Finding a debt solution that works for your personal debt problem should be your first priority.
But establishing which debt solution is the most suitable for your personal situation is equally important, after all, using the wrong debt solution could cost you more than just time and money.
So which debt solution is the correct one to choose?
Firstly, you should analyse your personal debt situation, because it’s only once you understand where you are financially that you’ll be able to work out how to get to where you need to be.
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Once you have a clear understanding of where you are you can then opt for the most appropriate debt solution available.
Principally, there are 4 main debt solutions,
Individual Voluntary Arrangements (IVA)
Consolidation Loans: These are loans where all a person’s debts are brought together under one new lower payment. It is important to understand that this debt solution has a limited ability to help with a debt problem, as the size of the required loan may be too high for a person to realistically achieve. Also, taking out a consolidation loan without addressing the underlying financial problems that may be being experienced will only lead to a bigger debt problem in the future.
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Debt Management Programs: Debt management programs fill a very useful requirement within the whole debt solution portfolio. They are especially helpful to people whose debt problem is short term, perhaps due to unemployment or illness. However, they do not tend to be suitable for people who are suffering from a chronic debt problem, or one where there is no end in the short term, for example when someone is suffering from a long term disability, or someone who has taken retirement. Of course it would also depend on the size of the debt problem, and how much money the person was able to afford in repayments to their creditors.
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Individual Voluntary Arrangements (IVAs): This debt solution will help people who have built up debts of over £12,000 to 2 or more creditors, and find themselves unable to afford their normal monthly repayments. It is especially appropriate when someone has a large asset or property the wish to protect, or an occupation which would be put at risk should they declare themselves bankrupt. What’s more - you may not have to repay your creditors the total amount you owe them.
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Bankruptcy: Which is, in most people’s eyes, the ultimate debt solution. It is worth bearing in mind not all types of debt are written off in bankruptcy and you will be required to repay to your creditors whatever it is deemed you can afford for up to 3 years. So, it should go without saying - you should take professional advice before declaring yourself bankrupt, so you can be informed of exactly what to expect in the process.
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If you need further information on the most appropriate debt solution for your personal circumstances call one of our debt solutions experts now on…
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