Debt Advice

It’s important to get professional debt advice when you are struggling with debt problems. Which is going to be the best solution is going to depend on your situation but if you are considering bankruptcy then there is usually a better alternative. We’ll go through some of the options now.

Debt Management

As long as you can still manage to pay a reasonably large amount towards your debt, then a debt management plan is something that you may be able to receive debt advice on.

Once you know how much you can afford to pay in a month, there are debt advisers who will be able to negotiate with your creditors so that you don’t have to pay any more than that. It’s also common to get any charges or interest rates on the debt reduced or frozen. If it’s agreed, then you just send the money to this third party, and they distribute it to your creditors on your behalf.

However this is something you can attempt to do for yourself if you prefer, in which case it is called an Informal Arrangement. In either case though, you or your creditors can pull out of it as it is only a voluntary agreement so they are not bound to it. It does mean that you are able to avoid being declared insolvent though.

IVAs

When you’re after something more formal, or not all of your creditors will agree to receiving a reduced amount every month, then you can go for an IVA instead. There are a couple of conditions that have to be met in order to qualify though, including that you have at lease 200 of disposable income available a month and that you owe at least 15,000 in unsecured debt.

With an IVA, it’s only necessary for 75% of your creditors to agree to the arrangement in order for all of them to be bound to it. As with the debt management plan, you’ll only have to make one payment towards it every month, and a third party then distributes the agreed amount to all of your creditors.

This is a form of insolvency, meaning that for the 5 years in which it is in effect you will not be able to take out any other lines of credit. However that is probably a good thing so that you do not exacerbate your problems. Also, after the 5 years is up, any outstanding debt will be written off.

DROs

One of the best debt solutions are DROs or Debt Relief Orders. There are some pretty tight conditions to be met in order to qualify for one though. You can’t own your own home, you can’t have more than 50 of disposable income left over in a month, and you can’t owe more than 15,000.

What happens when an order of this sort is granted is that all of your unsecured debt is immediately frozen. That includes any interest rates and charges. It remains so for a year, and when the year is up if you still can’t afford to pay then most forms of unsecured debt will be written off at that point.

This is often a good alternative if you are thinking about going bankrupt. It has many advantages, including that you won’t be forced to sell your assets and that it is cheaper. However, you won’t be able to occupy certain job positions.

Declaring Yourself Bankrupt

Bankruptcy should be treated as a last resort, any expert that you ask for debt advice will tell you this. It has many negative consequences, although your debt will be written off immediately.

One of the major problems with this is that your home is going to be at risk, you will probably be asked to sell it in order to pay off as much debt as possible. The same goes for other assets. You will be left with enough to survive on however. Certain jobs will also be affected by this, if you work in a financial institution or you are a member of a professional body.

If you want some more ideas regarding how to make use of advice on debt, visit the website where Carson James often is found writing at: http://www.debtadvice.net.