankruptcy: registering as bankrupt is by far the most radical choice that you can take, and may well end up in you losing your home. It will also have a lasting impact on your credit score.
Steve Smith writes for All About Loans where visitors can apply for self employed loans and also focuses on poor credit loans , and debt consolidation loans for UK Homeowners. Visit today