|
|||
| The independent answer to your debt problems | login join | ||
If you have heavy debts but feel that debt management does not suit your personal preference or circumstances, there are several other ways you can manage your growing debts which you may find more palatable. Whatever method you choose, do not ignore your debts as you can end up having an extremely poor credit rating or worse, you can face legal action.
A simple but surprisingly effective method of dealing with your debts is to approach your creditors and be honest about your circumstances. Your creditors are likely to be sympathetic if you confess that you have difficulty making your repayments. Be brave and request for a reduced repayment schedule, a lower interest rate or even interest-only payments for a short period of time.
Taking on an Individual Voluntary Arrangement or IVA can be an valuable way to tackle your debt problems. This is a legally-binding contract between the debtor and his or her creditors whereby an agreement is reached that states a specific amount to be paid regularly for a period of time until the debt is cleared. Most IVA's take about 5 years to complete. In the majority of circumstances, entering an IVA can mean that some of the debt can even be written off. When choosing an IVA, make sure you use the services of a trustworthy insolvency practitioner who will help you set realistic targets and make you work towards clearing your debts as soon as possible.
Another useful alternative to debt management is debt consolidation. If you choose debt consolidation, you are in fact choosing to put together all your individual debts under one large umbrella debt. This has the advantage of making all your debts easier to manage and hopefully, easier to clear. Debt consolidation also generally benefits from a more favourable interest rate although it will probably take a longer time to clear the debt completely. A disadvantage of debt consolidation is that you will usually end up paying more than you initially anticipated.
Another option is to re-mortgage your property in order to free up much-needed cash to make your debt repayments. Some people choose home equity loans or second mortgages.
If possible, transfer some of your debt to a low-interest credit card. This option will not make your debts disappear but it can reduce your overall costs.
If you have savings, make sure you use them towards repaying your debts. You may feel insecure about using your savings to pay off your debts but this makes good financial sense.
You can also try to borrow money from friends and family and even your employer. However, make sure you pay them back as soon as you are able to. It is not worth losing your good friendships to your debts, however bad things are.
It is worth considering straightforward options such as reducing your personal or household expenditure. Cut down on all non-essentials such as going out or buying clothes and toys. Conversely, you can try to earn more money by getting a second job, working longer hours or taking on an extra shift at work, just until you are on top of your debts.
