One possible approach could be a debt management plan.

What is a debt management plan?

A debt management plan is an informal agreement between you and your unsecured lenders, which could allow you to make reduced monthly payments that you know you should be able to afford – to a single company.

Once you make your repayment every month, the debt management company will then distribute your payment to your unsecured lenders as agreed, which could take some of the pressure off, making it easier to repay your debts per month.

If your lenders agree to your new repayment plan, they may also agree to reduce or freeze interest and other charges on your debts, so they won’t continue to grow as you’re repaying them. But if your unsecured lenders don’t agree to this, you should be aware that making lower payments over a longer period of time could cost you more in the long run.

Entering into debt management will also remain on your credit history for six years, which can affect your ability to get credit.

A debt management plan: what are my options?

You don’t have to work with a debt management organisation. You could set up your own debt management plan, which means you’ll have to negotiate with your lenders directly about accepting reduced payments, etc.

Some people prefer to do this on their own, whether that’s because they don’t want anyone else involved in their finances or they don’t want to pay the fees that many debt management organisations charge.

Alternatively, you could agree one with a professional company, who’ll go through your finances with you and negotiate with your unsecured lenders on your behalf. This could reduce the stress of dealing with your lenders directly, and give you an expert point of contact who can help you with your finances.

It is not unusual for a person to get a little over-extended. It happens to the best of us, so don’t worry – you are not alone if this has happened to you. You might have had to do some really creative things as a means to get the “dough rolling” as they used to say. But if it were to happen to you today, you could consider a cash loan and avoid some of the issues you might have dealt with previously.

Cash loans are much more flexible than a traditional loan from a bank. The terms might vary from provider to provider, as well as from deal to deal, but the framework for them is pretty much the same.

One big benefit to getting cash loans is that you can spend the money on whatever you want. So buy that pair of nice shoes, pay a few bills or maybe take a trip to clear your head, and relax for a weekend. There is no end to what you can do when you have the money to do it – and cash loans are really a smart way for many people to get what they want, and keep right on trucking.

Most people ignore the option of consolidating all their debts because they don’t own their own home – well, you don’t have to own your property to consolidate debts. Of course, owning your home will give you more options, such as a remortgage option, or a secured debt consolidation loan, but those who are yet to own their homes can take advantage of a simple consolidation program. You should however think carefully before securing other debts against your home, although with companies such as DebtAdvisorsDirect, things always run smoothly as long as the manageable payments are repaid on time. So, what are the drawbacks of debt consolidation? Well, generally, you’ll be paying your debt off for a longer period of time then you would have originally, however, the payments will be lower, therefore easier to repay.

Each solution has its own benefits and drawbacks, however, something DebtAdvisorDirect can guarantee is that they’ll make it easy for you to repay your debt, and get back in the black. Speak to an adviser today and begin plans for a brighter financial future – consolidating your debts is simple, and sensible.

One common debt solution is debt consolidation, which collects all of your bills into one manageable monthly payment. This stops creditors from hounding you, as all the minimum payments on your bills will be paid, and you can make dents in your debt little by little. This also helps you avoid late fees and other hidden charges creditors like to add on.

An IVA, or Individual Voluntary Arrangement, is another popular option. This documents allow you to put what money you can towards your debt and nothing more. It prevents them from adding any more extra charges or fees, and will prevent you from being charged with any legal action from the creditors.

The other option is bankruptcy, although this is not popular for several reasons. The biggest downfall is you would be forced to sell your home, with the money split between your creditors. Bankruptcy is also a public affair – many local newspapers publish lists of who has been bankrupted, whereas if you had an IVA instead it would remain private.

However, at a time like now, debt consolidation loans (along with other forms of credit) can be relatively difficult to obtain, due to the relatively limited availability of credit.

If you’re applying for credit of any kind, the success or failure of your application will depend largely on the state of your credit report – which is ‘an important source of information which lenders use when
they consider an application for credit’, according to a guide from APACS (the Association for Payment Clearing Services).

‘Your Credit Record’, the guide published by APACS, explains how the way you handle your finances may affect your chances of being approved when applying for credit.

In the current economic climate, the state of your credit report is more significant than ever.

Approval and rejection

If you have been rejected when applying for credit, you should talk to the lender – as you should be able to find out why you were turned down.

After doing this, you could try to improve your chances of being accepted next time you apply for credit.

You could get a copy of your credit report. This will cost you £2 and can be obtained from a CRA (credit reference agency). There are three major CRAs, and each records different information, so you may wish to get your report from all three.

After getting a copy of your credit report(s), you should look for errors. If you are certain that something on your report is incorrect, you should contact the CRA and ask them to either change it or remove it.

In addition, you should look for problems on your report – and try to fix them. For example, can you pay off any outstanding bills? Or can you catch up on your arrears?

If you can’t ‘fix’ the problem, then you could try and explain it. You can add notes next to the problems on your credit report – explaining, for instance, why you missed a particular bill payment. Potential lenders can read these notes, and may well take them into consideration when making a decision on your application.

Debt consolidation isn’t always the most suitable way out of debt. Some people may find that an alternative debt solution, such as an IVA (Individual Voluntary Arrangement) or a debt management plan is more appropriate.

A classic counseling position is one where an individual is unable to meet his or her financial commitments with income alone. Some creditors might already have initiated recovery proceedings or alternate legal action. Declaring bankruptcy seems the only alternative, but such an action will impact the person’s credit record for the next 7 to 10 years.

In such an instance, a non-profit counseling service could come up with a more palatable alternative. A debtor could furnish full details of all dues and undertake some debt counseling. The counselor will consolidate all the outstanding balances and calculate a single payment which will be offered to all the separate creditors. More often than not, creditors are happy with such an arrangement rather than meet the costs of legal proceedings.

Bankruptcy is a really serious step and has long lasting effects. While you might be getting rid of debts that you can’t pay, bankruptcy can be detrimental to your credit. It’s much worse than just being late or behind on a few payments.

Debt consolidation is an excellent choice if your credit is still fairly good. Since you’re obtaining a loan to pay off all of your current debts, your credit generally doesn’t suffer. This is a perfect option for anyone that is planning to buy a home in the near future.

By the time that most people turn to someone else for help with an over abundance of debts, they’re credit rating has already suffered. This makes a debt management a perfect option. You will still be paying your debts, you’ll just be making smaller monthly payments. Which means that you’ll be able to pay your other expenses and not have to struggle between paydays.

Regardless of the method that you choose to repay the debt, it is important to compile a list of the debts which are owed to creditors. This includes the amount which is owed, who the amount is owed to and the interest rate that the debt. Next, calculate the amount that the debt is costing per month by multiplying the balance of the debt by the interest rate.

The first method of debt repayment uses the system of paying the most expensive debt to the least expensive debt. Fifteen percent of the income every single month is applied to the most expensive debt, and this amount is carried through until the debt has been completed repaid.

The second method of debt gives an instant gratification as it repays the smallest balance first. This can give the consume motivation to continue the repayment system, with fifteen percent of the income that is coming into the household.

These two methods are tried and true and have helped consumers to repay thousands of dollars in debt, in a fraction of the time that other repayment methods would use. Take advantage of these methods to get out of debt this year!