How to Solve Situations of Financial Debt
Posted on | May 13, 2010 | No Comments
In these hard, economic times an ever-increasing number of people are finding themselves being drawn into a spiral of debt either through unforeseen job cuts, increasing living costs and heating prices or due to unfortunate money management. For those people caught in the debt trap life is a struggle with no obvious means of sortingyour finances or life back on track. In many cases, by means of curtailing on your expenditure could be adequate to clear your debts however occasionally there may be no option but to seek specialist assistance and an alternative resolution to your problems.
If you ever fall into this latter group then what are the choices available to you so you can regain control of your finances?
Debt Consolidation
The objective behind a debt consolidation loan is quite simple. Depending on the level of the debt which you owe, you can take out a debt consolidation loan to help clear your debts from things just like hire purchase, loans, credit cards or store cards. You can then be left with one single monthly payment, typically with a lower rate of interest.
Debt Relief Orders
Debt Relief Orders or Debt relief order’s are a comparatively new option that has become available to people discovering themselves in situations of debt. Introduced early on in 2009, a DRO is suitable for people whose level of debt is below £1500 and who’re on low levels of income. You’ll find strict criteria that have to be met so as to successfully apply for the debt relief order which means you will need to consult an insolvency practitioner or financial Advisor. Essentially a debt relief order allows consumers to write off their debts without having to get involves in a proper bankruptcy claim. The Debt relief order will often continue for nearly a year, in which time your creditors aren’t able to take action against you so as to repossess the debt which you owe them. At the end of the Debt relief order time period you will then be relieved from your debts.
Bankruptcy Procedures
In severe cases, bankruptcy might be your only choice. Bankruptcy is a legal process where a petition is filed at the local county court. Through the course of the bankruptcy procedure, a trustee is appointed to supervise and take control of your assets and deal with your debts and creditors. The course of a bankruptcy procedure lasts around 12 months. Once the bankruptcy has been completed then you’re released from the procedure and able to start rebuilding your life again.
Individual Voluntary Arrangements
An Individual Voluntary Arrangement or IVA isn’t as well well-known to the ordinary man in the street as the dreaded ‘Bankruptcy’ but for a lot of people it may be a more appropriate option for all those in extreme situations of debt. Again, it’s going to depend on your circumstances.
An IVA is a legally binding agreement involving yourself and your creditors. It’s where a part of your future salary is put aside, at the end of an agreed period your creditors will be paid out from this fund. From the creditors point of view they are going to typically receive less than that they’re owed in the beginning but this amount is far more than what they’d have received had a bankruptcy process been taken.
Consulting an Financial Professional
If you are finding yourself in a situation of economic debt which is getting out of control its always advisable to look for a solution to your problems as soon as possible. One of the first things you could do would be to look for the services of a financial advisor, debt management company or other professional. They will be able to recommend you on which option is best suited to your circumstances. They will be able to lead you through the process and manage your creditors.
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