The World of Possible Debt Solutions
Between July 2006 and July 2007, UK debt rose by £120 billion, which represented a 10% rise. In more manageable terms, personal debt is increasing by £1 million every four minutes. These statistics are frightening because it highlights the fact that the individual debt in this country is quickly becoming unmanageable. It is no wonder that around 317 people declare bankruptcy or insolvency every single day. As a result, it would pay a high percentage of society to look into the possible debt solutions that are out there for them to tap into sooner rather than later, before it gets to the stage that bankruptcy seems to be the only viable solution to their financial problems.
As debt problems have risen in this country, so have the possible solutions out there. Noticing a market demand for debt solutions, many high street banks and lenders have come up with various products to try and help out, as have the government. There are many reasons to look into these and they will be outlined below, but the main reason is to prevent you from becoming a financial statistic. They can all help to manage your finances far more efficiently and thus can enable you to get clear of debt rather than continually being bogged down by the vicious circle that is debt. They can offer you a way out, so be sure to use it!
Balance Transfer Credit Card – Balance transfers on credit cards are becoming extremely popular as a result of the offers out there. Many providers offer 0% deals that allow individuals to transfer balances from other credit cards for a small fee that is usually around 3% and then pay no interest on the balance for usually around twelve months, although some offer a longer or shorter period than that. These cards allow you to get rid of any outstanding balances you have within that period with no extra cost added on so if your debt is fairly low then you can use this tool. If, however, your credit rating is not very good then you may not be approved for a balance transfer card and may have to look elsewhere.
Unsecured Debt Consolidation Loans – This is better for individuals with a larger total balance of debt. An unsecured loan has many advantages, including low interest in comparison with several credit cards. By taking out an unsecured loan to consolidate your debts, you can manage your debts over a fixed period of time, which is usually between one and seven years, and only pay one set amount every month. By paying one amount, you know exactly where you stand and can budget accordingly. As the total interest that goes on it is less too, you can have more money available for other things, like enjoying yourself! However, again your credit has to be relatively good in order to be approved.
Secured Loans – Secured loans are better for homeowners with relatively poor credit. You can borrow money by offering your home as security against repayments and so your credit rating does not really matter. As it is offset against your home, you can also borrow more money, depending on the equity that you have in your home. You can borrow the money over a longer period of time, again on a lower interest rate, and get out of debt on your terms. Secured loans come in many forms, from regular loans to remortgages, but the nature of it is up to you.
IVA – This is the final step before bankruptcy in many cases. An IVA is a formal agreement between you and your creditors that enables you to pay back your debts at a level that you can afford over five years. All interest and charges are frozen and you can plan your finances out to pay back only as much of the debt as you can afford. This only applies to unsecured debt as secured debt can actually be funded by the sale of your home. An IVA is a great way to avoid bankruptcy, but there are terms and conditions as well as qualifying criteria attached so consult an expert before applying!
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