FollowKeeping A Stiff Upper Lip With Debt Management UK
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With inflation hitting a 20-year high in UK, many British families are in danger of being snowed under with debts. Prices of food and drinks, transport bills, utility bills, petrol, clothing and footwear, and other expenses rise with no commensurate increase in wages. The Brits must learn to map out their finances, budget their static income and forego unnecessary expenses, otherwise, they may be facing debt problems. The spiraling inflation levels may be one of the reasons why the debt management UK business has been bustling.
Debt Management UK Options
Debt Management Plan. If you are expecting a steady flow of monthly disposable income and you want to write off debts that are less than £15,000, then this option may be suited for you. A debt management plan allows you to lower your monthly debt repayments to an affordable amount. The debt management company will negotiate with your creditors on your behalf to arrive at this affordable amount. You will also be making one single payment to the debt solution firm and it is their responsibility to appropriate the payments to your creditors. Unlike in an IVA, your debts are not written off until you have paid the entire amount. There is no specific time frame to finish the plan. One danger in a debt management plan is that it is not legally binding. The creditors may decide to change the terms later on to your disadvantage.
Individual Voluntary Arrangement. For people who owe more than £15,000 in unsecured debts, this debt solution initiated by the British government may be appropriate. The IVA gives the debtor the chance to write off his debt in 60 months by restructuring debt within this period. Interest and other charges are kept fixed during the duration. If you can religiously pay this modified monthly payment, which must be at least £180 per month, you can be debt-free in 5 years even if you have not fully paid off your entire financial obligation. The remaining balance is instantly written off. This is the main advantage of IVA.
If you decide to take this route in getting rid of debt, you must be able to prove that you can no longer afford to pay your debts by showing that your income is less than your expenses and debts. You do not have to obtain the consent of all your creditors in order to start an IVA as long as the majority agrees to it. Take note that IVA is legally binding. If you fail to keep up with the monthly payments, you will not be charged but your debts will not be written off, meaning you will still owe your creditors of the remaining balance. Also, while you are under an IVA, you cannot secure credit. It will also have a short to medium impact on your credit score.
