Debt Consolidation Options Compared

Debt Consolidation Options Compared

If you live in the UK and you want to consolidate your debt, then you have several options. The best consolidation option for you will depend on your own particular circumstances such as the size of your debt and how many creditors you have.

Individual Voluntary Arrangement

One of the most popular debt consolidation options used in the UK is an Individual Voluntary Arrangement, commonly known as an IVA. With an IVA you can consolidate your debts and clear them in a fixed period of time. Typically you will make consolidated payments for a period of five years after which all remaining debts will be written off leaving you debt-free. The amount you pay each month will depend not only on the size of your debts but also on what you can afford given your current income and essential outgoings. By entering into an IVA it is possible for you to reduce your debts by as much as two thirds. IVAs are an excellent choice for many people with debt problems they aren’t, however, suitable for everyone. Usually, to qualify for an IVA you must have debts in excess of A15000 and be in regular employment. If you do not meet this criterion then you will have to consider other options.

Debt management plans

The most common form of debt consolidation used by people in the UK is debt management plans. A debt management plan is an informal arrangement made between a person and their creditors to reduce the size of their debt repayments. Creditors are usually prepared to agree to such an arrangement if it prevents the debtor from defaulting on the payments altogether. Typically the plan will also mean that any interest being charged to the debt is stopped and so the size of the debt is no …

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Does Debt Consolidation Improve Your Situation?

Does Debt Consolidation Improve Your Situation?

Brought by the current financial situation, the majority of the population evaluates their spending in what areas they can tighten their belts on. One option that is considered by many consumers today is to reduce monthly payments to refinance! If you want to ease the pain of budget cuts because of the rising costs of everything, especially things like gas and groceries, having more money in your pocket can be very useful.

When should someone be combined into one loan debt?

If you have several credit accounts with high interest rates and balances heavy, you really should consider consolidating your debts. Interest rates are higher in a lot of money, 10% of your monthly payment is applied against the principle of the loan, which costs thousands of dollars more with consumer takes more time to repay.

What are the options?

There are few ways you might consider consolidating your debt. Taking a line of credit home equity is a quick and easy way to obtain additional funds. Then the lender lets you borrow against the equity in your home. If you have equity of at least 30% and can show a paid job almost any lender will give you this type of line of credit.

If you need some extra cash, then doing a cash out, refinancing or where you keep the difference of what your home is worth compared to your debts can be a good option for you. Your home mortgage is what you do here and receive the principal amount for the money back. You might want to consider this option, especially if your mortgage rate is good. This is especially true because even though interest rates are low now, they may not in the near future.

How does the process work?

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