Dealing with debt can be a frightening time for anyone. It can be easy to allow debt to build up and spiral out of control. Debt can take you by surprise as credit cards, catalogues and loans can easily build up. Lots of debt isnít necessarily a problem as long as the repayments are affordable, itís one the outgoing are more than the incomings that problems can occur.
The key to solving debt problems is to seek help as quickly as possible. It may seem easier, in this situation, to bury your head in the sand, however, debt often do not go away.
One way to deal with debt is to allow experts in the field to deal with your debtors direct and take away the burden. These experts are called insolvency practitioners. They will deal directly with your debtors and discuss repayment terms with them and the amount you can afford to pay each month. In some cases, they may even be able to write a portion of the debt off, if this cannot be paid in a realistic timescale. In some extreme cases, you may even find the whole debt written off , if there is no way the entire debt can be cleared off in a realistic timescale.
These approaches, can be used by licensed insolvency practitioners as power tools in the way of managing debt back to affordable amount. The insolvency act allows practitioners to help bring debt relief to those who are suffering as a result of the weight of their debts. However, each case is different and so is the level of debt and the amount each person can afford to pay back and that is why it is vital to seek expert advice as soon as possible.
There may be an number of options depending on the level of debt and the personal circumstances.
Debt Management Plan
These plans are usually informal agreements between you and your creditors. These plans are overseen by a debt management plan (dmp). It is the role of the insolvency practitioner to work with you in drawing up the debt management plan deciding on exactly what amount you can pay back each month, and discuss with your creditors how much should be paid back each month.
The practitioner will usually charge a fee for this service and there are no guaranatees that the interest on the debt can be frozen and the debt management plan may be in place for many years till the full amount is paid off.
An Individual Voluntary Agreement can be an alternative to bankruptcy. IVAís can be a way to avoid bankruptcy and also safeguard other assets such as a family home or business. An IVA is a legally binding document, where interest and charges are frozen over a period of time.
Not many people realise that bankruptcy is not always the only option for them. Even with insurmountable debt. However it may not be always the best option and can be a very costly mistake without the correct help. It is therefore very important to get the correct advice.
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