This is a question many people who contact Debt Support Trust ask. The reality is, eliminating debt is not as straightforward as many people are led to believe.
If you find yourself in a position that you are unable to pay your debt the first thing you must do is seek debt advice. We always recommend a not for profit charity such as Debt Support Trust, a telephone based charity that has been set up to help people in financial difficulty in the UK. You can also receive face to face debt advice from your local citizens advice bureau.
If a debt problem is left then the situation can quickly become too severe and only an insolvency solution is suitable. When calling Debt Support Trust you will be asked for information which we treat with the highest confidentiality. This information includes your contact details and some basic questions so that we can get a rough idea of your own personal situation. We then discuss your income, expenditure and assets. This is important to ensure the advice we are providing is accurate and specific to your situation. The telephone call to Debt Support Trust is free from all landlines, however if you are using a mobile please let an advisor know and we will call back - we don't want you to be charged for the call.
Once all the necessary information has been collected we will provide advice which is tailored to your own individual circumstances.
Our advice can range from providing a letter template to help you negotiate with your creditors through to bankruptcy.
A Debt management plan is an informal arrangement between you and your creditors, where you pay one monthly affordable amount and this is distributed amongst your creditors on a pro-rata basis. Interest and charges will be asked to be frozen, however this cannot be guaranteed. The length of time you pay your debt management plans depends on the amount of debt you have, if interest and charges are frozen and the amount you are able to pay each month.
An IVA is another debt solution. This solution usually lasts for five years and at the end of the term any remaining debt will be written off. This is a formal solution and all interest and charges will be frozen, however you must be able to contribute an affordable monthly payment to your debt. Your monthly contribution to your debt will be reviewed every 6 months.
Bankruptcy is one solution people associate with eliminating debt but our article shows some of the pitfalls of bankruptcy.
Any of the above solutions will affect your credit rating for 6 years and you should be aware of all the pros and cons before entering any solution.
We recommend you call Debt Support Trust to receive free debt advice to discuss which debt solutions would be best suited to your situation.