Debt Management Debt Counselling Services

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Losing ones job, starting a family, divorce or separating from a partner, sickness or family death, all of these can make it very hard to manage your budget. You can fall behind with your rent or mortgage payments while other bills still continue to mount up. Soon you can find yourself juggling payments and you are deep in debt.

The good news is there are many ways both government backed and independent to help ease the stress and worry of debts, plus, if you qualify for an IVA, you could clear a very large part of your unsecured debts. In many cases as much as 75%!

Dealing with debts: Some useful advice.

Try not to worry about your debts, but do not ignore them. There is help for Home Owners and Tenants who have total unsecured debts of £2,000 or more, less their mortgage and/or their secured loans payments.

  • Write Off Up To 75% of Debts
  • Only Pay What You Can Afford
  • Reduce or Freeze Interest and Charges
  • Single Affordable Monthly Payment
  • Protection From Creditors
  • Expert and Impartial Advice
  • Dedicated Point of Contact

Debt management gets you out of debt by letting you make only repayments that you can afford, rather than struggling to survive month after month.

The following information will help your understand Debt management (UK) better to decide which of the  Debt management solution (USA) is best for you.

There are two types of Debt Management solutions. They are both considered ‘informal’ arrangements.

Self Help Debt Management.

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This is where you contact your creditors, explain to all of them that there is a problem with your repayments. Then negotiate a new monthly repayment directly with each of your creditors. The advantage of this is that there is no Debt Management fee to be taken out of the repayment, therefore your creditors will receive all the money that you can afford

The distinct disadvantage of this is that it can be a very stressful and time consuming, made all the more difficult when there are a number of creditors, and when you don’t have a lot of experience in negotiating with the creditors.

Commercial Debt Management Plans.*

 

This is where you contact a Debt Management company,tell them all your creditors’ details and the debts to each creditor. They will then negotiate with your creditors’ on behalf of you and provide the creditors with the evidence they require that show you are unable to pay their current repayments.

Then you will only have one single lower monthly payment that you can afford. This is paid directly to the Debt Management Company who distributes your monthly payment between your creditors so the creditor you owe the most to gets the biggest share of your disposable income and the one you owe least to will get smallest share.

In most cases the Debt Management company has arranged with creditors to have interest payments stopped during the debt management program. There will be an initial setup and a monthly fee,taken out of your single monthly payment before the rest is distributed between your creditors. The benefits of this type of Debt Management are listed below:

  • You Don’t Have any Dealings With Creditors,it is all Managed for You
  • Single Monthly Payment That You Can Afford
  • Reduce or Freeze Interest and Charges
  • Free Financial Advice From Personal Debt Advisor.
  • Dedicated Point of Contact

Individual Voluntary Arrangement UK Explained

An Individual Voluntary Arrangement is a formal agreement between a debtor (person owing money) and their creditors (the people who are owed money).

An (IVA) is also a legally binding agreement, and allows the debtor to make smaller monthly payments to unsecured creditors so they pay off a percentage of what they owe for the full term of the Individual Voluntary Arrangement UK, which is normally 5 years.

While the IVA is in force, the creditors are legally bound to freeze the interest on outstanding debts and to stop adding late payment charges to the account(s).

Also during the IVA the creditors are not allowed to contact the debtor about the outstanding debts, whether by mail, telephone, fax or email, as all correspondence must be passed through the appointed Insolvency Practitioner’s office according to the terms of the Individual Voluntary Arrangement (IVA).

Once an IVA is successfully completed all outstanding balances must be written off by the creditors,this can be as much as 75%!, leaving the debtor debt free.

The amount of the monthly repayments to the IVA are calculated by the debtor providing the relevant documents and are based on what the debtor can actually afford to pay throughout the full term of the IVA.

To qualify for an IVA the minimum requirements need to be met.

  • Debts must be over £15,000
  • 3 or more different creditors
  • Debtors must be in have a regular income which is not dependant on benefits
  • The Unpaid Balance is Written Off – As Much As 75%
  • Single Affordable Monthly Payment
  • Freeze Interest and Late Charges
  • Protects You From Any Action By Your Creditors
  • Alternative to Declaring Yourself Bankrupt
  • Avoid Public Notices Affecting Your Reputation

Will debt management stop my interest building up?

When you enter a debt management plan,  your lenders will be asked to accept lower monthly payments towards your unsecured debts. Repaying your debts more slowly does mean it’ll take longer to repay them and can end up costing you more (due to interest), but it also means you should be able to stay on top of your finances, since your debt repayments would be based on how much you can afford per month, rather than what you thought you could afford when you took on the debts in the first place.

Your lenders will also be asked if they’ll waive charges and either reduce or freeze the interest they’re charging on your debts. They’re not obliged to agree to this, but there’s a good chance they will if they can see that it’ll help you repay your debts at an affordable rate.

And remember: debt management companies aren’t the only ones who can negotiate with lenders. In fact, you may be able to get them to accept lower payments, freeze interest and waive charges if you call them directly and speak to them yourself.

Even so, there are various reasons people choose to go to a professional debt management company. For example

They’ll know what makes a realistic repayment plan.

A debt management company will be able to help you calculate exactly how much you receive in a month, how much of that you need to live on, and how much you can realistically afford to pay towards your debts. They’ll help you make sure you’re offering your lenders as much as you can afford, without committing yourself to paying more than you can afford per month.

They’ll know what lenders are likely to accept.

They will have experience of helping people with debt problems. So they’ll have dealt with lenders on many occasions – they’ll know whether lenders are likely to think a proposal represents a reasonable way of helping you clear your debts.

They’ll have the time to focus on your debt problems.

Most people have so much going on in their lives that it’s hard to find the time to negotiate with multiple creditors – possibly on multiple occasions. Debt management professionals do this for a living. They’ll be able to spend the necessary time corresponding with your lenders.

In other words, a professional debt management company should have the skills (and the time) it takes to negotiate agreements that will help you get your finances under control – and that your lenders can agree to.

Please note that a debt management plan would only be an option if you can’t keep up with your repayments as they stand. Plus, changing the way you’re repaying your debts will show up on your credit report for 6 years and can affect the cost and availability of credit for that time.

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Is Debt Management the only solution

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A Debt Management Programme, also known as a Debt Management Plan and is set up by a professional debt adviser in accordance with the consumer credit act legislation. Read more

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