Debt Consolidation The Ins and Outs

28 October, 2017

Debt consolidation, bankruptcy and IVA advice have become all too familiar words for many people seeking help with spiralling debt. The economic crisis and subsequent recession has seen risk adverse creditors reign in on accessible easy credit at low interest rates. Gone are the days when credit card holders could easily carry out a balance transfer on existing debts to a lender offering low or 0% interest rates of a year or even longer.

As more and more of our wages go towards ever increasing household bills like food and fuel people find they are struggling to make repayments on their debts and are turning to debt consolidation and IVA advice in order to get themselves back on a more secure financial track.

Consolidating your debts offers a way of getting your finances under control without resorting to bankruptcy by consolidating multiple debts into one so you are only making one monthly repayment, rather than juggling numerous different repayments each month, trying to remember how much you owe to whom and by what date. By carrying out debt consolidation you should also be free from various creditors contacting you with repayment demands which can be very stressful and make you feel like there is no way out of your current financial predicament.

Consolidation often means you can secure a lower rate of interest for your monthly repayment and you can establish a monthly repayment you are comfortable with while still meeting all your other monthly outgoings. Making just one payment means you are less likely to miss a repayment which can help you maintain a good credit score.

Consolidation is not the answer for everyone, it very much depends on your individual circumstances and seeking IVA advice may be a more viable option. Whatever you do, try to leave bankruptcy as your very last resort. When most people start looking into consolidation they have often left it too late and have already missed repayments which has damaged their credit rating. This will make it harder to secure a debt consolidation loan with a low interest rate.

A higher interest rate consolidation loan may make it too expensive to be a good option. Debt consolidation also does not address how your spending has gotten out of control as you can move your debts and continue spending on credit, thereby making you situation worse. You should also think very carefully before taking out a secured loan or you could be at risk of losing your home.

If a consolidation loan is not right for you, you should explore IVA advice. An IVA is an Individual Voluntary Arrangement and a viable alternative to bankruptcy. If you have debts of more than 12,000 and are in regular employment you can arrange reduced repayments for a fixed term, usually about five years. It is a legal agreement and means your creditors cannot take any action against you for the duration of the agreement.

You establish a monthly repayment you can afford over five years and any remaining debt is written off by your creditors. Unlike debt consolidation, an IVA is legally binding and can often be the best solution for many people with large debts looking to avoid bankruptcy. Always take IVA advice and any other financial advice from a reputable company.

Learn more about debt consolidation. Stop by Alan Jeffries’s site where you can find out all about bankruptcy and how to avoid it.

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