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Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track
Loan consolidation/remortgage Debt Management Plan Individual Voluntary Arrangement (IVA) BankruptcyEach solution has its advantages and disadvantages, which are outlined below.Loan consolidation/remortgageIf youre a homeowner and have equity in your home (ie its worth more than the amount of money you still owe on it), it may be possible to release this equity to pay off your debts, especially those unsecured loans with high interest rates, such as your store and credit card bills. This will reduce your monthly outgoings and is called loan consolidation/remortgage. The advantage of this secured loan, or remortgage, is that interest rates will be lower than those for an unsecured loan. However, your loan will take longer to pay off and if you fail to keep up payments, youll put your home at risk of being repossessed. Debt Management PlanA Debt Management Plan is an arrangement you make with those you owe money to (ie your creditors), usually organised and run by a debt management company, which allows you to reduce your monthly payments to an amount you can afford. These plans are often called informal arrangements as they are not legally binding and apply to your unsecured debts only.A good debt management company will often have close contacts with most major creditors and will be able to set up the plan quickly and smoothly. In addition, if you get phone calls or letters from your creditors, you can pass them on to the debt management company, who will deal with them for you.The amount you pay is worked out by adding up all your monthly bills and reasonable living expenses, and deducting this total from your monthly income. The money left is known as disposable income, which you send to the debt management company each month. They then pay your creditors for you. As you are paying back less per month then originally agreed, your debts will take longer to pay back, your creditors are not legal obliged to freeze interest and charges and your credit rating may be affected.Individual Voluntary Arrangement (IVA)An IVA is a legally binding contract between the debtor, ie you, and your creditors, ie those you owe money to. The advantages of an IVA are that, instead of making payments each month to various creditors, you make one affordable payment, usually over 60 months, to whats known as a licensed insolvency practitioner, who arranges and manages IVAs. The moment the arrangement is in place, your creditors usually have to stop adding interest or charges to the money you already owe, and they must also stop demanding any money from you. Any debt that is still outstanding at the end of the IVA is written off by the creditors.The disadvantages are that an IVA will affect your credit rating (ie your ability to get loans etc in the future) for up to six years. In addition, you may also have to remortgage your home towards the end of the IVA, releasing some of the money tied up in the house to give to creditors.BankruptcyBankruptcy is often considered the last resort for people with serious debt problems. If youre a homeowner, for example, your share of the property can be used to repay your creditors; any other significant assets can also be sold and you may be required to make payments from your income. Along with the stigma of bankruptcy, your conduct leading up to the bankruptcy will be reviewed.SummaryThis article provides a brief overview of the options available to those with debt problems. However, before you take any action, think carefully and make sure you carry out further research. In particular, you should seek advice from a debt advisor, wholl be able to tell you the best solutions available to you, along with detailed information of those solutions, based on the level of your debt and your personal circumstances.Whilst we make every effort to ensure this article is as up to date as possible, Accuma cannot be held responsible for changes in legislation or developments in case law since this article was produced and published. Article produced on 24th June 2008.
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