Got Debt Problems? Get Debt Help

The recession has left many people with severe financial problems, but it has also seen the debt industry boom. With so many organisations seemingly keen to offer debt advice, it can be hard to know where to go for the best independent, impartial debt help.

If we take our finances for granted and keep slipping further into the red each month, eventually the credit will run dry and all that will remain is a mass of debt problems and in some circumstances bankruptcy. However this can be avoided with some simple budgeting and debt advice. To start with, you need to understand what is causing the issue or what is making you feel like your finances are overstretched. Are you spending hundreds on gym memberships and magazine subscriptions that you don’t need, or are you wasting money daily by buying expensive lunches and coffee each day?

By trimming back on non-essential items like these, you could potentially save hundreds of pounds each month that could relieve your finances and leave you with more money to repay your debts. If you’ve tried this and are still struggling each month, you could then look at your essential items and see if these could be trimmed further. This could mean finding a cheaper mortgage (or moving to a cheaper property if you rent), shopping around for lower insurance premiums, or switching gas and electricity providers to get a better deal. You could also review your benefits and tax credits allocations, as you may not be receiving your full entitlement.

When shopping for food you could also try and buy the supermarket’s own brand of groceries, rather than expensive brand names – as the quality is often the same. These little changes could have a big impact on your finances and could relieve any debt management worries.

If you’ve tried all of these little tricks and still find that your debts aren’t decreasing, it may be worth seeking some impartial debt help. Reputable debt advice organisations, like The Debt People, Hamilton Locke and Chiltern can offer some simple but effective solutions to debt problems that could see you get out of debt within three years.

Professional debt solutions like an Individual Voluntary Arrangement (IVA), Trust Deed or a Debt Management Plan (DMP) offer you to regain control of your unsecured balances (Personal loans, credit card debt, catalogues, store cards etc) whilst still repaying debts.

These effective solutions can prevent problems developing further and can also help to avoid bankruptcy or other legal action. An IVA gathers all of your unsecured balances and enables them to be repaid with a single monthly payment. This is usually within a five year period. This payment is based on how much you have realistically available to pay towards your unsecured balances once your priority payments like rent/mortgage, council tax, food, travel to work and other essential items have been accounted for. As these are taken into account, it will always be affordable for you, and allow a reasonable standard of living (an allowance is even allotted for basic satellite/cable, internet and mobile phone packages). The IVA involves a qualified insolvency practitioner who drafts a legally binding agreement between you and your creditors. This protects you from their changing terms of agreement or payment demands. Once the IVA has been agreed all additional interest and charges will stop being added, so the debt doesn’t continually grow larger. All correspondence with creditors is done via your insolvency practitioner, so their letters and calls at inconvenient times demanding payment will stop. Once the IVA term is complete, all remaining outstanding unsecured balances are written off, which means the amount you pay into an IVA is typically considerably less than the total amount of debt that is owed. Throughout the term of you IVA the insolvency practitioner will be on hand to provide impartial IVA advice and support.

Trust Deeds are only for people living in Scotland and work in much the same way as an IVA - but are normally repaid over three years. An insolvency practitioner will draft your agreement and ensure that the terms are affordable and manageable for you.

Debt Management Plans (DMPs) are a more informal arrangement and don’t require a legally binding contract. Because of this, the services of a qualified insolvency practitioner are not required. They will still gather all unsecured balances into a single monthly payment, and your provider will try to have interest and charges reduced or stopped on all accounts. With a DMP you also have the satisfaction of repaying all of your outstanding debts, but at a level you can afford and that is manageable for your situation. This is because your debt repayments are rescheduled over a longer period of time, and the amount you pay is the amount you have available once essential living costs have been accounted for. Payments are flexible and can be altered according to your changing financial situation, so if your available income is affected by higher costs or lower wages it can be increased or decreased to suit. The monthly payment is made to your DMP provider, who then distributes the amount between your creditors on a pro rata basis. They will also handle all correspondence on your behalf, so letters and calls from creditors should stop.

As with all of these debt solutions mentioned above, finances can be simplified and adjusted to suit your current circumstances – but it is always best to seek impartial advice from a reputable provider (like those listed above) to ensure you receive the most suitable solution for you.