Is a Debt Management Plan a Good Option For Getting Out of Debt?

Is a Debt Management Plan a Good Option For Getting Out of Debt?

One of the most asked questions in finance is: If I’m in debt what options do I have open to me?

In recent years this question has been asked more and more. It is estimated that persoanl debt in the UK has reached over A�1.4 trillion and with food prices and the cost of just about everything increasing more and more people are seeking solutions to their debt problems.

Often, when people have debt problems they will end up taking out more loans to simply repay the amount of debt they have, or worse still using credit cards to pay back debt – which is usually a very expensive way to borrow money.

If you have some form of debt problems, then it is worth considering a real solution. This article will explore some of the options which you will have open to you.

IVA:

An IVA works by settling your debt within a period of time – usually 5 years. The agreement works by paying back as much as possible over this period of time. Anything which is not paid back within the 5 years is written off. Usually creditors would compare the amount that they would get from an IVA with what they’d get from bankruptcy. If they get more from an IVA then they are likely to go for this.

A Debt Management Plan:

A debt management plan differs from an IVA in that it is an informal, flexible agreement. It is not legally binding, meaning creditors are not obliged by law to accept the terms of it. There are many advantages of a debt management plan, including:

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– Only pay back what you can afford – no unrealistic payments

– It is a flexible agreement, you can change your payments at any time or leave

– You make just one monthly payment, which is handled by your debt management plan company

– You won’t have to risk equity from your home in order to pay back debt

– Your debt management plan company will negotiate for you with your creditors to try and reduce charges and interest.

For more information on getting a debt management plan and other debt solutions check out a reputable provider.