By Melanie Taylor
Struggling with debt can be a difficult and stressful
situation, and it's easy to feel like you will never be able to
find a way out.
More and more people are getting into trouble with debt these
days, yet many are unaware of what help is available. In
reality, even people with severe debt problems can get help from
a professional debt adviser.
Importance of good debt advice
If you ever find yourself having problems with your debts, then
you should contact a professional debt adviser as soon as
possible. Since the interest on debt often means it grows very
quickly, putting it off can result in you paying a lot more
How can a good debt adviser help me?
General debt help
In a lot of cases, simple debt advice is all it takes. If you
have trouble managing your money, you're not alone - many people
have this problem, and it's not unusual for it to lead to debt
Your debt adviser may be able to recommend a few changes in
your spending that could help you to get back on track. Equally,
they may help you to set up a budget, so you can make sure
you're aware of how much money is needed for each of your
commitments, and how much you have left to spend as you wish.
If the situation has become more serious, and your debts are
becoming unmanageable, then your debt adviser may recommend a
debt solution that could help your situation.
What debt solutions are available?
There are a number of debt solutions available that can help
people in various situations. Your debt adviser can help you to
decide which (if any) is best for you.
Debt consolidation loan
A debt consolidation loan is typically for people who have
relatively manageable debts, but would like to simplify their
finances and/or reduce their outgoings. It is essentially a new
loan that pays off your existing debts, ending your ties to your
original creditors and consolidating those debts into one
convenient monthly payment.
Many people with a debt consolidation loan choose to reduce the
amount they pay each month by spreading their repayments out. If
you choose to do this, be aware that because you will pay
interest for longer, you may end up paying more overall.
However, it's still possible to save money if you consolidate
high-interest debts, such as credit cards. So long as the
interest on the debt consolidation is lower, you could save
money, although a longer repayment period may limit the amount
Debt Management Plan
For debts that have become unmanageable under the existing
terms, a debt management plan is an informal arrangement with
your creditors that can allow you to repay your debts at a more
As well as reducing the amount you will pay each month, you may
be able to negotiate a reduction or freeze in interest and other
charges, which can prevent the debt from growing - or at least
slow down the rate at which it's increasing.
However, be aware that repaying any debt more slowly will take
longer and can cost more, as it'll have longer to attract
interest. This is why it's important to work closely with a debt
adviser to ensure that your repayments are affordable, while
still allowing you to repay what you owe.
IVA (Individual Voluntary Arrangement)
If your debts have become so unmanageable that you don't think
you will ever be able to repay them in full, an IVA could help
you to avoid bankruptcy by agreeing to pay a set percentage of
your debt to your creditors, after which the remaining debt will
be written off.
You will make monthly payments to your Insolvency Practitioner,
who will subsequently distribute it among your creditors as
agreed. This will usually continue for five years, and on
successful completion you will be legally debt-free.
There are some things to consider before entering into an IVA,
though. You may be expected to give up a portion of any increase
in income earned during your IVA (including pay rises and
bonuses), and if you are a homeowner, you may also be expected
to release some of the equity in your home in the 54th month of
Although an IVA is typically considered preferable to
bankruptcy, there are some cases in which bankruptcy is the more
beneficial option. Your debt adviser will offer advice on the
best choice for your particular needs.
About the Author: For more information on debt advice including
debt consolidation, debt management and IVAs visit
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