Are there Alternatives to Debt Management?

Not all debt is bad, it only becomes that way 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 a number of ways in which you can deal with your debt no matter how high it is, please see below for some examples:

• Unsecured Lending:

Obtaining an unsecured loan at a reasonable interest rate is always difficult if you are financially struggling or have been previously been refused. If we assume that you have already explored the option of borrowing from your bank or building society, then the truth is that you are probably already financially stretched. Instead of borrowing more money, you need to make your existing debts much more affordable.

• IVA (Homeowners and Tenants)

If you qualify for an IVA, it is invariably your the best solution, as it is the only one that allows you to write off a large proportion of your debt.  An IVA means you only pay one affordable monthly payment, interest and charges are frozen, your creditors would stop chasing you and at the end of your IVA, typically 60 months, all that you haven’t repaid is written off. If you are a homeowner, your IVA will protect your home from your creditors and bankruptcy proceedings.

• Secured Homeowner Lending Consolidation/Re-mortgage)

If you have more equity in your home than outstanding unsecured debts, it may be possible to qualify for a secured loan, consolidation loan or a re-mortgage. Providing that you can afford the additional borrowings, this could be a good option for you.

If you have less equity than your unsecured debt or think that you may struggle to make repayments, then secured borrowing against your home will can never be appropriate as it would still leave you in debt and could put your home at a very serious risk. Please seek expert help to determine whether you are able to keep up the repayments.

• Bankruptcy

Bankruptcy should only ever be considered when all other options have been fully exhausted. It is important that you only take professional advice from a Licensed Insolvency Practitioner.

 

Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.

Your property will be protected within an IVA but you may be required to release all or part of any equity during the period of the arrangement.

Failure to complete the term of an IVA can result in bankruptcy.

(In Scotland, a PTD is the equivalent to an IVA.)