Are you are feeling the credit pinch?
Are your debts are spiralling out of control?
Don't know how you're going to deal with them? |
| There are a few debt solutions available based on your financial situation, the 2 most common options available to become debt free are, Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs). |
We have put together a quick guide to both popular debt solutions:
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| 1. Debt management plans (DMP) |
| A Debt Management Plan is an informal option to repay your debt at a rate you can afford. A debt Management Company will speak to all of your creditors and negotiate with them to reduce your monthly contractual payment, your monthly payment will be based on your disposable income. |
| Pros |
- You will only make one monthly payment to cover all of your creditors
- Your monthly payment will be lower and affordable
- Your Interest and Charges may be stopped and Frozen
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| Cons |
- Your credit rating will be effected
- Not all creditors may agree to freeze interest
- You extend the time you spend in debt even further.
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| 2. Individual Voluntary Arrangement (IVA) |
| Unlike a debt management plan, an Individual Voluntary Arrangement (IVA) is a legal agreement between you and your creditors that will be monitored by an Insolvency Practitioner (IP), The term of an Individual Voluntary arrangement (IVA) is set, normally 60 months and at the end of the term you will be debt free and any debt not paid withing the IVA will be written off.If you have a property with equity you may be asked to release this equity and pay it into the IVA. |
| Pros |
- Your creditors write off some of the debt.
- Interest and charges are frozen.
- You might well be able to keep your house.
- You don't face the stigma of becoming bankrupt, and you can keep your job if you're in a profession where you're not allowed to be bankrupt.
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| Cons |
- After a year, you may have to remortgage in order to keep your house and pay off some of your debts.
- You can't get significant unsecured credit.
- Your credit rating is affected for six years, which means new mortgages will cost more and you might have to put down a larger deposit.
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| Call Your Debts Cleared free on 0800 692 2000 or Take our online DEBT TEST |
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