At some stage in the vast majority of people`s lives we will incur some debt. If all goes well we will not need any help to cope with the debt or debts, however sometimes finances taken out through such facilities as credit cards, loans, store cards, higher purchases or other secured debts can get on top of anyone, leading us to need a little help. My Sort of Loan are based in the UK and specialise in helping customers get on top of their finances and turning their cash flow around by arranging a lower monthly repayment through an extensive lender panel. We have access to secured homeowner loans and unsecured personal loans and will try to help both homeowners and tenants deal with debt. Simply call us for free on 0800 0159 108 (from a mobile or landline) or fill in our short enquiry form to find out without any obligation what you can do to get back in control of your debts and exactly how much you will pay back each month and in total via a free quotation before you accept any product you are offered.
It is far too easy to end up with a combination of debts that strain your cash flow to (and beyond) breaking point. We are all bombarded daily with advertisements for credit cards, short term loan solutions, store cards, personal loans and higher purchase, it is little wonder that many UK consumers end up with more debts than they can comfortably manage. The debt can be a consequence of home Improvements, car purchase, holidays, designer fashion, new furnishings, lifestyle or pretty much anything you do that you may have decided to borrow money for.
Often all will be running smoothly until something happens to affect your financial position. Some life impacting events that can cause issues with debt are:
Loss of employment or regular overtime disrupting your cash flow
A bereavement through the passing of your spouse or extended family
Loss of contract or larger than expected tax bill for the self employed
One or more credit / store cards coming to the end of their zero interest offer period
Divorce or separation effectively splitting the household finances as two homes may well be needed
The withdrawal of a revolving debt facility such as an overdraft which then needs to be repaid
The expansion of your family through a new child or older ones returning home
Becoming a family carer for elderly or disabled relatives who need your help which results in a nett drop in income
Generally speaking most people would prefer to avoid debt if at all possible as it virtually always means paying interest on the money you owe, therefore the purchase has cost you more. Once you have started taking out finance agreements it`s all too easy to find yourself slipping into a debt spiral that can prove calamitous for your finances. Therefore it`s important to try to deal with the problem and not bury your head in the sand, the earlier you tackle a debt problem the more solutions you may have.
It imperative to remember though that few debt problems are beyond help there are several solutions all have differing effects on your chances of obtaining finance again in the future, therefore its important you choose the right one for you from the available debt solutions.
You may be able to get debt help via a consolidation loan, this allows you to simply move all your borrowing, or a large part of it into one manageable loan. The loan is then structured over a longer period to allow your monthly outlay to be reduced .The downside of this arrangement is It that by repaying the debt over a longer period of time it will mean that you will pay back more than you would have if you had left the debt in place. Also these sort of loans often need to be secured on immovable property, particularly where larger amounts are required
A positive feature of a debt consolidation loan is that you are only paying one loan repayment instead of many and will help you with your cash flow by lowering your monthly outgoings, allowing you to be able to budget more effectively. Unlike Debt Management plans, IVA or Bankruptcy plans the debt consolidation loan should not harm your credit rating as long as you maintain the regular agreed repayments.
To put it simply a debt management plan is an agreement between you (the debtor) and your creditors, these are usually the banks or finance houses who you owe money to. The debt management company will contact your creditors and suggest figure you can afford, after allowing for their monthly fees to be taken off your payment, to be split amongst all of them.
The debt management advisor will come to this figure after discussion with you and will reflect the maximum amount you can afford to pay after essentials such as gas, electricity mortgage repayments, council tax bills and day-to-day living costs have been deducted.
Once your creditors have agreed the debt management plan the interest charges on your debts should be frozen, this means you can start reducing the debt without additional interest and charges being added, this allows you to make payment in roads into you debt.
One of the downsides to this type of arrangement is the credit agency`s will note you are in the arrangement which will have a negative impact on your credit file. However, over time if the arrangement is kept to your credit standing should start to improve. It`s also worth remembering that one of the disadvantages of debt management plans is that you have to pay off the full amount you owed at the time of entering the plan.
An Individual Voluntary Arrangement or IVA allows you to repay a percentage of your debts normally because you are unlikely to be able to pay them off within a reasonable timeframe. This is a formal arrangement where your lenders (creditors) agree to accept less money that you originally agreed to pay back. This will be shown on your credit history and will impair your ability to obtain credit for circa 7 years as you have demonstrated that you have been unable to meet your credit. However, towards the end of the agreement you may be expected to prove you have tried to or raise the money needed to settle the agreement in full (for example if you are a homeowner you could be expected to try a remortgage or secured loan ).
You may be able to declare yourself Bankrupt if you owe more money than you can afford to repay and cannot find a reasonable alternative. If you take this option its worth bearing in mind that you will not have control of your finances .A third party known as the official receiver will take control of your assets and property and administer payments on your behalf. If you have any assets such as a house or car the receiver can sell them in order to repay creditors. In fact one way to avoid bankruptcy if you are a homeowner may be to downsize to a cheaper home. Some bankruptcies can last for just a year, however they will show on your credit record for up to 7 years and severely restrict your ability to borrow during that period. After an agreed period you will be discharged from bankruptcy and your debts are written off. It is important before taking this option that you seek professional advice from debt specialist who will look into any alternative that might be more appropriate for you.
After you have chosen the best option for your debt help is important to learn by your past mistakes. The best way to avoid getting into debt is to live within your means, take time to work out exactly how much you have coming in each month, then deduct what you spend on essentials such as your mortgage or rent, utility bills and everyday items such as food and clothes and entertainment. Make sure you have more coming in than you have going out, It`s also sensible to put some cash aside for a rainy day this can be whenever you can or a fixed monthly sum into a savings account. It`s best to open a savings account so you can access the cash easily if you have an emergency such as urgent boiler repairs or your car breaking down. By opening the savings account it also allows you to get into the savings habit .