There are many ways you can get in debt, and there are many ways you can get out. There are many options for debt relief, whether you decide to do it yourself or seek out the assistance of a counselor to help you. Below are the most popular debt solutions offered by debt professionals.
Remortgaging
If you are in serious debt and own a house, a debt advisor may recommend that you remortgage your home to unlock the equity and use the money to pay your debts. It is a smart decision in many cases, as mortgage interest rates are typically lower than other types of debt.
Remortgaging is the process of ending your existing mortgage and beginning a new one. You may be able find a better deal with another lender. This can sometimes mean changing lenders. A debt advisor can help you keep these factors in mind as you explore this option. You may have to pay steep penalties or redemption fees if you cancel an arrangement that you have with a fixed rate.
If you’re in a situation to change, ensure that your new deal with the lender and lender allows you to remortgage at any time. Ask your lender if they offer any perks to new customers. Many lenders will pay for the appraisal of your home and the legal fees. Get the best deal possible!
Before you commit to any remortgage loan, make sure you seek out debt advice. You can get help from a debt advisor to keep your head clear and help you weigh the pros/cons of taking out a remortgage mortgage loan to pay off your debts.
Consolidate your Debts
A debt advisor can also recommend consolidating your debts into one loan. This offers similar benefits to remortgaging. This involves determining the total amount of your debts, and then taking out a term loan for that amount. The interest rate will likely be lower than your current debts. This money can be used to pay off your current debts. Then, you can start repaying the loan monthly with just one payment.
Banks will not approve you for a loan if you are already in financial trouble. If you have a mortgage, equity from your home will be required to provide security.
Before you sign any agreements, get advice from a debt advisor about consolidation loans and remortgages to repay your debts. You can get help from a debt advisor to put your decision in perspective and determine if it is the right option for you.
Debt Counseling and DMPs
People looking to improve their financial situation are turning to debt counsellors. These services can help you calculate your disposable income, take a look at your incomings, and create a monthly budget to help you pay off your debts. A debt advice specialist will help you create a budget and stick to it. This is usually done through a debt management program (DMP). Many financial institutions recognize DMPs and they can be extremely helpful in entering into bank negotiations. These services can be invaluable in organising your finances, even though they won’t save you much.
IVAs
An IVA (informal, legally binding agreement) is between a debtor or their creditors to settle outstanding debts within a reasonable amount of time, typically five years.
British debtors who have difficulty paying their repayments are increasingly turning to IVAs. These are a great alternative to bankruptcy and creditors love them because they can recoup more money than if they declare bankruptcy.
You will submit to your creditors a proposal with the assistance of an insolvency practitioner. It will outline the reasons behind your financial difficulties, the amount you can repay each month, and other details. You make monthly payments, and all outstanding debts are paid off by the agreed term. This method has been used by debtors to write off as high as 75% of their outstanding debts.
Although an IVA may sound great, it is best to talk to a debt specialist about all options before you commit to one strategy to reduce your debt.
Bankruptcy
Bankruptcy is a scary word. It is often considered a last resort. You should carefully examine all options before considering bankruptcy. A bankruptcy will not only free you from the pressures of creditors but it will also ensure that all assets are equally divided among creditors.
Bankruptcy is a stigmatized subject that has been widely publicized. It can lead to poor credit ratings for six years.
There are many options for debt advice, as you can see. The type of advice you choose will depend on your personal circumstances and preferences. A debt specialist can provide reliable advice on debt before you enter into a remortgage or debt consolidation loan. A debt specialist can help you evaluate all options and make the right decision for you.
To help you make a decision on the best debt solution for you and to find a professional or agency to help you, please fill out this form. A SimplyFinance representative is going to contact you soon to connect you with a specialist in debt advice. The debt specialist will help you find the right debt relief program.
