Published on June 11th, 2013 | by Pete0
Why Less Debt Among Young Adults is Definitely Bad News
If you have debt which you are struggling to pay off, don’t let it get you down. There are a number of very workable solutions available to you depending on your circumstances. The first step is seeking out some qualified advice and you will be well on your way to making your debt more manageable. Thousands of people get debt help from organsiations like www.consolidatedcredit.co.uk each year and there is no shame in asking for help.
Finding the right debt solution for you
You need to find a debt solution which works for your circumstances and one of the key aspects of this process is learning how best to control your finances for the future to ensure you do not end up in the same situation again. A good debt management company should give you advice on budgeting, saving and planning for the future.
Debt Management Plan
A debt management plan is one way to take control of your debts. You could consolidate multiple unsecured debts into one manageable payment with a debt management plan. This payment should be less than you are currently paying every month including fees, meaning you have less of a struggle to make ends meet each month. With a debt management plan you may be able to get your creditors to lower your interest rates or even freeze them until you have paid off the debt.
You must have unsecured debt, for example in the form of credit cards or unsecured personal loans. You must also have a source of income in order to make the reduced monthly repayment. Using a debt management plan can adversely affect your credit rating but the impact is much less than that of bankruptcy and once you have cleared your debt you can work on rebuilding your credit rating.
Temporary Repayment Plan
A temporary repayment plan is a good option for someone whose financial situation may change in the near future. It requires negotiating with your creditors to arrive at a more affordable monthly repayment. This is an informal agreement between you and your creditors and is not legally binding. You need to look at your income and outgoings carefully to arrive at a figure you can propose to your creditors as a more manageable monthly repayment until you are back on your feet and can resume the standard repayment schedule.
Your creditors are under no obligation to accept your plan but they can be amenable to it if it means avoiding debt write off or settlement losses as a result of bankruptcy or other settlement offers.
Individual Voluntary Arrangement
An IVA is a legally binding formal repayment plan which means you can repay your creditors on a more manageable payment schedule, usually over five years. Interest and fees are frozen. Creditors may accept or reject the proposal but if 75% of your creditors agree, they must all accept it. After you have completed the repayment schedule any remaining debts are written off. An IVA will result in a six year penalty on your credit history and there are fees which will be included in your monthly repayment.
CJ writes regularly on finance for a range of financial advice websites and blogs. Thousands of people get debt help from organisations like Consolidated Credit each year and there is no shame in asking for help about these.