Posted on April 1, 2010 - by admin

A Comparison of Debt Management Solutions

It is important that anyone finding themselves with levels of debt that are sufficient to make their lives difficult should seek debt management advice from professional qualified debt management specialists. Free advice can be obtained from debt management companies and a number of charitable organisations. Here we look as some of the features, both positive and negative, of the main strategies which are most popularly employed to get people out of debt.

Debt Management

Debt management is a strategy that aims to reduce monthly payments to an affordable level. The principal benefits are that you make a single affordable payment every month which is distributed by your debt manager to your creditors; your creditors will no longer bother you with demands and phone calls; and there is no need to take out another loan. The downside is that your credit rating will be damaged for some considerable time.

Debt consolidation

Debt consolidation is also a way of reducing your repayments to an affordable level. In this case this is achieved by taking out a loan that is used to repay all your creditors in full. The principal benefits are your credit rating will not be affected; the interest rate that you repay will be less than you were paying previously; you only need to make a single monthly payment. On the downside, as you are paying less each month the time that it will take you to settle your debts will be increased and the total amount of money you repay is likely to be more.

IVA

An IVA is a way of writing of debt that you are finding impossible to repay. The principal advantages are that you write off much of your debt rather than repaying it; you remove any danger of being made bankrupt by your creditors, you stop any other legal action such as county court judgements; and in five yours you will be completely free of debt. The downside is that your credit rating will be seriously damaged and will remain so for six years.

Whatever your precise situation, if you have debts that you can’t repay then it is likely that one of these strategies will be appropriate for you.