When Debt Spirals Out of Control
Debts can be burdensome and when they get out of control help is needed. There are four types of help that you can get when your debts become a problem, but first how does debt get out of control? There are several reasons such as losing a job, getting sick, or just overspending. It doesn’t matter which of these reasons has lead to the debt problem the point is help is there when you need it. The four areas of help we will discuss below are individual voluntary arrangements, debt management plans, consolidation loans, and the Citizens Advice Bureau.
Individual Voluntary Arrangements
An individual voluntary arrangement is a binding legal agreement stating that you and the creditor agree to the terms specified in the agreement. The agreement states the repayment plan that you and the creditor have devised. The plan is fair and based on the payments you believe you can make for the debt. Most often with an individual voluntary arrangement the creditor is going to freeze or reduce the interest on the debt. In some cases they may also allow the amount of debt you owe to be reduced.
The idea of an individual voluntary arrangement is to keep you from filing bankruptcy which could further hurt your credit abilities for the future. It is also beneficial to the creditor as they see some payment rather than none at all. The documents drafted for the arrangements are usually signed by a court official such as a notary to make it a binding contract. The negotiations for the agreement are normally made through a debt management company and the creditor, rather than you as the debtor talking directly with the company. This allows for better bargaining power on your behalf. Once the terms are set you must stick with the contract.
Debt Management Plans
Debt management plans are something you can do on a voluntary basis. They are a budget that can be created about the debts you owe. To create a debt management plan working with a company or person in the financial sector offering advice is always a good option. You also need to be very truthful in creating a debt management plan. Every debt no matter how minor should be listed so that the budget you create will reflect the options you need to have. For example if there is a little money left over after the end of the month it can be saved or used to pay down the credit cards.
A debt management plan is going to show you how you can save. With a person helping you create a debt management plan they can suggest areas to save where you might be spending a bit much. To create the budget or debt management plan you need to list your monthly payments, total debts, income, and incidentals. This should help you with an idea of what you need to do in the future. It is also a better option than the IVA’s as a plan doesn’t harm your credit score.
Debt consolidation loans are loans in which you combine a series of debt into one loan. For example say you have two credit cards, a car loan, and a mortgage. By taking the consolidation loan option that you have you could combine these four debts into one loan and therefore have one monthly payment and one interest rate. Debt consolidation loans are either secured or unsecured. This means you either place some form of collateral on the loan or not. The unsecured consolidation loans are easier for some individuals to obtain because they don’t have savings or enough equity in their home to cover the debts. The unsecured consolidation loans are going to be higher in interest than the secured loans. The point of consolidation loans is to reduce the monthly payment or interest that you are paying on. For example you may not see a significant shift in the monthly repayments, but when the interest is reduced you are paying more towards the principle of the debt than you would normally be paying. Debt consolidation loans can help you get out of debt without incurring financial issues in the future like a bankruptcy or IVA.
Citizens Advice Bureau
Debt problems are something that we don’t usually like to face and most of all we don’t like to admit our problems to others. If you are suffering from debt issues it is okay to talk with a trained professional who can offer you advice, help you create a debt management plan, get a consolidation loan, or even help mediate for an individual voluntary arrangement. There are offices with the Citizens Advice Bureau all over the UK with individuals trained to help you with your debt problems. They are there to listen, which can also help the stress level you are currently suffering from.
http://www.citizensadvice.org.uk/ this link will get you to the online website where more detail information about the bureau is offered. If you need to know about job opportunities, getting advice or researching financial options this website will be able to help you.
There are forms available on the site to fill out so you can see where you stand financially. You can also get help with the fuel poverty action programme that is available to UK residents. The advice is available anonymously by calling the number or chatting online.
The website http://www.bis.gov.uk/insolvency is a government website designed to help you with your debt problems. They offer articles on bankruptcy, alternative options, as well as other financial information. There is plenty of information on this site that can be of use to you and your family. It doesn’t matter what situation, financially, you find yourself in. If you have issues with liquidation needs to pay off debts or if you need to know what the economy is headed for this website offers that information. Above everything else insolvency.gov.uk will help you plan for your financial future by seeking advice.