According to latest studies, seven in ten Brits are experiencing debt problems, with many not responding to the issue until £1250 of debt has been accrued. Financial management can always prove to be a challenge even to the most savvy of individuals in the difficult times we live in, but these statistics really cause concern. With mounting costs of living and prices of every day commodities on the rise, it becomes a challenge for most of the working class to manage their monthly budget, let alone getting down to saving for their old age and retirement.
There are times when the best of us are faced with a financial emergency which arises at the most inappropriate of times and when we are strapped for cash.
In such a situation, finding suitable finance options poses a bigger challenge than expected. For those who have a bit of savings to fall back on it does help, but for those who do not have the option of available finance, the only option is to explore other alternatives like a loan from a bank or payday loans, from private companies like wonga. This can help bridge the gap if there is a monthly shortfall, but these kinds of solutions are only ideal for temporary financial issues and not long term debt.
Be careful when applying for loans – it can be a slippery slope. Checking the money advice service can help you to manage your finances carefully, and see which option is best for you. You must be on top of things and take a proactive approach if you want to overcome your debt issues.
Afraid of bankruptcy?
There is a misconception that if you are unable to repay your debts it will lead to bankruptcy. This is not a fact, as with the right assistance most people can clear off their debts successfully and steer clear of becoming bankrupt. All it takes is some planning and the right financial advice.
Ways to get rid of outstanding debts
Getting out of a debt crisis would be the first step to finding financial security for yourself and your family. With careful and systematic planning you could be out of debt within the span of three years or even less. You would need to seek the advice of a debt management or financial adviser who will chalk out an effective and practical plan which you could use to consolidate your debts and pay them off gradually.
The advisor will conduct a review of your monetary situation, including sources of income, mortgage, outstanding loans and other credit repayments. He will then make an assessment of the amount you can actually afford to pay comfortably and as to what sort of repayment scheme would be best suited for you. The representative you have who draws up the debt management plan can represent you by acting on your behalf to make negotiations with creditors. His priority will be foremost to try and freeze existing interest rates and reducing payments to the best extent possible. It goes a long way in relieving you of the burden of stress in dealing with creditors.
Having a representative will help in minimising contacts with banks, loan companies or credit card companies as they will be duly informed that all financial matters will be dealt with by your representative on your behalf. The creditors will be well aware that although they may not receive full repayment by agreeing to the debt management plan, they will at least have a guarantee of getting a fair sum of what is owed to them.
Debt Management Plans
Debt management plans are ideal for those who have average debts. For a person to qualify for a debt management plan he must be able to prove that he is not in a position to meet his existing contracted repayments, while not bordering on the brink of bankruptcy. He should also be able to pay a minimum of £100 towards unsecured debts and the total unsecured non-priority consumer debts should add up to at least £8000. The debt management plan adviser will take care of negotiating the best possible rates of interest which although will be for a longer period, would be payable at the end.
Falling into a black hole?
Many Brits have felt like spiraling debts can feel like they are plunging further and further into a black hole, with no escape. Even for those whose debts do not meet debt management plan criteria, there are numerous other options available which can be explored using the services of a debt plan adviser, who will identify and help you select the option which would best work in resolving your debt crisis. Remember you are not alone, as help is at hand and all you need to do is seek professional advice to walk tall and free of debt, but you must be proactive.
Author Bio: The author has been in the financial advisory business for ten years and takes an avid interest in helping individuals adopt the most effective debt and financial management methods.