With debt, we feel it is crucial to let you know that there are many people you can contact to help you with debt issues. Your mortgage adviser is undoubtedly the most qualified to answer your concerns, but if you don’t want to let them know of your situation just yet or they couldn’t work with you towards finding a solution, here are five alternatives you should try.
Debt Management Plans
If you are dealing with unsecured debts, such as personal loans, student loans, or credit card expenses, a debt management plan (DMP) could be a great solution to get rid of your debt. The DMP is an agreement you make with your creditors if you can’t afford to pay the agreed instalments anymore.
You can adhere to a DMP either to reduce the instalments or to suspend payments for a period of time and resume them in a few months. Due to the flexibility of this scheme, you can either arrange a repayment plan directly with your creditors or let a licensed debt management company, such as Step Change, deal with it for you.
The latter arrangement is particularly suitable if you have multiple debts, as the company will share the money between all your creditors. However, keep in mind that adhering to a DMP can come with additional costs, such as monthly debt handling fees.
Individual Voluntary Arrangement
The Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay your debt through an insolvency practitioner. The practitioner is responsible for dividing the amounts between creditors, and you will have a little more control over your assets than in bankruptcy.
Through this scheme, the insolvency practitioner works out how much you can afford to repay each month and establishes how long the IVA lasts, but the scheme will start only if the creditors who are holding 75% or more of your debt agree to it.
Once it starts, the IVA stops your creditors from taking legal action against you. However, if you miss the payments, the insolvency practitioner can declare you bankrupt.
Like debt management plans, IVAs come with additional fees; you will have to pay an initial set-up fee as well as a handling fee each time you make a payment. You will also be added to the Individual Insolvency Register, from where you’ll be removed 3 months after you clear all your debts.
If you’re not sure which of the solutions above is right for you, the National Debtline is a free telephone service for people in the UK where you can receive debt advice. National Debtline was founded in 1987 and is part of the Money Advice Trust.
Their goal is to support people with debt and improve the standard of independent money advice.
To ask your questions and get the advice you need, you can call them from Monday to Friday from 9 am to 8 pm or Saturday from 9.30 am to 1 pm.
Besides the useful advice you can get from an operator, their website is also full of resources on money management and debt advice.
Getting money advice by phone or online can be confusing. So, if you need face-to-face support, Citizens Advice could be the best place to find debt support and assistance. Citizens Advice operate in England and Scotland from over 3,500 locations including local community centres, surgeries, courts, as well as high street locations.
You can either book a visit or opt for telephone or online support. Furthermore, some branches even offer home visits, and email support, and can even agree to give SMS or chat support.
Throughout the UK, there are also many independent debt advice centres, especially in community centres and churches. Most of these centres also provide face-to-face advice and could be an alternative to Citizens Advice if their waiting list is too long.
The Money Advice Service
Set up by the government, the Money Advice Service is another place where you can find free debt and money management advice and support. Their website comprises a vast compilation of articles and tools, including a handy debt calculator that can help you plan a debt repayment scheme.
Besides, they also offer online and phone support, and aim to answer all your questions and worries.
Their free landline is open from Monday to Friday from 8 am to 6 pm but is closed on weekends and bank holidays. Nevertheless, you can connect with an operator through their webchat service which is available between 8 am and 6 pm from Monday to Friday, or Saturday between 8 am and 3 pm.
Debt can be indeed overwhelming, but there are several ways to deal with it. National helplines, independent agencies, charities, and even your mortgage advisor or creditor can help you establish a repayment plan suitable for your current situation. Since most of these services are free, all you have to do is gather some courage and go find the best possible solution to your debt issues.
If you are looking to consolidate your debts into one monthly payment, we can find the ideal Debt Consolidation Loan for your situation.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.