Being in debt can often be an unpleasant and stressful situation to be in, especially if you don’t know where to turn for help or advice. However, there are always different options open to you depending on your circumstances. There’s no quick-fix solution to ridding yourself of debt but if you are willing to do what it takes then that’s the first step towards a debt-free life.
The right debt solution is largely dependent on how much debt you have. If you only owe a relatively small amount then a debt management plan may be the right route to take. In this case, you would calculate how much you could realistically pay back each month, with the help of a debt management company, and taking into account your household expenditure.
If you have larger debts then debt consolidation may be the right option for you. This involves taking out a new loan to clear your existing debts. This generally means that you’ll pay a lower interest rate than you would having debts spread out to different creditors. Although you do pay the debt consolidation loan back over a longer period of time, it does mean that your existing debts will be cleared straight away.
For those who have debts totalling more than £10,000 to at least three creditors, another option is an IVA (Individual Voluntary Agreement). An IVA is a legal agreement between you and your creditors.
For people who have extreme debt, declaring bankruptcy may be the only option left. Declaring bankruptcy is not something which should be entered into lightly as it can have serious financial implications for your future.
However extreme your situation it’s always best to seek financial advice from an expert and make steps to resolve the problem as quickly as possible. If you fail to make the repayments on your loan, it’s likely that your debt will be turned over to a debt collection agency such as Wescot for instance. In this situation you would owe the debt to the agency rather than your creditor but you should still have room to negotiate a manageable repayment plan.
Although being in debt isn’t pleasant, addressing the situation as soon as possible will be beneficial to you in the long run.