Free Debt Counselling.co.uk Helping you to overcome debt problems
Debt Consolidation Counselling
At Free Debt Counselling.co.uk we have many years experience of advising people with financial problems. If you are in debt then you have a number of options and so it is advisable to speak to one of our debt counsellers to find the solution best suited to your circumstances. An overview of just some of the solutions to debt that are available to UK consumers can be found below.
Money Management
If you find that debt is becoming an increasing problem then a simple review of your current expenditures can often provide you with a solution.
For example keeping a diary of all your monthly purchases and withdrawals can show you exactly where your money is going and allow you to cut back on any unnecessary expenditure.
Writing and sticking to a monthly budget can help prevent debts from building up as can getting in to the habit of using cash or debit cards to make small purchases rather than credit cards.
Advantages
- simple and cost free
- Unlikely to be a solution for everyone particularly people who already have large debts
Debt Management Programmes (DMP's)
A Debt Management Programme can be arranged by the Citizens Advice Bureau or most likely through a commercial Debt Management Company. The Debt Management Company will negotiate individually with each of a
your creditors and attempt to get them to agree to lowering your monthly payments and to freeze interest on the debt. In return the Debt Management Company will charge a monthly fee along with an initial set up fee.
Advantages
- the Debt Management Programme can reduce your monthly repayments
- can be a good solution and allow you breathing space if your financial problems are only temporary, for example to cover a short period of unemployment
- any fees charged by the debt management company will be added to your existing debts
- it is an informal arrangement with no legal obligation on either side
Individual Voluntary Arrangements (IVA's)
To qualify for an IVA you must usually owe greater than £15000 with this debt
being spread between more than two separate creditors. Under an IVA a person commits to make monthly payments of what they can reasonably afford based on their income.
These payments are made for a set period of time at the end of which all remaining unpaid debts are written off. The typical repayment period of an IVA is five years
although there is a large amount of flexibility in this.
Advantages
- your debt repayments can be reduced by as much as two thirds
- you will be expected to repay only what you can reasonably afford based on your current income
- at the end of the IVA any remaining debts will be written off
- an IVA is only an option for people fitting a fairly narrow qualifying criteria
- even if you qualify there is no guarentee your creditors will accept the IVA proposal
- it is usually a more expensive option than filing for bankruptcy
Debt Consolidation Loans
A further option for a person in debt is to take out a Debt Consolidation Loan. A Consolidation Loan will allow you to pay off your existing debts and so effectively group your debts
in to one single payment.
Advantages
- making one single debt repayment is easier to manage then making payments to several creditors
- only beneficial if the rate of interest on the loan is no higher than that of the existing debt and is sufficiently low to allow the loan to be repaid over a reasonable length of time
- can be difficult to obtain depending on your credit rating
Bankruptcy
Bankruptcy is often seen as a 'last resort' option for people with debt problems, however in many cases it is also the most suitable.
Advantages
- at the end of the bankruptcy period most of your remaining debts are cleared
- repayments are made for a shorter period than is the case with an IVA
- it is likely that you will lose your home and other valuable assets
- your credit rating will be affected for six years meaning it can be hard for you to obtain credit
Contact Us
If you would like to speak to one of our debt counsellors about your finnacial problems and possible solutions to them, then call us on freephone 0800 043 50 43 or complete our enquiry form.