Debt Solutions Comparison

debt solution
by Third Way

Debt Solutions Comparison

Whatever your financial worry, you need to have an understanding of what support is available for you. If you’re facing mounting bills, considering debt solutions is the only way you’re going to manage. There are six main options available to help you handle your money troubles and each one comes at a cost, usually to your credit rating. Depending on the severity of your situation and the amount you owe, one of these methods is bound to help you out of trouble.


The first method of solving your money worries is known as an informal agreement. If you’re having difficulties with your bills, the first thing you should do is personally contact all your creditors, explain your circumstances and try and come to an arrangement with them such as a freeze on interest or the negotiation of a lower monthly payment. Unfortunately, your creditors are under no obligation to accept your terms. The second method you could try is to employ a Debt Management Company to handle your creditors for you. In this instance you will be paying a specialised company a fee to negotiate with your creditors on your behalf. They will draw up a management plan for you and once its ready you pay the set monthly amount to the company who will then distribute it amongst your creditors. Another potential choice when trying to solve your money troubles is to consider consolidating your existing arrears in one new agreement. If you have the credit available, getting a new loan to consolidate all your existing balances could be a great way of managing them. A secured loan can mean you have to offer up your home as security so you need to be sure you can definitely keep up the repayments.


If the amount you owe is substantial and you don’t have any credit available to consolidate, there are some other options available.

The first of these is an Individual Voluntary Arrangement (IVA). This is a contract between you and your creditors through which you produce a proposal outlining your circumstances and detailing how much you can afford in total per month. An IVA usually lasts around three to five years and is a legally binding arrangement. You could also consider a debt relief order if you owe a large sum, have little disposable income and few assets to speak of and it remains on your record for around six years. It is the step before bankruptcy. Filing for bankruptcy is your last option in most cases and your case will be personally scrutinised to decide how much you can pay over the 36 month period bankruptcy lasts for. It can seem an easy way out but is very much a last resort which should be avoided at all costs.


These are the main debt solutions available and they cater for a range of severities. All of them will affect your credit rating except consolidating your debts. Think carefully and decide which method would suit your situation best.


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