For many people, debt is a reality that they have to face every day, although some may feel the burden a little more than others. There can be a number of reasons as to why we fall into debt, it could be due to the loss of a job, or an unexpected bill that has ramifications on the rest of our finances.
Those who don’t have the means to make payments could also be under pressure from debt collectors and bailiffs, so it’s no surprise that many people become overwhelmed and feel like there’s no way out in relation to their debt problems.
While there is no magic wand that can make everything okay, there are a number of steps you can take to try and deal with the problem and discover what options are available to you. Many people find their problems get worse if the situation is not dealt with sooner rather than later. While it may not be the most pleasant thing to admit, it’s better than letting the situation escalate, where you are likely to be subjected to further penalties.
Consider Some Impartial Debt Advice
Much of the worry associated with debt relates to the possible ramifications. In order to deal with debt in a positive way, you first need to understand what options are available to you and how they relate to your current situation.
If you are perplexed as to where to start when it comes to sorting out your finances, why not get some free impartial debt advice. There are many organisations and charities that are set up for people who may not be comfortable sorting out their financial affairs, or even for those searching for some generic legal advice. Knowing what your options are allows you to arrange your finances accordingly.
Organisations and charities set up for those who are struggling with debt may also be able to help you set up a debt management plan. This setup normally sees you pay a single amount each month, where the third party will then distribute the amount between all of your creditors.
If you have a lot of unsecured debt, such as credit cards and loans, then you may be able to make a voluntary arrangement with your creditors where monthly payments are made against unsecured debts, normally within a three-year period. A trust deed can be applied for if you have excess income or assets that can be used to pay down your debt.
There can be a charge involved, and this is normally taken from the payments made by the debtor. The overall cost will vary depending on how complex the trust deed is, as before, advice can be given via a number of organisations and charities, so ensure you’re know all the details before committing to a trust deed.
Bankruptcy is often seen as a quick solution for many, but the reality is that bankruptcy is a not a ‘made-for-all’ solution. Also known as ‘sequestration’ in Scotland, bankruptcy is a proves that helps debtors take care of the debts that simply cannot be paid.
Those who are bankrupt will find that their assets may be used to pay off their creditors. After a certain amount of time, anything else owed will be written off, effectively allowing the person to make a fresh start. Although in theory, this can be seen as the most attractive route, there are ramifications to consider.
The most serious of these is the effect on your credit score. Although bankruptcy will help you get rid of debt that cannot be paid, it will be recorded on your credit profile, meaning that credit may not be offered for some time. In the first instance, this may not seem that detrimental, but gaining access to basics such as a telephone line or bank account could prove to be difficult.
This isn’t to say that bankruptcy is a wolf in sheep’s clothing, it just means you need to ensure that the debts cannot be paid, if they can then it make sense to pay them. You are able to apply for bankruptcy yourself, although a creditor can also apply if you are unable to pay the amount owed.
There are many avenues for those in debt, but you should speak to a debt helpline who will be able to assess your situation and offer a solution based on your circumstances.