Advice About Debt Problems

Many people fall behind in their bills and struggle to get out of debt.  Some of them need reliable advice from an expert in order to get back on the right track.  There are many ways of getting debt help.  Some are better ways than others.  Some will affect your credit in a negative manner while others will be a positive hit to your credit.

One of the ways to get out of debt and have a positive effect on your credit is to do a debt consolidation.  This is a good way to get debt help if you have a steady job and a home to use as collateral.  You have to remember that a debt consolidation loan will use collateral.  You could lose that collateral if you are unable to pay the bill.  If you do have a steady job this is a good way to get the debt help you need.

Quite often when you ask for advice about debt, a debt consolidation loan will be recommended as a way to pay off all of your unsecured debts. This includes credit cards and store cards.  It will also pay unsecured bank loans that you might have.  You will then have one payment for the consolidation loan.  The interest on a consolidation loan is much lower than that of your credit cards and store cards.  This will help to keep the payment lower.  As long as you make the payment on time your credit will be affected in a positive manner.  If you get behind on a consolidation loan you could actually lose your home.  It is very important that you only use this method if you have a stable job that you can rely on.  If your employment is unsteady you could lose your home and it would be because of credit cards.

Another method of debt help that can help you get out of debt is an IVA.  This stands for individual voluntary arrangement.  You will use an insolvency practitioner (IP) to help you with this.  An IVA is a legally binding contract.  Once the creditors agree to this, they cannot change their minds.  They must stick to the arrangement.  They cannot harass you any longer or threaten to take you to court.  You will be free of all that harassment.

The IP will contact all of your creditors to see if they will agree to an IVA.  If 75% of your creditors agree, it will be accepted.  With an IVA your creditors will be given a percentage of what you actually owe them.  You could pay as much as 75% less than what you actually owe.  An IVA will have you make one payment which is divided amongst your creditors.  You pay on the IVA for 5 years.  This does have a negative impact on your credit.  It could actually affect it for up to six years.

Unlike a bankruptcy an IVA is not reported in the papers.  It is put in an IVA registry however.  Your family and friends do not have to know about it.  A bankruptcy is reported in the papers.  It can also affect your job.  You can’t hold certain jobs after filling bankruptcy.  You can with an IVA.  There will be no collateral need with an IVA.  You do not have to worry about losing your home.  It can use the equity in your home to pay your creditors.  Whenever you get a raise or your pay goes up, your payments to the IVA will go up.

An IP will look at the amount of money you make and how much you pay for mortgage, car and utilities and food.  These are essentials and will be allowed to be paid first.  What is left, the amount you can afford, will go to the creditors.  At the end of five years you will be debt free.  Although your credit is impacted by bad reports you have to stop to think how it would be impacted if you did nothing.  Your credit would still be affected in a negative way and you would still be harassed by your creditors.  Doing nothing should not be an option to you.  It is a mistake that will follow you for years to come.  It can hurt your credit just like a bankruptcy can.  An IVA will work well, but you must owe 15,000 pounds in debt and you must owe it to at least three creditors.