Further information about Debt Management

• If making timely payments on your credit cards, personal loans and other financial obligations is increasingly difficult, it may be time to consider external debt management solutions. Stressing over your outgoing funds, avoiding calls from creditors or ignoring a growing pile of unpaid bills is not an enjoyable way to live, whether your total debt is large or moderate. Instead of having your debts rule your life, tailoring a debt management solution can reassert your control of your finances again, reduce stress and pressure as well as restoring a warm feeling of hope.

  Approaches to Debt Management

  Because individual lives and circumstances differ, there is no singular approach to debt management beyond its basic principles of organisation and timely repayment. One key to financial management and debt management is finding the balance point between your current and future income and your debt payments. When you consult a credit counsellor, you discuss these factors frankly and confidentially. Together, the two of you design a plan and develop a strategy that will allow you to not just keep pace with your bills but to eventually reduce your debt within a reasonable and realistic time frame.
• A credit advisor and you will discuss which potential approach to debt management is most appropriate for your individual circumstances. For some, remortgaging a home can bring sufficient relief, using equity as collateral to pay outstanding credit card debt, student loans, even medical loans and other unsecured debts. You must be very confident in paying this remortgaged loan, for non-payment leads to the loss of the home.

  As an alternative, a debt management plan may be able to restructure your debt and recommended as the means to unsecured debt repayment. Reliable debt management companies work with your creditors to repay your obligation, sometimes at reduced interest rates. You, the client, pay the debt management company a predetermined amount each month, and the company dispurses those funds to your creditors according to the new agreements. Usually, a debt management company charges a fee for this service, and that fee is included in the amount you pay each month. Because of the confidentiality of your information and the responsibility of funds dispersal, it is imperative that you chose a reputable and trusted debt management company.

  In extreme circumstances, an Individual Voluntary Arrangement or IVA may be more appropriate. An IVA is an alternative to bankruptcy and lowers your obligations. An IVA allows repayment of your debts over a five-year term. This type of formal arrangement does allow you to repay your debts at a reduced rate whilst avoiding the risk of losing your home. The reduction is outlined in a settlement agreement between your creditors, your Insolvency Practitioner (IP), and you.

  An IP is responsible for the management of an IVA from start to finish. Consumers often remit the balances of their obligations through an IVA remortgage. The IVA releases or assigns to your creditors the equity in your home and releases you from further obligations to them.

  Bankruptcy is the debt management solution of last resort. Bankruptcies have more serious, longer-lived repurcussions on your credit rating than other solutions. A debt management counsellor holds bankruptcy recommendations until no other solution is possible. However, sometimes bankruptcy might be the best possible scenario: Debts that result from a severe injury, overwhelming medical bills and prolonged or permanent disability are a few examples that outline when bankruptcy might be the best overall approach.

  Debt Management Advisors

  Adverse credit is a common effect of enduring an extended time of economic hardship. You could have had wages cut, hours reduced or been a victim of employee downsizing. The primary wage earner may have passed, or you may have been hurt and be unable to continue working. Regardless of why your financial situation seems out of control, you may feel overwhelmed and highly discouraged at the never-ending burden you carry. Thankfully, a knowledgeable and trustworthy debt management counsellor can often help you find a solution.

  A qualified credit counsellor will examine your income, your assets and your financial obligations and work with you to determine which possible solution suits your situation and grants you the fastest relief. For some, a debt consolidation loan may be the best option. For others, an IVA might be more appropriate. If you received a large lump sum, such as an inheritance or funds from the sale of a home or other large asset, a full settlement arrangement with your creditors may end your financial difficulties.

  While rarely comfortable on a personal level, poor credit no longer holds the social stigma it once did. In this current, extended, difficult economy, many people wrestle with debt obligations that can no longer be met. Don't fret over mail delivery, afraid that too many envelopes hold bill notices. Don't jump in fear when the phone rings. Don't ignore your bills, hoping they will just go away. Work with a qualified agent who is approved by the Office of Fair Trading: Together, you may find a viable solution to your debt management problems.