Consider Solving You Debt Problem with a 2 Step Approach
The biggest problem with debt is the constant calls and letter from creditors, which forces you into making a hasty and possibly financially dangerous decision of choosing the wrong debt solution. If you go to a debt help company, they should first of all do a full financial fact find on you. After which, they will suggest that your best debt solution is, blah, blah. One problem that I have with this approach is, the full financial fact find could also be used to determine, which debt solution is most profitable to them. Remember, all these debt help companies have mouths to feed and in some cases some very hungry mouths! When you see an advert, that says “Free” or “Charity”, they too have large outgoings that need paying for.
Maybe you need a bit of time to do research?
2 Step Solution to Debt a Better Option
If only the creditors would stop calling! Bright red letter! Threats of Bailiffs! Threats of taking you to court! All these things are designed to put you under extreme pressure, causing you to make an unfordable payment, or jump into a debt solution that it NOT RIGHT for you. Perhaps you could take a two step approach to solving your debt problem?
Step 1 Enter into a Debt Management Plan (DMP)
You can put yourself into a DMP, or find a company out there that will administer a DMP for you. While a DMP can be a helpful starting point for you struggling with debt, it is important to note that this solution may not be as financially lucrative for companies who make more from other debt solutions. Despite its limitations, a DMP provides debtors with a structured plan for repaying their debts over a short/medium/long period of time, and can also offer benefits such as interest being stopped. While it may not generate as much income for companies as more aggressive debt settlement or consolidation strategies, a DMP can still be a valuable resource for you when seeking to take control of your debt, achieve financial stability, relieve creditor pressure and most importantly give you time to think and investigate a final debt solution. Or just maybe, once in a DMP, you are happy to continue as it is a “solution” for you.
Step 2 Final Debt Solution
Now that you have gone into step one a DMP, you can research all the different debt solutions that are out there. Don’t just fall for all the hype like; “Do You Qualify for Debt Solution”, “Free Debt Advice”, “Write off 80% of Your Debt”. I would suggest that at this point you look at what was once written on (this link): The Bankruptcy Association Site. Once you have read it, you will start to understand that you are worth money!
Property and Assets when in Debt
If you have any assets, especially property, you will want to be sure that those assets are safe. So, if you are looking for a final debt solution and you are worried about property or other assets, then you need to know what the effect of each debt solution will have on them!
There are a number of debt solutions out there and you need to ask yourself some questions; how much is a company making from administering my debt solution; are my assets at risk; what is the duration of each debt solution; what restrictions do certain debt solutions have; is my property at risk; I am sure that there are a lot more things to think about. Sometimes, what is said and what actually happens can be two very different things. If there is a contract to sign, READ IT, look to see what will happen to your property. Seek independent advice, books, online forums, search the net for the good, bad and ugly of debt solution.
2 Step Solution Debt Solution Gives You Time
You certainly did not want to end up being in debt, so really you are being forced into some kind of solution. Taking step 1 and going into a DMP will give you more time to think about whether or not you want to go into the second step of a debt solution.
Just remember, every debt help company will do a full financial fact find on you! Yes, this does allow them to work out how much you can afford to pay your creditors. However, it does also give them an opportunity to sell you the wrong product to maximise their profits (maybe).
Debt Solutions You May Want to Investigate Further
- Debt Management Plan (DMP) – an informal arrangement between the debtor and their creditors, where the debtor pays a reduced monthly payment over a longer period of time.
- Individual Voluntary Arrangement (IVA) – a legally binding agreement between the debtor and their creditors, where the debtor agrees to repay a portion of their debts over a set period of time (usually 5 years).
- Debt Relief Order (DRO) – a form of insolvency for individuals who have a low level of debt and no assets, allowing for debts to be written off after one year.
- Bankruptcy – a legal procedure where the debtor’s assets are liquidated to repay creditors, and any remaining debts are written off.
- Debt Consolidation – combining multiple debts into one manageable monthly payment, often with a lower interest rate.
- Debt Settlement – negotiating with creditors to settle debts for a lower amount than what is owed.
- Trust Deed (Scotland only) – a voluntary agreement between the debtor and their creditors, where the debtor agrees to repay a portion of their debts over a set period of time (usually 4 years).
- Debt Arrangement Scheme (Scotland only) – a debt management plan for Scottish residents that allows the debtor to repay their debts over a longer period of time while freezing interest and charges.
It’s important to note that each debt solution has its own advantages and disadvantages, and the best solution will depend on an individual’s unique circumstances and financial goals. It is recommended to seek professional advice before deciding on a debt solution.
Why Choose a Two Step Debt Solution?
Taking the first step, by entering into a debt management plan, will reduce creditor pressure. This will then give you time to explore what the best debt solution is for you. Too many people are being sold a debt solution that makes the most money for the company offering that solution. Why do you see so many adverts for IVA’s?