The summer can be an expensive time of the year for many people. With many of us taking an expensive holiday abroad, and many having to keep the kids entertained for six weeks, it`s no wonder that a lot of people find their pockets a little empty by the autumn.
If you have summer holiday debts that you`re struggling to repay, it`s important that you don`t hesitate to get the help you need. There are a number of options that could help you tackle your debts.
Debt consolidation loans are not ideal for people who are really struggling with their debts, but they could help you to simplify your finances if you`re finding it difficult to keep track of your various debt repayments. Your new loan is used to repay multiple existing debts - effectively replacing them with a single monthly payment.
Most people who consolidate their debts this way also reduce their monthly outgoings by repaying the loan over a longer period of time. This can be useful for freeing up cash for other purposes, but you may end up paying more interest this way.
A debt management plan is aimed at people who can no longer afford their unsecured debt repayments. It involves negotiating with your lenders to bring your debt repayments back down to an affordable level, enabling you to pay everything back at a rate you can afford (albeit over a longer period of time). If your summer holiday spending has pushed your finances `over the edge` and you can`t keep up with your debt repayments anymore, debt management might help.
Your lenders may also agree to freeze interest and other charges on your debts. Because this stops your debt from growing, you`ll be able to pay off your debts sooner than you could if they were still growing. If they don`t freeze the interest, though, you`ll pay more in the long run.
Your lenders don`t have to agree to a debt management plan, but if they can see it`s the most realistic way for you to repay your debts then they may well do so.
One downside of a debt management plan is that repaying your debts more slowly will have an impact on your credit rating.
An IVA is also aimed at people who are struggling, but you`ll only qualify if you`re carrying significant unsecured debts and there`s no realistic way you can afford to repay them. However, you`ll probably still have to be able to commit to making (smaller) regular monthly payments.
An IVA is a legally binding agreement with your lenders in which you`ll repay as much of your debt as you can afford over an agreed time (usually 60 months / five years). On successful completion, any remaining unsecured debt will be written off.
An IVA will have an impact on your credit rating, and if you`re a homeowner you`ll probably have to release equity from your property.
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Tags: debt, summer holiday, summer, holiday, debt management, debt consolidation, IVA, expensive holiday, abroad
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