Making the right decision – The Fourth Option!
Obtaining credit has never been easier than over the last 20 years. For many people finance has been literally thrown at them. Credit has been given without proper in-depth income checks for affordability being carried out by the lenders and providers. The size of personal debts has grown in the United Kingdom and many people are now seriously struggling with debts that are bigger than most people can afford to pay back in their life time.
For many people debt seems to just happen. One day they have a small debt that they can control. Then out of the blue circumstances change suddenly – or that’s how it seems to most people caught up in debt. Often the causes of personal debts are illness, divorce, gambling, drinking or bad financial planning. The debt that was once controllable now spirals out of control. The stress and the strain of having to control and pay off the debt are too much for most people to cope with and they slide further into debt.
Most people today have a reasonable education but unfortunately our schooling system over the decades has not provided people with enough of the fundamentals of how to handle, manage and control their own personal finances. This lack of ability to control and manage finances along with the constant barrage of marketing that we are all subjected to daily; has created a material-based society that wants everything today – we will pay for it tomorrow. Years ago when times were more challenging, people would have saved the money before buying anything.
Some people argue with their partners, they may split up or get divorced and the debt then spirals completely out of control, leaving families completely wrecked. Other people bury their heads in the sand. It is not uncommon to leave a partner who is unable to control and manage the debt to look after it while they ignore the situation. When finally they accept the situation their debt has spiralled out of control.
So what solutions are available for you if you are in debt or debt that is getting out of control? The first thing you need to do is to acknowledge the situation. Then you need to consider what help is available and what can you do to repay the debt. The best place to do research is on the internet. Do not make any quick decisions until you have considered all the angles and options available to you and please take advice from a professional.
If you are a homeowner the easiest way to remedy the situation is to use the equity within the property to remortgage your property and consolidate your debt. This is not always the best decision as you will be spreading the debt and the risk over a longer period and you can lose your home if you do not keep up your mortgage payments. The initial benefit is the reduced monthly payment but you will pay more money over the term of the mortgage.
Your first port of call should be the Citizens Advice Bureau. Here they will offer you free advice, help and assistance but remember this organisation is generally staffed with volunteers, who have had some training. You should also contact one of the charity funded debt help organisations. They have no axe to grind as they are non-profit-making organisations and they are only interested in helping you.
CCCS or Consumer Credit Counselling Service is one such charity dedicated to providing confidential, free counselling and money management assistance to financially distressed families and individuals. This charity does not charge any fees and they are very helpful, knowledgeable and able to assist you in finding a solution to your debts. Do your own research and you will find many other organisations and internet forums where the public go to talk about their experiences, their problems and solutions. You will often find good advice here from people in the same situation.
Most debt organisations and counselling services will assess your situation and ask you to complete a full financial review to see what you can afford or perhaps cannot afford. These organisations will generally not charge you. They are a free service to help you. The general options or schemes available to help you sort out your debt are Debt Management, Individual Voluntary Arrangements (IVA) or for extreme situations Bankruptcy.
Within the Industry, Debt Management is also called an Informal Voluntary Arrangement (not to be confused with an Individual Voluntary Arrangement). There are companies who will gladly take your debts and turn them into one affordable monthly payment for a monthly fee and in some cases an upfront fee as well. Debt Management arrangements are an informal agreement with your lenders and is not a court approved agreement. Therefore it can be changed whenever required. This means that you will be paying off your debt forever, with no real end date in sight.
The second choice you have is an IVA or Individual Voluntary Arrangement. Here you have a formal arrangement that is done by a qualified IVA practitioner. Under an IVA the term over which the debt is to be paid is agreed by the practitioner and your creditors. This is an official agreement unlike a Debt Management scheme.
With a Debt Management scheme and an IVA you keep your home as long as you continue to pay your mortgage and the agreed monthly payment towards paying off your debt. With these agreements the interest is generally suspended. Both of these schemes protect your home.
Each type of scheme has good and bad points. For example a Debt Management has not been done through the court and your lenders are “bullied” into taking the monthly payments. The Debt Management companies know that your creditors cannot take you to court as long as you are making an attempt to pay something each month. N.B. this does not apply to mortgages, secured loans, hire purchase and leases.
Recent news is that creditors are not readily agreeing to Individual Voluntary Arrangements, and would rather see people go bankrupt. Possibly the reason for this is that the creditor stands to lose up to 75% of the debt and the clients pay back the difference with no interest being charged. Then, after 5 years, clients will walk away with their credit files purged. If the client had gone bankrupt they would be scarred for life – or at least a further 6 years after the bankruptcy period has finished.
Well now there is a fourth option (which is not a Debt Management Solution nor an Individual Voluntary Arrangement (IVA) nor a Bankruptcy Scheme). There is a rapidly growing, yet relatively unknown key to unlocking credit card debit. There are companies in the United Kingdom that have found that Credit Card Agreements and their Terms and Conditions are flawed and therefore invalid and unenforceable,
It is also possible to legally detach yourself from some mortgages, loans and finance agreements. It is estimated that approximately 20 million finance agreements may be flawed and unenforceable. Some lenders have set aside vast amounts of money to pay possible compensation claims that may arise. This fourth alternative solution is capable of wiping out your credit card debts legally and your mortgages, loans and finance agreements. To find out more information go to: www.finance-claims-checker.com
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