Archive for the ‘debt’ Category

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.

Posted on November 29, 2009 - by admin

Obtaining Credit After Bankruptcy

Most people assume that if they have to file bankruptcy they’ll never be able to borrow money again for a long time. While it is true that you won’t be able to just run out and get a loan after filing for bankruptcy, you can generally get a loan within just a few years.

Filing for bankruptcy destroys any trust that your lender had in you. And, to be able to borrow money again, you’ll need to work on re-building that trust. You will have to keep all of your bills paid on time and establishing a checking and savings account can work in your favor as well.

One of the best ways to start out with new credit is to build up a savings and place that savings up as collateral on a small loan. Once you’ve repaid the loan, take out another loan for a larger amount. But, you will need to make sure that you don’t miss any of the payments in order to get a positive credit rating.

You should also carefully access the reason as to why you needed to file for bankruptcy. In most cases, the reasons for filing are events that are beyond the persons control. But, if you needed to file for bankruptcy because of careless spending habits, you’ll need to change your spending behaviors to establish good credit again.

Posted on May 25, 2009 - by admin

How Debt Consolidation Affects Your Credit Score

Many people that have considered debt consolidation as a way of getting out of a financial crisis have wondered how it would affect their credit score. The truth is that in most instances it will greatly increase your credit score and will not hinder you in anyway from obtaining a loan in the future which you might need later on for a housing project or a life insurance plan.

When you consolidate your debts you’re literally just paying them off earlier than is required by the lender. You’ll still be paying the exact amount that you owe the lending institution, so the payment will result in a positive rating on your credit score.

However, there is one thing to consider when calculating any affects on your credit rating. A small percentage of your rating is based on the length of your credit history. This category actually makes up for about 15 percent of your overall score.

Even if you’ve made every payment on time, if you’ve got a short credit history, this can affect future loans. To avoid this problem, some experts advise that you pay the balances off on your credit cards, but keep one or two of your oldest accounts open. This will help you retain the length of your credit history and still eliminate the actual debt.