Tag Archives: debt consolidation

Debt Management – Simplified

Debt Management - Simplified

Working out a debt management plan can be tricky - whether you're considering an IVA, a debt consolidation loan or a debt management plan.

Debt can be quite overwhelming – especially if unexpected changes to your personal circumstances have an impact on your income or if you have to end up paying out more than you are able to on a regular basis.

Many of us have been there – you can only tighten your belt so many times before you’re faced with a spiral of debt. Fortunately debt management programmes can offer a way of controlling debt – especially if you are facing endless payment demands.

Debt management helps you to manage your debt more effectively and gives you the breathing space you need to repay outstanding debts and get your spending back under control.

Whilst debt consolidation is probably the best known debt management plan there are other types of programmes, including a standard debt management plan and an Individual Voluntary Agreement. Let’s take a few minutes to look at the three different plans available and the merits of each:

Debt Management

A debt management specialist will work with you to take an in-depth look at what money you owe and who you owe money to. They will then talk with the companies you owe money to, and try to get them to freeze the mounting interest payments so that your debt doesn’t worsen. They will then ask the creditors to accept regular, sometimes  smaller repayments (in some cases they may even be able to write off some of the debt).

Debt management specialists will handle all letters and demands for payment from your creditors, which can also really help to relieve the stress of debt.

The debt expert will also help you to work out what your monthly income is and what you can reasonably allow for living expenses, to show what you can realistically afford to repay. In addition to this they will help you to allocate that money between your creditors. The idea is that you will only make one affordable payment each month, and the debt management company will use that payment to make payments to various creditors on your behalf.

It should be noted that there are no guarantees that the firm you owe money to will agree to freeze interest rates or reduce your regular payments, let alone write off any of your debt. In some instances companies may still charge additional interest or penalty fees.

Whilst your monthly payments may reduce, you could end up paying a larger total amount over a longer period of time, in order to make it affordable for you.

Debt Consolidation

Debt consolidation works in a very similar way to a debt management plan. The emphasis is on “consolidating” all your existing debt into one manageable repayment plan. This is known as a “debt consolidation loan”  - this includes all debts plus and early repayment fees you may incur. So all your existing debt is essentially paid by the debt consolidation firm so your only obligation is to pay them a manageable lump sum every month.

Individual Voluntary Agreement

In addition to these two there is something known as an “Individual Voluntary Agreement” (IVA) that is a more formal acknowledgement of your financial difficulties, however, it works in the same way as a standard debt management plan.

An IVA is essentially a legal agreement between the creditors and yourself. You basically agree to repay the debt over a set period of time (around 5 years on average). By the end of that agreed period your creditors will accept that they cannot obtain any further money from you – even if you haven’t repaid the debt in full.

If you are struggling with debt its worth looking at what your options are and, if necessary, look at a debt management / consolidation plan to help you meet the demands of your creditors.

Payday Loan Debt – How To Deal With It

Payday Loan Debt - How To Deal With It

Payday Loan Debt – How To Deal With It

Whilst payday loans can be a great way of helping you meet unexpected bills or helping to cover unforseen emergency costs over the course of the month, as well as a very convenient, quick way of getting a short term loan, there is always the risk of getting into debt easily, especially with the high interest rates associated with payday loans.

But what can you do if you do get into payday loan debt? Check out our top tips:

1. Work out a payment plan with your payday lender. Believe it or not payday loan companies do not want you to get in trouble with debt – it looks bad for them and it’s not so great for you. Most compliant payday lenders will work out a reduced repayment plan to help you meet monthly costs. This is what’s known as a “deferral” in the payday loan business.

2. Work out your monthly budget. Try to work out what your monthly outgoings are (i.e. utility bills, food costs, travel costs, etc), excluding your payday loan debt. Then simply subtract your outgoings from the overall amount you take in every month. That leaves you with a pot of money that you can dip into to repay debt – but remember you should only pay back what you can afford.

3. Cut out those things you don’t need. It’s easy really – by cutting out things like that weekly take-away, that 4 pack of beer or other luxuries, you will have more left over at the end of the month. More money that can go towards repaying your payday loan debt.

Remember – never ignore your debt thinking it will just go away. That’s not going to happen. If you’re struggling with payday loan debt then you need to face it head-on and resolve it as quickly as you can.

In addition to this you should avoid borrowing any more money until your existing debt is repayed. That doesn’t just include payday loans but should also include bank overdrafts, credit cards, unsecured loans and other forms of credit.

If you do end up taking out additional loans or borrowing money on your credit card you could end up with debt that is simply unmanageable. In which case it is important that you seek the guidance of a debt consolidation expert. If you are looking for debt consolidation services then you should look to the likes of a debt management plan to help you out.

Mortgage Holders Turn To Payday Loans

Mortgage Holders Turn To Payday Loans

Mortgage holders and tenants are turning to payday loans, credit cards and short term loans to help meet the monthly costs.

A survey by homeless charity Shelter has revealed that almost 1 million mortgage holders took out payday loans to help meet mortgage repayments last year.

The survey went on to reveal that a whopping 7 million people in total were dependent on some form of short term loan, credit card or unauthorised overdrafts to help meet the costs of their mortgage or rent.

Shelter have suggested that by turning to the likes of payday loans or credit cards could well see more and more people spiralling into debt.

The Charity’s CEO, Campbell Robb, commented:

“Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to urgently seek advice.”

Creditwindow suggests turning to the likes of the Consumer Credit Counselling Service or Money Advice Service to seek advice on managing debt and to look into new ways of controlling spending to meet monthly needs.

If you are looking for a debt management programme it may be worth looking at what the likes of MoneyExpert have to offer.

Image: Idea go / FreeDigitalPhotos.net

Managing Debt Effectively – Its Easier Than You Think

Managing Debt Effectively - Its Easier Than You Think

Managing Debt Effectively - Its Easier Than You Think

If you have mounting debt in the form of credit cards, personal loans, backed-up mortgage repayments, etc, then it can be a really daunting task when it comes to paying it all off!

So what can you do to help make managing your debt easier? That’s a good question and it’s not always the easiest one to answer – usually people opt to approach a debt management service, however, it’s important to consider all your options first.

What This Article Is

This article is a resource to find out how you can get your personal debt under control, offering free and impartial advice.

What This Article Is Not

This article, although will offer recommended firms to help manage debt, is not solely focused on this. It should be made very clear from the start that debt management programmes can benefit some people but is certainly not appropriate for everyone.

Don’t Ignore Your Debt

1. Try To Meet At Least The Minimum Repayments

2. Debt Counselling – some charities offer free debt counselling to people and they can give excellent advice. Try talking to the Consumer Credit Counselling Service.

3. Increase Your Income – whether that means getting an additional job, finding a new one or even asking for a pay-rise.

4. Consider switching utilities providers (gas/electricity) – shop around and see what’s out there!

5. Remortgage Your Home Or Trade It In For Something More Affordable.

6. With the ever growing price of fuel you could consider downsizing your car to a more economical model.

7. Stop gathering new debt – cut up those credit cards and stop taking out loans!

8. Cut out those vices – consider giving up cigarettes, alcohol or whatever (on average a pack of 20 cigarettes costs £5 – £6 a time – think about how much you could actually save in the longer-term!)

9. Prioritise your debt payment – get the most urgent debt paid off first.

10. If all else fails you could consider a debt consolidation plan where you consolidate all your existing loans, credit card debt, etc, into one, easy to pay, lump sum.

What Is Debt Consolidation?

Debt Management or “consolidation” is simply a method of putting all your existing debt (i.e. credit card, loan, mortgage, debt) into one lump sum.

In effect a debt management company will arrange a repayment plan where you pay everything off over a period of time. Usually you will find that the debt firm offers a good rate of interest (APR – Annual Percentage Rate) that will help keep repayment costs reasonably low – as long as you keep paying it on a regular basis.

As long as you avoid getting into more debt (cut up those credit cards or at least hide them away!) you should have your debt paid off reasonably quickly.

However, whether you take a debt management plan or not, it’s certainly worth following the ten points mentioned previously as this will help cut spending and help you live within your means.

Find a debt management plan to suit you

Don’t Let Your Payday Loan Debt Grow

British consumers turning to payday loan companies for a quick finance fix are being warned to repay the money on time or risk facing high interest repayments.

According to insolvency professional trade body, R3, over 2 million people have turned to payday lenders such as Payday UK and Wonga over the past year. Many customers are drawn to the convenience of borrowing relatively small amounts (between £80 – £1,000) and, in some instances, the payday loan can be in the customer’s bank account within 24 hours.

Whilst borrowing a payday loan can prove cheaper than accessing an unauthorised bank overdraft the interest can accumulate quickly if the money isn’t repaid on time.

For example, Wonga have suggested that a standard payday loan of £100 could result in a repayment value of £187 if no repayments were made for 2 months or more. If the customer continues to default the debt is usually handed to a debt collection agency who will add on admin fees as well – driving up repayment costs further still.

One finance expert commented:

“There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. The golden rule is not to borrow money unless it is absolutely necessary.”

Help in Handling your Money

Experiencing problems managing your finances, take a look at this comprehensive list of agencies that could help you help yourself:

Debt Management
For help in consolidating debt please visit our debt management page.

Citizen’s Advice Bureau (CAB)
Debt agencies and lenders chasing you for loan and credit card repayments and feeling over-whelmed? Why not speak to the CAB, an organisation setup to give consumers free, impartial advice.

Consumer Credit Counselling Service (CCCS)
For anyone faced with growing credit card and loan debt, the CCCS offers free and confidential advice and support service, online or over the phone.

National Debtline
This service also offers free independent and confidential advice over the phone for people living all over England, Wales and Scotland. Call: 080 88 08 40 00. Alternatively, visit the National Debtline website.

Credit Action
The Credit Action organisation are a finance charity that’s dedicated to improving British people’s thinking about money. They offer a number of resources, tools and training to help educate people better about handling personal money better.

Payday Loans Thought To Be The Main Reason Behind Low Income Debt

Payday Loans Thought To Be The Main Reason Behind Low Income Debt

Payday loans and short term loans are thought to be the main reason behind low income consumers being faced with spiralling debt problems.

Debt experts are suggesting that payday loans are the primary cause for lower income consumers facing mounting debts.

Due to the inflexibility of some mainstream lenders, most notably banks as a result of the UK economic recession, people on low incomes are having to turn to payday loans to help ease “their financial burdens.”

In many cases short term loans such as payday loans and doorstep loans can help to illeviate the financial pressure on British people. However, those on low incomes are urged to be cautious when opting for a quick, short term solution to brige the gap until payday.

One debt expert commented:

“If the problem is unsecured debt that has become unmanageable then it’s important that people who are struggling to meet their repayments seek help.”

He added that people on low incomes should look into what state benefits they could be entitled to, it could mean the difference between mounting debt and the ability to face those monthly costs until payday.

Should payday loan debt get out of control consumers are urged to consider debt management plans to help ease the debt by consolidating the debt so the consumer repays the amount in easy, manageable chunks.

Free money services such as the Money Advisory Service and the Consumer Credit Counselling Service may be worth talking to if you’re after help in controlling personal debt.

Creditwindow urge any consumers to be careful when seeking credit cards, personal loans or any type of financial borrowing. Anyone looking for a loan or credit card should do some thorough research before applying for them. Creditwindow boasts a number of guides, news and features that deliver impartial advice on financial lending.

To find out more please feel free to check out any of the main categories on this site, it’s worth knowing what your options are and the differences between the loans and credit cards.

When a Scottish Trust Deed Might Help With Debts

When a Scottish Trust Deed Might Help With Debts

Guest blogger Simon Wyllie suggests that Scottish Trust Deeds could help get you out of debt.

As households throughout the UK come under increasing financial pressure, it’s unsurprising that an entire industry has developed which advertises solutions to deal with unmanageable personal debt.

Many people remain unaware however that where you live in the UK determines which options are available to you.  Residents of Scotland have access to a variety of measures to deal with debt difficulties that are unavailable in the rest of the UK.

A trust deed (often also referred to as a “protected trust deed” or a “Scottish trust deed”) is one such option. Trust deeds exist as an alternative to bankruptcy for residents of Scotland suffering from serious debt problems.

The marketing of trust deeds has caused some issues. Certain debt-help providers advertise them as being an easy way to escape from debt and to have much of it legally written-off. This view downplays the serious nature of a trust deed; it is a formal insolvency measure in many ways similar to bankruptcy and it should always be viewed as a last resort.

However, for anyone with serious debts that simply cannot be repaid within a realistic timeframe by other means, a trust deed might well be appropriate.

When signing a trust deed you appoint a “Trustee” to supervise your financial affairs for a fixed period (which is often three years). You commit to paying over your surplus income each month and also to paying over the value of any significant assets that you currently own (or may acquire during the trust deed term).

Due to the requirements connected to assets, homeowners should be cautious about their position prior to signing a trust deed. If they have equity in their home they will need to pay over the value of that equity. However, refinancing during a trust deed to release equity is currently virtually impossible. This may mean that some homeowners with equity may have to review other options to deal with their debts.

The technical nature of the trust deed process and trust deed guidance/legislation means that many people have questions that they need answering before they are prepared to go ahead with this debt solution option. In such circumstances making use of a trust deed forum might be appropriate as it enables the provision of expert trust deed advice alongside the shared personal experiences of individuals that are at various stages of the trust deed process.

Guest Blogger:

Simon Wyllie

Trust-Deed.co.uk

Get yourself help with Creditwindow's debt management programmes.

IVA Advice Options Explained

IVA Advice Options Explained

Guest Blogger, Simon Wyllie, explains IVA advice options for consumers struggling with debt.

After a short period of decline, it’s apparent that adults throughout the UK are once again building up their personal debts. A few years ago this was often to fund luxuries such as new cars or foreign holidays. During the current economic squeeze the evidence is that many adults are using credit just to survive financially, with debt often being used to finance essentials such as a mortgage, rent or food.

Inevitably a growing level of debt will leave some people in a position where the repayments become unaffordable. This often occurs due to an unexpected change in circumstances and separation, redundancy or another form of income loss may be the root of the problem.

For residents of England, Wales and Northern Ireland an IVA (Individual Voluntary Arrangement) is one of the options to bring uncontrollable debt repayments back under control. Choosing where to obtain IVA advice is however not always easy.

For good reasons many people like to approach trusted organisations such as the Citizens Advice Bureau when they get into financial difficulty. The advisers at the CAB may well be able to provide good IVA advice as well as to direct people towards other viable options. However it should be remembered that the CAB isn’t itself a provider of IVA service so may not be able to provide full detail on the intricacies of an IVA.

IVA advice is also on offer from most Insolvency Practitioners. An Insolvency Practitioner is the individual that actually takes a “personal appointment” to handle an IVA for someone who wishes go ahead. It’s suggested that anyone seeking IVA advice focuses their search on Insolvency Practitioners that specialise in personal IVA services as opposed to the other main area of insolvency work which is “business recovery”.

Many IVA intermediaries also exist and are often connected to websites that appear to be direct providers of IVA services. They will eventually sell your “case” to an Insolvency Practitioner who will deliver the actual service. It’s strongly suggested that nobody should pay any kind of an upfront fee to any of these IVA intermediaries.

As IVA advice is a very technical area, rooted in insolvency law, many people have a lot of questions that they’d like answered

before proceeding with an IVA. In such circumstances an IVA forum may be useful. An IVA forum allows information to be gleaned from IVA experts as well as the exchange of personal experience between people dealing with similar debt situations.

Guest Blogger:

Simon Wyllie

IVAAdviceForum.co.uk

Get yourself help with Creditwindow's debt management programmes.

A Debt Management Plan: Choose Carefully

A Debt Management Plan: Choose Carefully

A Debt Management Plan: Choose Carefully

Debt management plan companies have been under serious scrutiny in recent times. The media, regulators and politicians have all taken an interest in an industry that has sometimes promised too much and delivered too little.

The reality is that a debt management plan is an ideal solution for many people who otherwise could not afford to repay their debts. It’s known as being “informal” in nature and therefore potentially much less damaging to the debtor than formal insolvency measures such as bankruptcy or an IVA. With creditor support it may result in interest being frozen (or reduced) which can greatly increase the rate of repayment.

There are however huge discrepancies between the competence, ethics and customer-service offered by different debt management plan companies. Good DMP providers fulfil a valuable role on behalf of their clients, serving as an adviser and a buffer to facilitate an achievable repayment outcome. Poor DMP providers however may lead to a debt situation worsening.

Competence is of paramount importance. Many unqualified individuals have flooded into the debt management industry seeing it as a lucrative business prospect. Professional qualifications in debt advice (the Certificate in Debt Resolution for example) and insolvency are available. It’s suggested that you confirm the qualification credentials of advisers and refuse to deal further with any “adviser” that turns out to be unqualified.

The operation of good ethics is equally important. Have you been provided with information on options other than a debt management plan? Have the drawbacks of a DMP been explained to you as well as the benefits? Advice should be provided that is in your best interests; giving you the information that you need to make an informed decision is a vital part of an ethical debt advice process.

Customer-service is also very important. This can be hard to gauge when taking initial advice, so recommendations can be useful. Can anyone you know give you feedback on a DMP firm they have used? If you prefer not to discuss this subject with those you know, online debt management plan forums may provide some feedback and reviews on certain firms that will be useful to you.

Take the time to identify qualified debt management plan advisers who operate ethically (and who work within customer-focussed businesses). This will greatly improve the prospect of finding a DMP that truly benefits you financially as well as reducing any worry or stress you may have been experiencing.

 Guest Blogger:

Simon Wyllie

DebtManagementPlanForum.co.uk

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