Potential Debt Solutions

1. The first port of call is to stop the outflow of expense. Ensure you are not paying more than you need to for expenses and also that you are curbing your spending. Do you really need to make that purchase?

2. Talk to us and we will see if we can consolidate the loans into one place to reduce your expenditure. If we do, don’t use the money saved per month to spend again. Use the money to save up for a nest egg and to get yourself ahead rather than always be chasing your tail. Steps after here are where one and two have failed.

3. Debt management: For those who do not wish to refinance their existing debts, the alternative is to approach the creditors in hope of reducing the monthly payments.

4. Individual Voluntary Arrangement (IVA). A financial statement is produced, and a surplus which can be paid to your creditors is calculated. To get an IVA in place, 75% of the creditors need to agree to the terms and conditions of the arrangement. The arrangement is set in stone, which is an improvement over the informality of a debt management plan. In addition interest charges will be stopped and a proportion of the overall debt may be written off. The process of getting an IVA in place can take two to three months and there are large administration fees, which can run to a two or three thousand pounds.

5. Bankruptcy. The most extreme option available but one that should be considered, particularly if things are really bad. In certain circumstances it can be the best option. But once you are declared bankrupt you are likely to be locked into it for many years. The long-term ramifications of which include: being unable to access credit, be in certain types of business or open a bank current account.