How to get out of debt is something many Britons constantly ask themselves. If you are one of them, here are some pointers that could be useful.
If you feel you are not moving forward due to the stress and anxiety of unpaid debt in your life, you are not alone. The ominous cloud of debt is a fact of life for many people in the United Kingdom. If you too are feeling the anxiety and the mental stress of a mountain of debt building up in your life, try to stay calm. Besides taking free, professional advice from an experienced debt counsellor, you can also check out the points below.
Debts in life have to be acknowledged and dealt with so that it does not create any serious negative impact on your mental and physical well-being. Any debt you have can impact your savings goals. This is not good for your future.
Being in debt can make you feel like you’re just not moving ahead. If you don’t acknowledge it or deal with it, it may also cause worry and stress. It can even negatively impact your mental and physical well-being. Debt can also affect any savings goals you may have set for yourself. This could cause future problems. In this post, you’ll learn about the different types of debt and what the best way to clear all your debts might be for you.
How to get out of debt bigger than your income
Debt can be the result of many factors. Most important factors include credit card spending, personal loans and hire purchase agreements.
There are many common causes of household debt in the United Kingdom. These include mail order debts, arrears on bills, overdrafts, credit cards, hire purchase, student loans and personal loans.
If your debts have now become unmanageable and you really need some solution that tells you how to get out of debt, check out these steps you may take.
Consider Debt Management Plan (DMP)
- DMP gives you the option to pay back your debts at an affordable rate.
- You are supposed to make just one monthly payment to the DMP provider.
- Your DMP provider can help you here by working out an affordable payment and talking to your creditors.
- DMP option may help if you have non-priority debts that include credit or store cards, personal loans and overdrafts.
Consider Debt Relief Order (DRO)
- DRO is possible if you have very few assets and low income.
- With a DRO, your debt is frozen for 12 months. It is written off completely if there is no change in your life circumstances.
- You can consider a DRO if you don’t owe lenders more than £20,000 and you also don’t own your home.
Consider Individual Voluntary Arrangement (IVA)
- IVA allows you to pay back what you can afford. But you need to spare at least £70 a month to pay your creditors.
- IVA lasts usually five or six years.
- Any debt that still remains after the IVA duration is written off. This is another option on how to get out of debt.
- IVA is a legally binding agreement. You can expect harsh penalties for cancelling it.
Consider Bankruptcy order
- A bankruptcy order writes off all debts that are allowed to be included in it. But there are some debts that can’t be included like social fund loans, student loans, child maintenance arrears, or fraudulent debts.
- Any assets you have will be checked and assessed to see if they can be used to pay off your debts.
- You can keep some assets during the bankruptcy term like tools or equipment you need for work. Consult with your debt adviser on how bankruptcy can impact your life.
We hope we could share in this post some good points on how to get out of debt in the UK. Do get in touch with your trusted debt adviser for advice best suited to your life circumstances.
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