Mar 03

Deciding on a Debt Management Plan

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In today’s fast-paced life and increasing expenses more and more people are finding it difficult to meet their financial commitments. This could lead to getting into serious trouble with creditors. It could even lead to bankruptcy or, in extreme cases, imprisonment.

In order to deal with this situation, UK legislation has allowed for debt management in the form of Individual Voluntary Agreements (IVA’s) and, in Scotland, Protected Trust Deeds. Your choice of a debt management plan will greatly depend on what your debt situation is, as well as where you live.

The first question that you need to ask yourself about a debt management plan is whether it is a suitable option for your situation. If you have debt accrued from credit cards or store cards (or something similar), an IVA will be a suitable solution for you. Other debt may qualify if you’re going through a temporary financial crisis and will be able to pick up larger payments after 12 months.

Should your debt become so serious that you are sued and end up in the county court, the court will take a close look at your finances. If they find that you are indeed in dire straits where your finances are concerned, the court can order you to participate in a debt management plan. The court will order a repayment plan after taking your entire budget for essential expenses into consideration. They will also put a freeze on interest and other costs to prevent the amount that you’re repaying from growing and becoming unmanageable.

Of course you can set up your own debt management plan before it needs to go to courts. This can be done either by you or a debt management agency. The two best known charitable agencies are Citizen’s Advice Bureau and the National Debtline. In addition to the charitable agencies, there are several for profit agencies that charge a fee to assist you with your management plan.

It is usually better to consult an agency – even if you choose one that will have a fee attached to it – as creditors tend to look more favourably on offers negotiated by professional debt advisors. Should you work through an agency, you also have the benefit of not having to deal with creditors again. Creditors a prohibited from contacting you when you’re on a debt management plan. The agency takes over all communication and creditors have to send all correspondence to the agency. The advisor will let you know of any significant issues that arise.

Remember that there are free debt management agencies and then there are profit making agencies. Depending on your financial situation you may want to consider both before committing to an agency. Profit making agencies take up to 15% of the repayment amount as an administrative fee before they pay over the rest of the money to your various creditors. If this practice is going to make it more difficult for you, you want the free option.

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Jul 05

Do You Need Financial Help To Help With Monthly Bills?

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Do You Need Financial Help To Help With Monthly Bills?

Debt consolidation can offer you relief from the day-to-day struggles faced by many people who have more debt than their income can support. If you are facing financial ruin, or have creditors calling you to make your payments, you need to look into other ways to get your debts in order and find more manageable monthly repayments.

You may have heard others talking about debt consolidation and you may even be considering it yourself. Lets take a look at some of the benefits that a debt consolidation loan has to offer and how this can help you, the consumer.

What Is Debt Consolidation?

When you have multiple debts from different institutions, lending companies and so on, you will no doubt be paying huge amounts of interest on these. Coupled with large monthly repayments, it is nearly impossible for you to pay off your debts, no matter how much of your hard earned money you are pouring into them.

In order to pay your debts, you need to level the playing field by lowering your monthly spending on these. The problem is that, at the current interest rates that you are likely to be paying, it is impossible to lower your repayments and still pay off the principal.

Debt consolidation basically takes all of your debts, such as unsecured loans, student debts, your mortgage, your car repayments, credit or store cards, or basically any money that you owe, pays them off and leaves you with one loan and one set of monthly repayments. With only one set of repayments to make each month, you have much more control over your finances.

But the great thing about it is that, often, you can obtain a much lower interest rate on these debts. This means that you pay less money, as well as pay off more of the principal of your loan each month, giving you more breathing space.

Often, you are able to get a much lower interest rate from a debt consolidation company if you have some sort of collateral, such as your home or a car. By changing your debts to a secured loan, the bank sees you as a safer risk and will reward you for it with lower interest rates. Just make sure that you understand that once you secure a loan, because you are giving the lending institution the right to foreclose on your collateral if you stop making payments.

There are also non-secured consolidation loans available, and although they may have a lower amount of interest that you are already paying, they will still be higher than if you had collateral to secure your consolidation debt loan with.

What Are The Benefits Of Debt Consolidation?

-Lower the amount of interest being paid every month. If you shop around and find a good lending institution willing to provide you with the money to pay off your debts, they will often offer you a much lower interest rate than what you are paying on your already existing debts, especially ones with much higher interest rates.

-Only one payment means more savings. Since there is only one set of monthly repayments to make with a consolidation loan, you can take the loan over a number of years to make your repayments smaller and more manageable. This can give you some extra money each week in your pocket, rather than it going in on high interest repayments.

-Stop harassing phone calls from debtors. No more harassing calls from creditors screaming for you to make your repayments when you dont have the money is one of the most enticing benefits of taking out a debt consolidation loan. Once you pay off your creditors, you will only be dealing with one company. Your repayments will be more affordable, making you more likely to keep up to date with your repayments.

-Stop late fees and over the limit fees. There is nothing worse than trying to make payments on your outstanding debts only to find that all of the money that you have paid has gone on late fees and over the limit fees, leaving you in the same boat that you were in before making a payment. When this happens, it seems as though you are wasting your time.

With debt consolidation, you start off with a clean slate, which means no more late or over limit fees, giving you the opportunity to start paying the principal of what you owe again, rather than fees designed to rob you.

-Raise your credit score or start repairing it. You credit score is vital to getting anywhere in life. Without a good score you are unlikely to get loans, credit cards, or financing when you need it. When you do get a loan with a bad credit score, you are often given the highest interest rates allowable, making it nearly impossible to ever pay back. By consolidating your debts and being responsible with your repayments, you can begin repairing any damage done to your credit score, bringing you back to a credit-worthy customer.

You may find it helpful to speak to a debt counselor who can help you make a budget and educate you on how to use money wisely. There are many credit counselors available and many of them offer their services at a very cheap rate, or for no cost at all.

Don’t forget that if you are securing your loan with collateral, such as the family home or vehicle, make sure that you budget carefully and can afford to make your monthly repayments on time.

Consolidating your debts, in particular, credit card debt consolidation, is well worth looking into if you are in need of changing your financial situation for the better. Just make sure that when you are looking for a debt consolidation loan, you are serious about repaying your debts and vow to stay away from the lure of getting into even more debt.

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Apr 25

5 Ways To Try And Reduce Your Debts And Outgoings

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5 Ways To Try And Reduce Your Debts And Outgoings

Anyone that has a high level of debt or a number of creditors to pay off each month will know how stressful and difficult financial management can be. However, for those crippling themselves with monthly outgoing as a result of high debt levels there are some steps that could help to reduce the amount that you have to pay out each month, as well as reducing overall interest paid on your debts.

1. See where you can make cutback’s on your outgoing’s. Look at cutting back on little luxuries such as eating out at lunch each day rather than taking sandwiches to work with you. Also cut out any unnecessary expenditure, such as subscriptions and memberships that may no longer be of much use to you. It is surprising how much you can claw back through a number of small savings each month, and this can then be applied towards your smaller debts such as credit and store cards in order to clear them more quickly.

2. Make sure that you are aware of exactly what is coming in and going out of your account each month. Trying to manage your finances and prioritize on paying off debt is impossible if you don’t keep a proper track of your income and outgoing’s. List down every little payment that goes out of your account so you know exactly how much you can afford to spend or put towards clearing your debts a little faster.

3. Consider consolidating your debts. By consolidating smaller debts with one larger loan you can reduce the number of repayments you have to make each month, cut back on the number of creditors to whom you have to pay interest, and dramatically reduce the amount that you pay out each month. For homeowners, a secured loan could be the ideal solution, as this can be spread over a longer period and this helps to keep monthly repayments down. You should be aware though, that by taking finance over a longer period, this would mean you pay back interest for longer. However, if the interest rate is lass than what you currently pay, and lower monthly payments means that you have more disposable income to spend, it would serve to prevent it from being necessary that you need to take on extra borrowing as you will have spare money each month to either build up savings and be able to afford things which you made want to purchase, with out borrowing additional money.

4. Try and clear your overdraft. If you have an overdraft with your bank, and you find yourself reaching the limit every month, one small transaction is all it will take to push you over the limit and of course this means hefty bank charges being added to your account. By ensuring that you keep your overdraft at a sensible level rather than teetering at the brink of exceeding the limit you can avoid these hefty charges.

5. If you do intend to take out another loan this should be by way of consolidation rather than an addition to your existing finance, as consolidating all your existing credit may help to ease the financial strain and reduce outgoing’s, whereas another added loan will increase both. It may sound obvious but try avoid taking out a loan as an easy solution, as this will only suffice for the short term and you may soon find yourself struggling to keep up with all of your previous debts plus a new loan.

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Dec 17

Low Rate Debt Consolidation : Get out of that deep

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Low Rate Debt Consolidation : Get out of that deep hole of debts

Taking out a loan has become a norm nowadays. Many people now take out loans to fulfill their needs. People take out a loan when their needs surpass their income. Many people have multiple credit cards which lead to further indebtedness. Sometimes the rate of interest is so high that it becomes very difficult to repay the loan. When you are unable to pay monthly installments, you are in a severe debt problem.

Debt trap is like a maze it is very difficult to come out of it. Once you become a victim of a high interest loan, you keep on taking out new loans to repay the old ones. It is often quite difficult to keep track of so many loans and this may lead to bankruptcy.Therefore, you must try and repay your loans instead of declaring yourself bankrupt.

One way to avoid bankruptcy is to avail a low rate debt consolidation . Low rate debt consolidation helps you keep track of your debt. Low rate debt consolidation can help you consolidate your debt.Low rate debt consolidation is basically taking out a new loan to replace your existing loans. The primary aim of low rate debt consolidation is to reduce the interest burden. The rate of interest on a debt consolidation loan is lower than the rate on existing loans and credit card dues. A reduced rate of interest can help you discharge from your loan obligation. Another advantage of low rate debt consolidation is that you have to repay your loan to just one creditor which is much easier than to keep a track of multiple loans.

A low interest debt consolidation can bring sanity back to your life.Your low cost debt consolidation means you have more cash in your pocket.Low rate debt consolidations are also available for people who have a bad credit history .Low rate debt consolidation can sweep away the pile of repayments to your credit and store cards, HP, loans and replace them with one, low cost, monthly payment one calculated to be well within your means.Low rate debt consolidation can help you pay off your debt sooner. Consolidating your debt reduce your payments simply by having a lower rate. By paying the same monthly payments, you can pay off your debt rapidly..Thus, a low rate debt consolidation can reduce both your interest costs and your monthly repayments, putting you back in control of your life.

Low rate debt consolidation do not reduce the amount you owe. Instead, they lower the interest rate you pay.The whole idea behind refinancing your debt is to lower your monthly bills so you have more money in your pocket at the end of the month. A low rate debt consolidation will give you only one payment per month. designed to fit your monthly budget and take the pressure off your bank account. You may be surprised to find that the time it takes to reduce your outstanding balances is dramatically less than your alternative and could save you thousands.

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