Take control of your finances: Debt Management
Debt management is the process by which debtors can take more control of their debt situation by taking debt management advice and, with the help of a qualifed debt management adviser, put in place a plan to reduce the cost of their debt.
We offer access to a range of debt management services, as follows. Each is explained in a little more detail below, or click on the links to read the full pages.
- Debt consolidation advice
- Debt consolidation loans
- Unsecured debt consolidation loans
- Credit card debt management
- Debt management plans
- Individual Voluntary Arrangements (IVAs)
- Bankruptcy advice
Debt management strategies will vary, depending on the type and level of debt, and on the individual’s ability to repay. At Principle First we offer debt consolidation advice to help you decide which strategy is right for you.
For the consumer who may have a number of individual debts, such as credit and store card borrowings, and bank loans and overdrafts, then debt can be consolidated by arranging a debt consolidation loan. This may be a loan obtained as an unsecured debt consolidation loan, which would normally be suitable for amounts up to £15,000. For higher amounts, a debt management adviser may recommend a secured loan, i.e. a loan linked to your home or property. One popular means of debt management using a secured loan is to arrange a remortgage on your home, clearing your various debts by folding them into your remortgage.
Credit card debt is a particular concern for many consumers, with one survey showing that in 2009 the average UK household had £10,000 of unsecured debt, much of it on credit cards. There are solutions designed specifically for credit card debt management which can help with this.
Do you need debt management help? Submit a a financial advice enquiry, or call us on freephone 0800 678 5929
This strategy can result in interest payments that are much lower than the relatively high interest you pay on credit and store cards, and can also be a longer term loan, thus further reducing your monthly outgoings.
Debt management with a Debt Management Plan
For those who are having difficulty and are unable to make their debt repayments, a debt management plan (DMP) is a good option. Again, the services of a debt management adviser, or one of the many specialist debt management companies, can be of great assistance in arranging a plan.
A debt management plan is an agreement negotiated with your creditors to enable you to repay your debt under terms that are more beneficial to you. Your debt can be rescheduled to give you a lower monthly repayment, a longer time to repay, and in some cases can even freeze interest payments. However, this will be noted on your credit record for 6 years, which may affect your ability to obtain credit in the future.
Debt Management: Individual Voluntary Arrangements (IVAs)
In more extreme cases and with larger debts, best debt management advice might be to make an Individual Voluntary Arrangement (IVA) with your creditors.
As a debt management strategy, the IVA is suitable for those with debts to several creditors totalling £15,000 or more.
An IVA is a legally binding contract where your creditors accept they will never recover your full debt. It is a compromise arrangement, and in some cases can involve your creditors cancelling up to 60% of your debt, while you repay the remaining 40% over 5 years. An IVA is a serious undertaking, however, and an option that should be taken only on the basis of debt management advice, and negotiated by one of the specialised debt management companies. Part of an IVA agreement may require you to release equity from your home, as part of your debt management strategy. Even if this is not required at the start, and you then fail to keep up the repayments agreed in an IVA, your home may be at risk. The fees of the debt management companies who arrange IVAs are not charged to you with a single bill, but are built into the IVA repayments.
Debt Management: Bankruptcy
Bankruptcy is a last resort in debt management, and is the term that applies when you cannot repay your debts. Filing for bankruptcy is a serious decision best made with the benefit of high quality bankruptcy advice from one of the specialised debt management companies, who can also discuss the other debt management strategies and options listed above.
Are you considering taking debt management advice? Contact us with a financial advice enquiry, or on freephone 0800 678 5929 now.
