Start Dealing with Debt Today
Being in debt can be one of the most frightening experiences there is. If you’re in debt you can end that fear – right now. Not tomorrow, not next week, not ‘when I get a chance,’ – literally in the next few minutes. Being in debt can mean a future full of uncertainty and worry so understanding how to start tackling debt can end all that and put you on the road to a debt-free life.
The starting point, as with most problems, is admitting you have a problem. You will instantly feel better. It takes courage to face up to problems but debt is something that can be solved. Millions of people have been in debt or are still in debt. You’re not alone and it is often a good idea to talk to someone close to you to help.
The first step is then to work out exactly what you owe. Make a list of all the people you owe money to (creditors) and how much. Then place them in order of priority. The ones of the most importance are not the biggest in value. The highest priorities are things like mortgages, rent, and secured loans or tax bills. These are the ones that could have the biggest consequences such as repossession of your home or being evicted. Lower down the priority are things like credit cards, bank loans or money borrowed from friends. These have to be repaid but paying off the high priority debts will give a more reliable situation from which to start paying off other debts.
Then planning your own income and making a budget of what you need to live will give an idea of how much you can afford to repay.
Repaying Creditors
Once you have a good grasp of your financial situation there are two options. Firstly, you could contact all your creditors and explain. They may come to an agreement of making a series of repayments or even writing off some of your debt.
Getting help with debt management
Alternatively, you can get advice from a number of professional bodies. For a full list see the Government website: Debt – where to get free help and advice
All of this advice is FREE. Before paying for any advice or debt plan make sure you know what you are paying for. There are loads of places offering free advice so you should not need to be shelling out any more money.
Debt Management Plans, IVA’s and Bankruptcy
Getting expert help will help find the best solution for your debt, depending on the amount you owe and can repay. They are popular as they are accustomed to dealing with creditors and can often negotiate freezing interest rates and writing of some of your debts. They can also stop companies sending threatening letters.
Usually debt-management companies will assess your situation and decide which is the best way for you to get out of debt. There are three main options:
- A Debt Management Plan (DMP) is an informal agreement between you and all creditors to repay debts at a set rate. A debt-management company will organise a single payment per week or month.
- An Individual Voluntary Arrangement (IVA) is a legally binding agreement that usually lasts five years. You make monthly payments of what you can afford. As long as you keep up with the payments, when the IVA is finished you will be debt-free no matter how much you have paid off.
- Bankruptcy is usually seen as the very last resort. It will wipe out all your debts but there are many penalties. It will affect your future ability to hold certain positions, run companies and obtain credit.
Any debt-management company or advice centre will help decide what is best for you and the impact it will have on your life. The more prepared you are the easier they will be able to assist you in that choice. Many people say ‘I wish I had done something sooner.’
Dealing with debt can actually be quite straightforward but takes individual courage. But if you do the only regret you’ll have is that you didn’t do something sooner too.
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