Debt Management

For those who might be struggling with their finances – whether that finance is in the form of loans, credit cards, overdrafts or mortgages, there is plenty of free debt advice available.

Debt Management Advice

Debt management advice is generally sought on debt of all types, whether secured against a property or unsecured. There are many debt management services in place for borrowers depending on whether or not they have any money left to pay off their debt, so debtors should first of all consider where they stand with the state of their finances.

Debt Management Plans

Debt management plans are common financial strategies for those who may have the means of paying off their debt, but who are unable to sufficiently manage it on their own. Borrowers can seek the help of their lender – or an outside organisation acting as middle man – to agree lower monthly payments until they get their finances back under control. Lenders such as banks, building societies, and general online lenders often agree to freeze interest payments or other charges – though in return, customers are required to agree they will repay their debt in full and missing regular payments could result in court action.

Debt Consolidation

The various types of debt consolidation can equally help a borrower gain greater control over their mounting debts. Some debt management companies allow people to send all their monthly repayments in one lump to them; they will then divide the money and forward it on to each lender so their customers don’t have to deal with the stress. However, such companies often apply considerable charges for this service, so such an approach should be taken with care; it is usually better to take advantages of any of the free advice available from organisations such as the Citizens’ Advice Bureau.

Surprisingly, taking out another loan can also act as a solution. Debt consolidation loans can save people money as combining debts into one payment often results in lower regular payments, especially if the loan is taken out over an extended period, though such savings are only possible if the borrower has a reasonable credit rating.

Individual Voluntary Arrangements

Alternatively, Individual Voluntary Arrangements provide debt management help to those with greater debt issues but who do not want to make themselves bankrupt. They are informal arrangements which allow customers to pay back their debts but over a fixed period – usually five years. They cannot be obtained by anyone however, as they are only suitable for people with a certain amount of spare income per month, who owe two or more separate creditors.

Debt Relief Orders

Those with debt problems that cannot be saved may feel they have no other option but to consider an insolvency procedure. Debt Relief Orders last around a year during which no lender can take legal action against their customers for not repaying any money. At the end of the year, the debtor will simply be free of all their debts listed in the order.

Bankruptcy

In cases of extreme debt, a person may wish to apply for a bankruptcy order. Once someone has been made bankrupt, if certain conditions are kept to the money they owe is written off so they can make a fresh start. Though this appears to be a viable solution in the outset, bankruptcy can lead to a person losing their home or other valuable possessions, and they can face considerable difficulties in obtaining consumer credit in the future.

Free Debt Advice

People with any debt worries are highly advised to seek free debt advice from charities rather than fee charging debt management companies for practical solutions for clearing off debt.