In these difficult, recession hit times an increasing number of people are finding themselves being drawn into a spiral of debt because of unexpected job redundancies, increases in living costs and heating costs or because of inadequate money management. For those stuck within the debt trap life is definitely a struggle with no obvious means of sortingyour debts out. In most cases, by means of curtailing on your outgoings is generally sufficient to clear your debts but sometimes there could be no alternative but to seek out specialist advice and an alternative resolution to your problems.
If you happen to fall into the latter then what are the alternatives available to you in order to take control of your finances and life?
Debt Consolidation Loans
The aim behind a debt consolidation loan is quite simple. Based on the level of the debt which you owe, it is possible to take out a debt consolidation loan to help pay off all your outstanding debts from things such as loans, hire purchase, store or credit cards. You will then be left with one single monthly repayment, mainly with a lower rate of interest.
Debt Relief Orders
Debt Relief Orders or DRO’s are a pretty new option that has become available to people finding themselves in debt. Launched in April 2009, a DRO is suitable for people whose amount of debt is below £1500 and who are on low levels of income. You will discover strict standards that should be met so as to successfully apply for the debt relief order so you will need to check with an insolvency practitioner or financial Advisor. In effect a debt relief order enables consumers to write off their debts without getting into a bankruptcy process. The DRO will frequently continue for nearly a year, during which time your creditors are not able to take action against you in order to recover the debt which you owe them. At the end of the DRO period you’ll be relieved from your debts.
Bankruptcy Procedures
In severe cases, bankruptcy may be your only alternative. Bankruptcy is a legal practice whereby a petition is filed at the local county court. Throughout the course of the bankruptcy procedure, a trustee is appointed to oversee and take control of your assets as well as deal with your debts and creditors. The course of a bankruptcy procedure lasts around 12 months. On completion you are released from the procedure and able to start rebuilding your life again.
Individual Voluntary Arrangements or IVA
An Individual Voluntary Arrangement or IVA is not as well known to the man in the street as the dreaded ‘Bankruptcy’ but for many it is perhaps a more fitting alternative for those in severe situations of debt. Again, it’s going to depend on your situation.
An IVA is a legally binding agreement involving yourself and your creditors. Its where a part of your future income is put aside, then at the end of an agreed amount of time your creditors are paid out from this fund. From a creditors view point they’ll generally pick up less than that they are owed in the beginning but this amount is far greater than what they would have received had you been declared bankrupt.
Consulting an Insolvency Practitioner or Finance Professional
If you are discovering yourself in a situation of financial debt that’s getting out of control it is always advisable to search for a solution to your problems sooner rather than later. One of the first things you can do would be to look for the services of a qualified insolvency practitioner, debt management company or other professional. They will be able to inform you on what option is best suited to your predicament. They are going to be able to lead you through the process and manage your creditors.