Reducing your monthly debt repayments
November 30, 2007
When you have a lot of different debts and a variety of creditors that you are making repayments to life can get very difficult, as this often means that you are paying out a large chunk of your income on debt repayments, which can leave you financially crippled each month.
If this is s situation that sounds familiar then it is vital that you do not ignore the problems, and that you try and address your debt issues by taking action. There are a number of different solutions available that could help you to reduce your monthly debt repayments, and by selecting the right method for your needs and circumstances you could soon reduce the stress and affordability problems related to high debt levels.
If you fail to take action with regards to reducing your debt levels you will continue to struggle with your finances each month, and eventually this can lead to you missing or making regular late repayments. This in turn could result in court action against you, regular creditor hassle, and damage to your credit report and rating.
Moreover, if your financial situation reaches a point where you struggle to pay your rent or mortgage you could even end up losing your home. This is why it is important to familiarize yourself with available solutions for those with debt problems, and to ensure that you take early action if you start to experience problems. Below are some frequently asked questions relating to monthly debt repayment reduction:
What are the different options available to help me to reduce my monthly debt repayments?
There are a number of different options available depending on your needs and circumstances, and it is important to ensure that you look into all available options in order to determine which is best for you.
Available options include debt consolidation loans, debt management advice, debt management plans, debt counselling, informal arrangements, and IVAs. Of course, another option is bankruptcy, but this should only considered under very extreme circumstances.
How will I know which is the best solution for me?
The best solution for you will be determined by your needs and circumstances, and it is important that you look at all of the available options so that you can see which could be the best one for your needs.
However, it is important that you make the right choice, so if you are in any doubt then it is well worth speaking to agencies such as the Consumer Credit Counselling Service or the Citizen’s Advice Bureau for further advice.
My credit is okay at the moment but I am starting to struggle with my unsecured debt repayments. What do I do?
If your credit isn’t too bad and you want to reduce your monthly repayments before your credit rating does take a battering it may be worth considering a consolidation loan, which will be used to repay your existing debts leaving you with one lower monthly repayment to deal with.
You could find that one of these loans reduces your monthly outgoings by a significant amount in some cases.
What if I have damaged credit? Can I still consolidate?
This will depend on the extent of damage to your credit. You may find that you can only get a secured consolidation loan, which means that you would need to be a homeowner. You may even find that with bad credit you cannot get a consolidation loan.
In cases such as these you may fare better looking a debt management plan or debt counselling to try and get your finances under control and reduce your monthly repayments.
What is an informal arrangement?
An informal arrangement is where you would contact all of your unsecured creditors in writing, explain your financial situation, and come to an agreement with regards to reduced repayments either for a set period or for the term of the loan.
This will, of course, extend the time over which you pay the loan but will ensure that you can benefit from increased affordability. You should make sure that when you contact your creditors you put forward a reasonable proposal with regards to a reduced repayment, and you explain why the difficulties with your finances have arisen.
Should I consider an IVA?
An IVA is a softer alternative to bankruptcy, and there are many companies putting out glossy ads to try and entice those in debt to consider this form of action.
An IVA can help some people that are so deeply in debt that they have little chance of every repaying it. However, it is important to remember that the after effects of this sort of action can be long lasting in terms of your credit.
You will also need to meet strict eligibility requirements and the plan will have to be agreed by the majority of your creditors.
Written by Peter Kenny · Filed Under Mortgages
i v a, s are a waste of time its a glossey con you end up paying them over £15,000 to do a job that you can do yourself.having had a perfect credit rating my husband had an accident it put him out of action for 6 weeks he coulnt work he is self employed it put us behind missed morgage [2] payments needed 120,000 consolidation to put us straight as he has his own business. people owe us money including inland revenue insurance people who drag their feet when paying out on an accident then you end up with nothing. garages that say they can do repairs then you have to get them put right. when you try and get your money back you end up having to go to small claims court [more red tape. put in for a bank charge refund [joke!] last 6 yers. am now still in a quew with everyone else to get my money back. ordenary people who have worked all their lives in this country get no respect their is always someone sitting on your shoulder to rob you. i used to be proud of my country not any more.a national health service that people pay into all their lives to have everything took off them because they are old to fund an old peoples home that doesnt care but takes the pension book anyway. dirty hospitals which leave sroke victims to feed themselves.mrsa is rife sub standard cleaners that skimp on their duties to get easy money its a disgrace.england should look at the dutch hospitals you could eat off the floor .they are immaculate.england has become everyones rubbing rag all the rubbish is dumped on this country.and yes i am bitter as we will end up a third world country.ancestors fought 2 wars to save us it was a united and proud country then.