Not all debt is bad. Debt becomes bad when you cannot afford to repay your credit commitments. In some cases this is where the level of debt is very high, but not always. There are many people who owe small levels of debt but still can’t afford their repayments.
Call now on freephone 0800 048 1752 or take the One Advice Debt Test to see you what debt management alternatives are available.
Our One Advice advisors are on hand to help you find the debt solution which is right for you. We would only ever offer ethical debt advice and endeavour to find a debt solution which is right for your needs.
Although a debt management plan can help you to control your debt, there are alternatives to debt management which you might want to consider, such as:
1. IVA (Individual Voluntary Arrangement)
If you qualify for an IVA, it is invariably the best solution for you as it is the only debt solution that allows you to avoid bankruptcy if you keep to the terms of the IVA, and will write off your unaffordable debt. As a homeowner, your IVA could protect your home from your creditors and bankruptcy proceedings.
Every other debt solution (except bankruptcy) will increase both your debt and the term of your repayments. If you qualify for an IVA you would only pay one affordable monthly payment, interest and charges are frozen, your creditors will stop chasing you and at the end of your IVA, typically a 60 month period, all the debt that you haven't repaid will be written off.
2. Unsecured Lending
Obtaining an unsecured loan at a sensible interest rate is always difficult if you are financially stretched, have missed payments to your debt or have been refused credit or a loan in the past.
If we assume that you have already explored increasing the limits on your cards or getting additional loans to help you with your debt, and you still have a requirement for additional borrowing, then the truth is that you are probably already financially stretched. You probably don’t need to borrow more money, but rather you need to make your existing debts more affordable to you. This is how a debt management plan can help, it can restructure your debts so that you can afford your creditor payments, without the need of taking our further debt.
3. Secured Lending (eg Debt Consolidation Loan /Re-mortgage for Homeowners Only)
Consolidating all your unsecured debts into one affordable secured payment may be an option. If you have more equity in your home than you have unsecured debts, it may be possible to qualify for a secured loan, debt consolidation loan or a re-mortgage.
Providing that you can afford additional borrowings, this could be a good option for you. If you have less equity than your unsecured debt, further borrowing against your home will not be appropriate for you as it would still leave you in debt and could put your house at risk.
Never secure your unsecured debts on your home if you think you may struggle to make the repayments in the future, because you are putting your home at risk. Seek expert help to determine whether you can afford the repayments.
4. BankruptcyIf you are considering a Debt Management Plan or you are looking at your debt management alternatives, then the chances are that you debts are spread out over a number of different creditors and have perhaps been built up over a number of years.
We believe that every case is different and your individual financial circumstances are unique to you. This is why One Advice has expert debt advisors who are able to talk through your finances and help you to come to the best decision for you.
Call One Advice free on 0800 048 1752.