Debt Advice – The Facts

It’s a complex world, but most of us still manage to get on with it: whatever our job may be, we turn up every day and tackle the challenges that come our way.

When it comes to debt, though, it’s not so straightforward. Many people end up with serious debt problems they just don’t know how to deal with. Why is that?

• It could be because debt’s a complicated subject, full of unfamiliar terms and issues: repayment terms, APRs, early repayment penalties, and so on.
• It could be because we’re content to leave the details to the lenders. At the end of the day, it’s often tempting to assume that one set of terms and conditions is much like another – so all we want to know is ‘Can I borrow the money or not?’
• It could be because it’s just too easy to get credit – or at least it was until the credit crunch occurred. There are too many people who simply have too many debts: multiple credit cards, multiple store cards, an overdraft, a personal loan, a couple of hire purchase deals…
• It could be because we leave it too long before we look for debt advice.

In short, it’s easy to see how so many people who can cope with life’s other challenges still have a hard time coping with debt.

Is it worth getting debt advice?

If you’re in debt and you don’t know what to do about it, you should talk to someone who does know. To a professional debt adviser, debt isn’t something to think about once a month – and then try to forget about. It’s something they deal with all day, every day.

Whatever debt problems you’re facing, you’ll find that the right debt adviser has dealt with them before, and is able to give you some practical guidance on how to tackle them.

It might be something as simple as learning to make better use of your money – learning to budget effectively so you can be sure you’re not buying ‘luxury’ goods and services with money you really need to be putting towards your debt.

If your debt problems are more serious and/or you’ve already cut your non-essential spending down to a minimum, you might need to think about the various debt solutions that could help you sort your finances out.

Either way, a good way to find out what your options are is to get some professional debt advice from someone who does it all the time. In general, the sooner you do it, the sooner you’ll be able to start making some headway on your debts – put it off and you might find you’ve missed the ‘window of opportunity’ to bring your debts back under control without making any major changes to the way you live your life.

What Happens Next?

A debt expert will be able to examine your finances and propose the best solution for your situation. Common solutions include IVAs, debt consolidation loans and debt management plans. Each have their advantages and disadvantages which a debt professional will be able to inform you of.

IVA

An IVA or individual Voluntary Arrangement is legally binding and it works on the idea that you pay back as much as you can reasonably afford and then have the rest written off. The period you are likely to be paying back the debt, if agreed with your creditors will be 5 years. If both parties agree, the lender will agree not to pursue any legal actions against the borrower and write off the debt once the IVA has reached its conclusion.

Debt Management

A debt management plan involves liaising with lenders to lower monthly payments to ensure you will actually be able to afford the repayments and start paying off the debt. Depending on the type of creditor, they may also agree to freeze interest charges. By seeking debt help you will allow a professional to negotiate on your behalf. They have years of experience in dealing with lenders and will also take care of all the administrative work, phone calls and letters.

Debt Consolidation

This involves combining all of your monthly payments into one affordable monthly payment, making it easy to manage. You will also know exactly when the repayments end meaning you will know when you will become debt free.