Debt advice and the options available

However deep in debt you are, you'll be looking for a solution. Perhaps the right solution for you is an IVA, a Consolidation Loan, a Debt Management Plan or anther way to address your debts.

The most important thing is that you make the right decision now and avoid more financial heartache later.

Addressing debt

Being in debt can be extremely stressful and can affect your whole life. In fact, getting out of debt should be your priority.

Dealing with debt is a difficult part of life that no one ever plans to face, and for some it can become so overwhelming it seems like there is no way out. However, there is a solution for almost any debt problem, so it's important to understand what help is available if you are struggling to deal with your debts.

What are my options?

Controlling your spending is of the most important steps to plan when working out how to eradicate your debt. Get this right, and you'll be able to successfully budget to avoid overspending further, and plan what money you have available at the end of the month. Controlling your spending will also highlight what type of debt solution is suited to you, based on what repayments you can realistically afford.

Once you have a tight rein on your spending and a solid budget in place, there are several options available to help you when dealing with debt. These range from informal agreements to legal orders.

  • Use your savings
    If you have any savings hidden away but you're also struggling with debt, use this money now. You are charged more interest on a loan than the interest that you earn on savings, so use them to clear yourself of debt.
  • Take the informal approach
    If you are in debt and cannot afford to make the required repayments, but do have disposable income available at the end of each month after your essential costs (for example, mortgage payments), you can contact your creditors directly and negotiate what you can afford to pay. If you have a lump sum of cash available, you may be able to use this as a full and final settlement to your creditor in exchange for them writing off the remainder of the debt.
  • Protect yourself with a legal route
    A debt solution such as an Individual Voluntary Arrangement (IVA) is suitable for those with large debts, and enters you into a legally binding agreement. This protects your assets and freezes interest whilst you make regular affordable payments for a set period of time. When this period ends, any remaining debt will be written off. This solution is a form of insolvency, and will appear on the insolvency register and affect your credit rating.
  • Declaring bankruptcy
    Declaring bankruptcy is a last resort, but it's sometimes necessary for those dealing with severe debt that they cannot solve. When you're made bankrupt, your bank accounts will be frozen, you may have to surrender personal belongings and even sell your home to repay your debts. You will remain bankrupt for 12 months, and your details will be publicly available on the insolvency register. Being declared bankrupt will affect your credit rating and is not to be taken lightly.

What not to do

One thing you should definitely not do when dealing with debt is ignore it. This will not make debt go away. In fact, it will just make it worse. For example, if you do not respond to a court order to repay money owed, and you're then served with a County Court Judgement (CCJ) and also ignore that, bailiffs may come to your home and seize your personal belongings.

Tackling your debt later rather than sooner will put your assets at risk and damage your credit rating even further.

Meeting your monthly repayments

The main cause of personal debt is when your earnings can't keep pace with your monthly debt repayments, and you start to slide further and further into debt.

Putting you back in control of your finances

Although there can be many causes of debt, it's when debt becomes a serious problem and you struggle to meet the repayments that you know you need to find a way out - and fast.

You can speak to those close to you and seek assistance from debt counselling services. Don't be embarrassed about your situation. It's not uncommon, and you may want a strong support network around you at a difficult time like this.

You can also seek professional guidance from financial advisers who can assess your circumstances and provide advice on the best route for you to take. Help with Debt Consolidation's expert partners can provide honest feedback and answer any questions that you may have on how to deal with debt.

For more debt advice, call us now on 0808 163 9579 to speak to an advisor or complete the form below.

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