Every year, thousands of people fall behind on loan payments, credit cards, store cards, and home shopping catalogs. For some of the lucky people, the situation that was causing them difficulties and delays in their payments disappears and they can catch up on what they owe. However, for many more people it is impossible to catch up on their missed payments and the debts continue to mount. If you are in debt or having difficulty keeping up with your current payments, then you should begin to investigate the many debt management options available to you.

What debt management options are there?

There are several options you could take to help you get out of debt or consider if you’re having trouble staying afloat. You could consider a debt management plan with a specialized company. You might consider getting a consolidation loan or you might consider the benefits of taking an IVA. All debt management plans come with their good and bad points, and to some extent, the type of debt you have and the amount you have will determine what type of debt management option you might consider best. Discussing your situation with a financial advisor and getting their advice may help you find the best solution for your needs.

Debt Management Plan: A Simple and Effective Solution to Become Debt Free

Making a debt management plan is perhaps one of the simplest and most effective solutions to get out of debt. Many specialized companies offer a debt management service; however, there are usually criteria that must be met to qualify for a debt management plan. For example, you would have to have a lot of debts and these debts would have to be owed to at least 3 different creditors.

Your adviser will make an evaluation of your income and expenses and this will lead to establishing how much money you have to pay your creditors each month. The adviser would then talk to your creditors and ask if they would be willing to receive reduced payments. If you agree, then you would pay the agreed amount of money to the adviser each month for the agreed term and they would split this amount among your creditors. The plan would continue until you have paid off your debts or your circumstances change.

A VAT – Individual Voluntary Agreement

This is an agreement made between the debtor and their creditors and is usually taken over 5 years under the supervision of an insolvency administrator. When the VAT has come to an end, any debts still outstanding will simply dissolve and you will owe nothing.

However, you should be aware that your assets, such as your home and car, would be at risk and you could be expected to sell them with the money going toward debts you owe. A VAT would also be recorded on your credit file and would remain there for the duration of the VAT. It could also greatly affect your chances of getting credit in the future for a long time, even after VAT has stopped.