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Self Help – How To Get Rid Of Debt
See Also The Following Related Pages:
Advice On Debt Management
Advice On The IVA UK
Advice On Debt Settlement (US only)
Learn About How To Negotiate Debt
This whole website is intended as a self help debt guide to help you deal with financial problems, but this page in particular will outline how you can take steps yourself to eliminate debt. The most important point to make is that if you ignore debt, it will get worse. Debt does not just stand still; it grows even if you do not deliberately add to it. By looking for help you are taking the right first step.
What to do next will depend very much on your particular situation and on your personal preferences. This site includes a step by step self help guide to dealing with debt by negotiating with your creditors. You can find this under Ways To Pay Off Debt. This will take you through the four stage process of writing to your creditors and making offers to settle your debts for payments that are within your means.
The self help debt guide mentioned above does depend on you being comfortable with creating your own Personal Financial Statement, which is a vital starting point for this process. You need to be able to break down all the details of your income and expenditure, in order to demonstrate the reality of your situation to your creditors. Only by doing this can you hope to convince them to help you by accepting reduced payment amounts.
If you are not comfortable with the prospect of having to prepare financial statements and negotiate new payment terms with all your creditors yourself, you could seek help from one of the many professional debt help organisations that exist. These companies can take you through various processes to eliminate your debts, and will often offer advice and counselling on how to avoid debt in the future too. There are various options open to you and the right one will depend very much on the particular circumstances you are in. The type and size of your debt will have an impact on which self help debt option you should choose.
Self Help Debt Advice - Debt Management Plans
Debt management plans are a way to help you repay your debts in full by reducing your monthly outgoings and simplifying the payments you need to make. Instead of having to deal with lots of different people chasing you, there is only a single monthly payment to make, which is more affordable than the total of your debts used to be. You also know when your debts will be repaid and when you will be debt free again.
This works by a debt management company working out new agreements with all your creditors that allow you to pay less each month. This is achieved by getting them to reduce interest charges and sometimes to reduce or write off any extra charges that they may have applied, for overdue accounts, etc.
When this is done, you just make a single payment to the debt company each month, and it is then their job to worry about passing on the agreed amounts to each of your creditors. For this type of self help debt solution to work you do need to have a steady income so that you can afford to keep up the regular payments that the plans require.
When thinking about finding a debt management company, always choose from reputable organisations and apply to a few before committing. You can find a list of some of the best debt management companies on the main debt management page of this site.
Self Help Debt Guide - More Serious Debt
If you are in a debt situation that is perhaps too serious for a debt management plan to work, such as not having enough income to service the volume of debt that you have accumulated, you may need to look at other options. If the main problem is that your debts are so out of proportion to your income that you can never see how they will be repaid, you usually need to find a self help debt option that will involve actually writing off a good part of your debts.
Only by getting rid of part of your debt without having to repay it can you hope to restore enough balance to deal with the remainder. The solution you choose will partly depend on where you live.
Self Help Debt Advice - Using An IVA
For UK residents, there is an option available to help you write off debt, which is not available in any other country. The individual voluntary arrangement, or IVA as it is known, was introduced in the 1980s to help small businesses avoid bankruptcy. It is now commonly used to help individuals deal with very serious debt problems.
It works by allowing you to make fixed, affordable payments towards your debts for a set period of time, and at the end of that period all your remaining debts are written off. Sounds good doesn’t it, but there are a few things to be aware of before jumping in. An IVA is a formal agreement so you cannot just decide to stop it if you change your mind or your circumstances improve. This is a key difference between an IVA and a debt management plan.
They usually last for five years, which is quite a while, but at least you know exactly when you will be debt free again. The legally binding nature of an IVA does have another advantage too, when it comes to getting your creditors to agree to join in. Whereas with a debt management plan you are at the mercy of creditors as to whether they want to take part or not, with an IVA you only need 75% of your creditors to agree, for it to be compulsory for the rest.
If you are thinking of looking into an IVA, apply to a few companies that offer both debt management plans and IVAs, so that they can assess your situation and advise you on the best course of action. You can find a list of some of the most reputable IVA providers on the main IVA page of this site.
Self Help Debt Guide - Debt Settlement
The other way to write off debt is known as debt settlement, and involves persuading creditors to settle the debt for much less than the full amount, generally in return for a lump sum payment. This is a service widely offered by professional debt settlement companies in the US, or you can undertake the process direct with creditors yourself.
Debt settlement companies are obviously very experienced and you should expect to get at least half your debt written off with the best organisations, but you will need to pay a proportion of this saving to them as a fee. If you do it yourself you can save on this fee, though you may not achieve such a big saving anyway without some expert help. There are lots of step by step guides to help you through the debt settlement process your self, though choose carefully as many offer advice too vague or out of date to be of much use.
(bold)You can find information on some of the best self help guides on the main page of this site that covers How To Negotiate Debt.
(bold)You can also find recommendations for some of the most reputable and effective Debt settlement companies on the main debt settlement page.
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