What types of debt help are there?

For people looking for a way out of debt, there are a number of debt solutions to suit different circumstances. The range of options can be confusing – so it helps to have a good knowledge of the various types of debt help available.

Here we look at the range of debt help and solutions that could help you become debt-free once again.

General debt help & advice

Some people don’t need a long-running debt solution – simply a nudge in the right direction will often be enough.

When you call one of our expert debt advisers, we will talk you through your financial situation, work with you to establish areas that could be improved, and discuss a plan of action for the future.

If your situation requires it, we’ll advise you on the best debt solution for your circumstances.

Debt management plan

If you have a number of debts that you feel unable to repay, a debt management plan could help. When you start a debt management plan through your debt adviser, they will negotiate with your creditors on your behalf for smaller monthly payments, based on how much you can afford each month.

This will mean your debts take longer to pay off – but for people whose finances are stretched to the limits, the reduced monthly payments can be a great relief.

Debt consolidation

If you have multiple debts and would like to simplify your finances, a debt consolidation loan can enable you to do that. It involves taking out a new loan to pay off all your existing debts, after which you will make regular monthly payments to your new lender.

Debt consolidation loans also allow you to spread repayments over a longer period than the original debts, reducing your monthly payments – but be aware that this will lead to you paying more interest in the long run.

IVA (Individual Voluntary Arrangement)

For more significant debts (typically £15,000 or higher), an IVA is an alternative to bankruptcy which can avoid many of the more severe consequences of bankruptcy, such as the person in debt losing their home.

When you enter into an IVA, you agree to make a set monthly payment to your Insolvency Practitioner. The arrangement must first be accepted by a majority of creditors but once it is, it’s legally binding. Payments normally continue for five years. After that time, any remaining debt will be considered settled.

The type of debt help that’s right for you will depend on your individual circumstances, so it’s always wise to seek expert debt advice before you make a decision.

Tags: debt, debts, debt consolidation, debt help, debt advice, debt management plan

Our initial advice on your best financial solution is free. Fees payable when continuing service is provided. Calls may be recorded for training and quality purposes.