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What Debt Solutions Are Available to Me?

What Debt Solutions Are Available to Me?
"""When the majority of people realize they have a debt problem, they will have panicked for months or even years, using credit to pay off credit, disregarding phone calls, and not opening their mail. This is not a sustainable way to live, so eventually they determine enough is enough and action must be taken.

When the decision is made to resolve a debt problem, there are a number of individuals to whom you can turn; however, the majority are too embarrassed to confide in friends and family. Instead, they may choose to inform another business about the issues they are experiencing.

Informing the proper company about a debt issue.

There are tens of thousands of companies that offer debt advice and support, but many in the for-profit sector are only motivated by profit. Similarly, there are for-profit businesses that care about assisting you.

When you realize you have a debt problem, your wisest option is to consult a non-profit debt advice organization. The owners of charities are unable to receive an income or profit from the way the charity is managed, so the decision-makers make decisions based on what is best for the consumer, not what is best for their own pockets.

What options are available for addressing a debt issue?

There are a variety of solutions available, and a charity that provides debt advice will work to ensure that you are presented with all of them so that you can make an informed decision. The available options for individuals with debt include:

Debt Management Plan

A debt management plan is a non-binding agreement between you and your creditors. You consent to repay the entire amount of money you borrowed over a longer period of time than originally stipulated. Because you are not adhering to your contractual obligations, the debt management plan will have a negative impact on your credit score. However, because you have agreed to repay your debt on a set schedule, your creditors may decide to suspend interest and fees to help you achieve this goal more quickly.

A debt management plan offered by a for-profit organization will incur charges and fees. A debt management plan offered by a charity will not charge you directly. The quality of service with a for-profit debt management plan or with a charity is unknown; however, it has been suggested that the service provided by a for-profit company is superior because you are paying for it. This has not been demonstrated, and the choice is yours. A charity will get you out of debt faster than a for-profit organization because there are no direct fees.

Trust Deed (only in Scotland)

In Scotland, you are eligible for a Protected Trust Deed if you have at least $10,000 in unsecured debt, at least two creditors, and the ability to repay at least 10% of the money you borrowed within three years. The trust deed is a form of insolvency in which you are unable to satisfy your monthly contractual obligations.

The Trust Deed enables you to submit a proposal to your creditors, which, if accepted, will allow you to pay your monthly disposable income to a single company (the insolvency practitioner), which will then distribute the funds proportionally to your creditors. If you successfully complete the trust deed, you will be debt-free at the conclusion of the solution, with interest and fees frozen and any residual debt written off after the term of the trust deed. Any equity in your assets will be considered and may be included in a Trust Deed.

IVA (exclusive to England, Wales, and Northern Ireland)

If you have a severe debt problem and cannot meet your monthly contractual obligations, an IVA may be appropriate. Individual Voluntary Arrangements (IVAs) are a common debt solution in England, Wales, and Northern Ireland (over 40,000 people enter an IVA each year) and allow individuals to repay what they can afford over a period of 5 years.

To qualify for an IVA, you must owe at least $15,000 in unsecured debt to at least three separate creditors and be able to repay at least 25 percent of the money borrowed over a five-year period. At the conclusion of the debt solution, all interest and fees will be waived, and the remaining balance will be forgiven. Because you are no longer repaying all of the money you borrowed, the IVA has a negative impact on your credit rating. Your file will be marked with a default that will remain for six years.

Bankruptcy

Another solution to debt is bankruptcy. This debt solution is for individuals with the most grievous debt issues, for whom no other solution can realistically resolve the debt issue. Bankruptcy can impair a person's ability to continue working; however, accountants and other professionals cannot be declared bankrupt. Also, if you are a director of a limited liability company, you must resign if you are declared insolvent. The insolvency practitioner in a bankruptcy proceeding will seek to recover as much money as possible for the debtor's creditors; this may involve the sale of real estate, vehicles, stocks, and other assets.

Your debt situation may not be severe enough to warrant any of the above solutions; therefore, general financial advice may suffice.

Taking the initial steps toward debt resolution

You can take the initial measures toward resolving a debt problem by speaking with a trusted friend, family member, or non-profit debt advice organization.""

" - https://www.affordablecebu.com/
 

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"What Debt Solutions Are Available to Me?" was written by Mary under the Finance / Wealth category. It has been read 137 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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