debt repayment
The Ups And Downs Of Getting An IVA Agreement
You find yourself struggling to keep up with the monthly repayments that you need to keep making to all of your creditors. If you find yourself in this situation then you will more than likely want to find a solution to your problem. An increasingly popular method of doing this is by setting up an Individual Voluntary Arrangement or IVA agreement. This can be an extremely effective way of alleviating your debt problems but it is important that you understand the ins and outs. We have given you a brief outline of the biggest positives and negatives that can occur with these plans.
Advantages.
By setting up a debt payment plan in this way, you will only have to make one payment each month, this will be calculated specifically for you so that it is affordable.
Within 5 years you should be free of all your debts and in some cases it will be within a much shorter time.
Another plus point is that you will not incur any further late payment charges or added interest during the term of the arrangement.
Once the plan is in place you should not have any further correspondence from any of your creditors. If you receive any phone calls or letters then you simply pass the details on to the company managing your arrangement.
Disadvantages.
These agreements are only available to people whose overall level of debt is more than £12,000. If your debt is lower than this then you need to look for another alternative.
Your credit rating is going to be severely affected, you will be unable to borrow for the length of the agreement and may struggle for some time afterwards.
These arrangements will last for 5 years as opposed to 3 for bankruptcy and as well as the longer term, you are also required to pay a lot more with these.
During the course of the agreement you will not be able to use any unsecured credit, this means no store cards, credit cards etc can be used.
Obviously if you are considering an IVA agreement then you should do thorough research into the subject first. If you have weighed up all of the pros and cons and still want to go ahead with it then make sure you look for a reputable firm to get you on the road to being debt free.
What You Need To Know About Credit Card Debt
These days everyone is looking for ways to reduce debt and save money. It is possible to wipe out your existing debt and learn how to live your life within your means.
Here are five tips that will help you on your way to debt free living:
1. Stop using credit cards. One of the leading factors in the current economic crisis is people buying things on credit they cannot afford. The next thing they know, they find themselves unable to do anything more than make minimum monthly payments.
* Minimum payments will keep you in debt because every month interest continues to accrue on your original balance. A $1,000 balance on a typical credit card can take 22 years to pay off if you make only the minimum monthly payments!
* Don’t fall into the trap of credit card debt. Instead, avoid the hassle and expense by paying cash for the things you buy. If you want a big-ticket item, save the cash before you make the purchase. Only buy when you can afford to pay for the item in full before you bring it home.
2. Buy luxury items with cash. Avoid using credit to get the luxury items you desire. You’ll get much greater enjoyment from the extras in your life when you pay cash, rather than ongoing monthly payments.
* Nothing takes the excitement out of a new toy or nice vacation more than the large payments that strain your budget month after month.
3. Create a realistic budget that includes debt repayment. Reach your first step by creating a workable budget and gain control of your finances and debt. Rather than stifling you, a budget can bring you freedom! You’ll know where your money goes and you’ll set a spending plan so you can continue buying the most important things in your life.
Make sure your budget includes recreation and debt repayment along with housing, utilities, food and household items and savings.
* If your budget doesn’t include room for debt repayment, there will never be enough money to pay off your debt. Take control of your financial reality by working with a realistic budget every month. It won’t be long until your debt starts to diminish and your savings starts to increase.
4. Don’t be affraid to call on a financial planner to help you out. The best way to be sure you’re making sound financial decisions is to seek out the help of a financial professional.
* Credit counselors, financial planners and accountants are experts in the areas of savings, debt repayment, investments and tax deductions. Going forward, inject each of these strategies into your finances so your future will be more stable and stress free.
5. Negotiate better rates with the banks or credit card companies. You may even qualify for a lower annaul percentage rate, but most people don’t realize they can call thier credit card company!
Open up the lines of communication with your financial institution and see if they are willing to help. You may be surprised at how willing they are to budge.
* If your credit is in good shape or you’ve made steady, progressive strides to improve it, you may be able to get lower interest rates on your debts.
* You might also receive higher interest rates on your savings, giving you a double shot at eliminating your debt entirely and moving forward with your finances in a positive direction.
You can repair your debt problems and learn to avoid creating them in the future. These five steps will point you in the right direction and get you started on a new path to financial freedom and prosperity!
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