Debt Management - Clear Your Debts Right Now

In today’s society there seems to be a constant temptation to spend money and some people seem to have better self control than others in respect of this. We are seemingly gripped by the ‘buy now pay later’ culture that has swept across the country in recent times and as a result of this, consumer levels of debts are at an all time high.

Of course consumer debts are not solely accountable to reckless high street spending and indulgence. In many cases, individuals accumulate debts through a change in their personal circumstances/lifestyle such as loss of income through illness or redundancy, or any other life changing event such as divorce or separation. 

Essentially, debt management involves the practice of distributing consumer debt repayments to a number of credit providers. This practice could also be described as financial juggling.

There are many companies on the market today offering their services by way of arranging a debt management plan between you and your creditors. The idea behind such plans is that you are able to repay back your debts on a monthly basis at a rate that you yourself feel is affordable. A good debt management firm will take the stress and hassle out of this process by dealing with your creditors directly so that you don’t have to. 

Often such debt management plans are arranged over a longer term than that of your current outstanding loans and credit cards. It is therefore important to understand that it is likely that a debt management plan will take longer to pay back due to this fact.

Is the stress of debt is a day-to-day reality for you then it could be worthwhile getting in touch with a debt management company in order to see if this would be suitable for you.

The term IVA stands for ‘Individual voluntary arrangement and is viewed by many as an alternative to bankruptcy. There is however a number of key differences between an IVA and bankruptcy which will usually determine which route an individual takes when dealing with the pressures of debt.

With an IVA, the debtor arranges with the creditors to reschedule the repayment of the debts over a specified period. An IVA can be set up only if creditors who represent at least 75% of the debt agree to the arrangement. In addition, the scheme must be set up and supervised by a recognised insolvency practitioner.

In recent years, a large number of firms have come to market that assist individuals with significant personal debts to enter into an IVA. Where an IVA has been set up, this will usually allow for the individual’s interest to be frozen on the outstanding debt.

The setting up of an IVA will on the most part, see a significant percentage of the outstanding debt be written off – In exchange for this, the creditors will receive a reasonable guarantee that a monthly repayment will be made in order to pay off the balance.

It is interesting to consider that from a Bank’s point of view, this course of action can work out better for them than simply writing off the debt or selling it to a debt recovery firm.

Similar to bankruptcy, while the IVA is in force, the individual will not be able to obtain credit. In addition, this can seriously tarnish an individual’s credit rating even after the IVA arrangement has ceased. Serious though should be given when embarking on an IVA due to the potential negative resulting factors – such as being able to take out a loan or a mortgage.