End of the recession – are you in debt?
As the UK economy exits recession… the question looms – are you in debt?
If you are, you may be wondering how you could deal with it. Here, we will take a look at just a few of the ways you could tackle your debt and get rid of it!
Seek professional debt advice
The first thing you could do is seek professional debt advice. A professional debt adviser should be able to ’sit down’ with you (whether face-to-face or over the phone) and discuss your situation – establishing what they believe to be the problem.
They may simply offer you a few tips on how to manage your finances more effectively (how you could improve your budgeting skills, for example), or they may provide you with guidance on how to negotiate with your creditors.
On the other hand, though, they may recommend that you enter a specific debt solution.
Enter a debt solution
Debt solutions are designed to help people in different situations, with different levels of debt. There are several debt solutions available, including debt consolidation loans and debt management plans, but here, we will take a brief look at IVAs (Individual Voluntary Arrangements).
An IVA is a form of insolvency. It is a legally binding agreement between you and your unsecured creditors and may only be suitable for you if you are struggling with an unmanageable level of debt that you can’t afford to repay within a realistic amount of time, but that you can commit to making regular reduced payments towards.
The payments you make on an IVA will usually last for five years, and if you can make all these payments, your creditors will write off the portion of the debt you can’t afford to repay – once the IVA has come to a successful conclusion. Note that an IVA will damage your credit rating.
If you are a homeowner, and you enter an IVA, you may be required to release some of the equity in your property during the final year of the agreement. This money will be used to repay more of your debt.