Seeking help with debt

Whether it comes from problems in keeping up with monthly loan payments, falling behind on utility bills or defaulting on credit cards, those who have accumulated significant debts are likely to find themselves under major pressure.

And those who are unable to clear their debt in full will find interest accumulating, increasing the overall amount they owe. Such problems could be even worse for those who pay less than the minimal monthly amount, while borrowers who miss out a payment altogether will not only see the interest charged on their debts continue to grow, they may also be hit with a late payment charge, driving their financial problems even further.

Heavily-indebted consumers could also find they receive constant phone calls demanding repayment from creditors and companies they have previously purchased goods and services from. Furthermore, their letterboxes could be flooded with letters containing a 'final request for payment', while some may fall victim to unscrupulous organisations or individuals who turn up at one's doorstep requesting money which they simply do not have.

There is a way out

In facing such an ordeal, people might find they are under even more stress and spend many sleepless nights worrying about their difficult situation. However, there is no need for those with money management problems to feel that nothing can be done. By seeking debt advice, consumers could be presented with a way out of their problems and - in time - find themselves on a more stable financial footing.

Seeking advice on debt could see people offered a variety of means of repaying what they owe. Although one way this could be done is by contacting a creditor to ask for a few more days to repay their debts, this may not always be possible, especially if consumers owe thousands of pounds and have little or no prospects of quickly getting their hands on the money they owe.

Could an IVA be the ideal solution?

Another solution those looking for debt advice in the UK may wish to consider is seeking out an individual voluntary arrangement IVA. This is a formal arrangement where a debt help firm will come to a deal with those parties to which money is owed to set out what portion of the overall debt consumers will pay back.

Upon seeking advice on debt, those who choose to go down the IVA route will find that all interest on what they owe - which could include debt accrued on personal loans, credit cards and overdrafts - is frozen and that they will be required to make a debt payment on a monthly basis over a five-year period. However, consumers should bear in mind that they are legally bound to make these payments, which are pre-determined based upon their disposable income.

Such a debt management strategy can see more than half of the money that consumers owe written off, although people may wish to be conscious that doing so will leave a mark on their credit report and prevent the use of credit cards. Meanwhile, a failure to keep up with the monthly repayments could see people be made bankrupt.

However, there are other options people researching the UK debt advice market may wish to consider. One route is a debt management plan DMP in which those owing money work alongside a debt advisory firm to figure out the best way to make repayments. The National Debtline points out, that under a DMP, a budget is drawn up where all areas of essential household expenditure - for instance utility bills, food, mortgage/rent and travel - are added up. This is then subtracted from income, with the remaining money available to be used to repay debts.

Debt management plan can be 'a good option'

If this figure is more than £100, the debtline suggests a DMP could be a "good option". Under the plan, a debt management company assesses how much people can afford to pay back each month. Borrowers then give this amount to the firm, which then - usually after subtracting a fee - is passed on to creditors. Such a plan means consumers no longer have to deal directly with the companies they owe money to, which could alleviate a lot of the stress caused by facing constant demands for payment.

With numerous plans and guidance available on getting out of debt, people may well find such financial help involves some short-term expenditure, in the form of advisors' fees and administrative charges. However, by getting free debt advice, consumers will not have to shell out money for guidance on how to get their debts under control. And with one less potential expense to worry about, this particular form of debt advice could ultimately get them back into the black that little bit quicker.

Whatever route they eventually choose to take, people in major money difficulties should not suffer in silence. By seeking debt advice, they could well find they can make affordable repayments and be on track to a brighter financial future.

Moneyextra.com recommends you take independent financial advice before acting on any article

2009-10-23 15:12:52 © Moneyextra.com