Take control of your finances and get back on track. Today there is more help than ever to stop your debts spiralling out of control. It is frightening enough having…
Take control of your finances and get back on track. Today there is more help than ever to stop your debts spiralling out of control. It is frightening enough having debt without it getting worse.
With this advice, you will gain confidence and an understanding on the starting point to getting your debt back on track.
Where to start?
Many people will bury their head in the sand at the first sign of debt. Unfortunately, this is the worst thing to do as this will not solve your financial problems. You need to admit to yourself that you are in debt. Admitting to yourself is one of the most important steps.
One of my favourite methods is to start by writing down everything you currently owe on loans, credit cards etc. That way, you will know exactly how much debt you are in.
Prioritise payments that need to be paid off first and payments that are actually manageable. Having order to your financial situation will stop you feel like you are drowning in your problems.
If you are in a relationship, talk to your partner about your current financial situation. Off loading the pressure and working as a team on how to get back on track will give you more support.
Here are some more debt solutions on offer:
You may have tried to speak to your creditors about your debt struggles and nothing has come from it. Seek professional help.
There are many charities out there today that want to help you. They will provide free help and advice to getting your finances under control.
You can also contact your local Citizens Advice Bureau for a manageable repayment plan and they help you discuss your situation with your creditors.
Individual Voluntary Arrangement
An Individual Voluntary Arrangement (IVA) is a formal agreement between an individual and the unsecured creditors. An insolvency practitioner or debt advisor administers it.
Why? Well, if you are struggling to sort out an arrangement to clear your current owed payments gradually through a debt repayment plan, an IVA is something to consider.
IVAs last for five years. During this time, you will pay an agreed amount to your creditors. Once that period of time ends, any remaining debt will be wiped out.
Do I Qualify For An IVA?
To obtain an IVA, you must fit within the criteria.
- A minimum debt level of £5000
- A minimum of 2 credit lines e.g. 1 credit card and 1 loan.
- A regular income
- The ability to pay a minimum of £90 per month into the IVA
- An IVA should offer a higher return for your creditors than bankruptcy
- You must live in England, Wales or N.Ireland.
You will not be able to borrow again during your IVA.
If you cannot clear your debts any other way then this option is a last resort.
You can either be forced into bankruptcy by your creditors or apply for bankruptcy yourself.
If you owe £750 or more, a company can apply for you to be declared bankrupt. It is however, only recommended to those with unsecured debts of £50,000 or more.
When you declare yourself as bankrupt, other assets such as your home or your car, can be used to pay the people you owe money to.
Bankruptcy lasts for around one year. The bankruptcy will be noted on your credit file for six years. Meaning you will not be able to apply for any further credit and you will be unable to get a current account that offers an over draft. Any accounts you have, your bank will freeze them and as you may not be able to open any new accounts, you will struggle make or receive payments.
This may seem daunting. But, for some people this method has been their last resort to get out of debt.
Remember to always seek professional advice before proceeding with an IVA or bankruptcy.