Pairing Business With Success

Debt problems? - here are some solutions

However it happened, it’s in your creditors’ interest (as well as your own) to find a realistic way for you to repay your creditors, and a professional debt management company can help make that happen. They can contact your creditors on your behalf, asking them to consider things like accepting lower payments, freezing interest and waiving charges. So debt management might mean your debt takes longer to pay off (because you’re repaying it more slowly), but it can keep it from escalating further.

Rather than struggling to keep up multiple payments to multiple debts, some people in debt decide to consolidate their debts - taking out a consolidation loan that’s big enough to pay all their smaller debts 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).

A form of insolvency, an IVA is a legally binding agreement between the debtor and their creditors. If you owe around £15,000 or more to multiple unsecured creditors, an Insolvency Practitioner 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 draw 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 to the IVA proposal, the IVA can start. You agree to make those monthly payments (and usually free up some equity in your home, if you own property), and the creditors will 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 Individual Voluntary 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 IVA is right for: people who owe 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.

4th: Protected Trust Deeds. A Trust Deed is similar to an Individual Voluntary Arrangement (IVA), but only available to residents of Scotland. In most cases, a Protected Trust Deed will last for three years.

Who a Trust Deed is right for: residents of Scotland who owe three or more unsecured creditors a total of around £10,000 or more and can’t afford their monthly repayments - but can afford regular smaller payments.

This entry was posted on Friday, October 31st, 2008 at 6:41 am and is filed under Capital. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.