How Can I Clear My Debts?
In this article, we'll look at:
Being in debt can be a worrying time, often leading to a lot of stress and upset. If you are looking to clear your debts, there are many options available to you depending on such things as level of debt, whether you’re a homeowner, and how many creditors you have.
We understand that sometimes all the options can be overwhelming, and it can be difficult to decide which debt solution is best for you and your circumstances.
To make your decision process much simpler, we have created a brief outline of each debt solution available in the England, Wales, and Northern Ireland:
Debt Management
A Debt Management Plan is an informal debt solution that involves a third party combining all your existing unsecured debts into one affordable monthly payment. Some benefits of being on a debt management plan include:
- A strong possibility of frozen interest and charges on any debts included in the plan.
- Reduced creditor contact to you.
- Reduced monthly repayments.
- Finances that are easier to manage.
Here at DFH we specialise in creating bespoke debt management plans. If you think you may benefit from the above benefits, please reach out. A member of our team is happy to support you in finding the best solution to your financial worries.
Contact Our TeamDebt Consolidation
Debt Consolidation involves taking out a loan that is equal to the sum of your existing debts and using it to repay the creditors. This then leaves you will only one monthly repayment to one creditor.
Although debt consolidation loans can make your finances much easier to manage and leave you with less creditors to deal with, they can result in you repaying more than your original debt level over time. This is because debt consolidation loans often come with a high APR %.
Before applying for a debt consolidation loan you should consider if this is actually a better option for you in the long run.
Individual Voluntary Arrangement
Individual Voluntary Arrangements (IVAs) are a good option for people who have high levels of debt. An IVA is a formal arrangement with creditors that legal protects people from creditor harassment and bailiff action – providing the terms of the IVA are kept to.
Some benefits of IVAs include:
Guaranteed frozen interest and charges.
Protection from bailiffs.
Legal binding terms and conditions.
Debt written off if the IVA is completed successfully.
Debt Relief Order
A DRO allows all your debt repayments, interest, and charges to be frozen for 12 months. This is to allow you time to get your financial situation in order. If at the end of the 12-month duration you still cannot repay your debts, they will be written off.
Although this is a good alternative to bankruptcy, DRO’s are detrimental to your credit score. Additionally, they are not suitable for homeowners and people with large amounts of debt.
Bankruptcy
Bankruptcy may be the best option for you if you owe large amounts of debt that you cannot repay, and other debt solutions are not maintainable for your situation. To go bankrupt a court or will need to issue an order against you.
Before declaring bankruptcy, it is important to understand that this debt solution causes serious financial implications.
People who declare bankruptcy may need to:
Change career.
Close their business if they own one.
Sell their home, car and shares (even if they are joint assets).
There may be short term implications to incomes paid in, or expenditures paid from your bank account.
What debt solution is right for you?
If you are still unsure on which debt solution is best suited to your current financial situation, try not to worry, our team is on hand to advise you.
For bespoke, honest, and completely confidential advice from experts please complete the questionnaire below. A member of our friendly team will contact you shortly to support you on your journey to financial freedom.
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