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Ways To Get Out Of Debt

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When in debt the are many types of debt help
available, this can be confusing for a person already in a great deal of stress. It is important for those with debt problems to understand the many options available to them before proceeding with any.

Debt Advice -
The first thing to do when in debt problems is to seek advice that would point you in the right direction in terms of a recovery out of debt. Most debt management companies offer free debt advice, such as budgeting tips and those techniques where a debt management company may not be needed.

Otherwise the advice given by the advisor if the amount of debt you are in is severe enough will be to suggest a debt solution in the form of a debt management plan, debt consolidation or for extreme cases an IVA.

Debt Management Plan -
Those unable to make the required repayment on existing loan agreements would first be directed towards a debt management plan. Here your monthly repayments can be negotiated to a lower amount. But it is important to know that smaller payments mean a longer term which ultimately means that more debt will be incurred overall.

Debt management plans can be done individually or by a management company who will charge a fee. Importantly entering into a debt management plan incurs the consequences on defaulting on debt which last on your credit file for six years.

Debt Consolidation -
A slightly different way of reducing monthly repayments would be to go to a debt management company would ultimately take your debt from you but offer you a loan for the total amount owed to your creditors but over a longer period of time. Again this would mean more debt is incurred overall and fees would be owed for taking the service.

IVAs (Individual Voluntary Arrangements) -
For those with debts amounting to 15,000 or more with little chance of keeping up with the agreed repayments then an IVA could be an option rather than resorting to becoming bankrupt. An IVA would be suitable for those who could not guarantee to repay their debts in a reasonable period of time but want to avoid losing their homes.

An IVA agreement lasts for 5 years in which time it may be necessary for the individual to release some equity in their house. Otherwise after the 5 years then any remaining unsecured amount is written off. An IVA adversely affects your credit score for 1 year.

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