Options available to people in debt
Options available to people in debt
Debt consolidation loans.
Rather than struggling to keep up multiple payments to multiple debts, some people choose to consolidate their debts - applying for a loan that’s big enough to pay them all off. This means they’ll only have one payment to make per month, reducing the risk of missing payments (and the charges and damage to their credit rating that can result).
Plus, a consolidation loan can come with a lower interest rate than many other forms of unsecured credit. It can also give the individual the opportunity to think about their financial circumstances and arrange to repay the debt consolidation loan at a rate they can afford - again, repaying a debt more slowly will mean it takes longer to pay off and can end up costing more, so it’s vital to weigh up the pros and cons before proceeding.
Who debt consolidation is right for: people who want / need to reduce their monthly repayments.
IVAs
A form of insolvency, an IVA is a legally binding agreement between a debtor and their creditors. If you owe around £15,000 or more to multiple unsecured creditors, an Insolvency Practitioner (IP) can tell you whether an IVA might be the best way for you to cope with your debt. If they think it is, they can draft up an ‘IVA proposal’, detailing how much you can afford to pay towards your debts every month for the next (normally) five years, once you’ve taken your essential expenses into account.
If enough of your creditors agree, the IVA can start. You agree to make those monthly payments (and possibly free up some equity in your home, if you own property), and they’ll agree to freeze your debt, hold off on any legal action (such as trying to make you bankrupt) and write off any outstanding debt once the arrangement has successfully concluded. Please note: an IVA will have a serious impact on your credit rating, potentially making it harder to borrow money for the next six years.
Who an Individual Voluntary Arrangement (IVA) is right for: people who owe money to three or more unsecured creditors a total of around £15,000 or more and can’t afford their monthly repayments - but can afford regular smaller payments.
Protected Trust Deeds
A Trust Deed is similar to an Individual Voluntary Arrangement, but only available to residents of
Who a Protected Trust Deed is right for: residents of
No debt solution is a perfect fit for everyone. If you are having debt problems, it’s vital to talk to a professional debt adviser who understands all the available debt solutions and can help you choose the solution that’s right for you.
