Wrapping up your debts is a precursor to a debt free life. Falling in debt is a common phenomenon and for similar reasons several debt relief programs have been designed to help debtors get out of debt. Debts can get out of control if they are not managed properly. There are various ill effects of being trapped in debt.
However, there are various ways by which you can get out of debt too. Given below are some of the measures you can take to lead a debt free life.
• Evaluate your debt-to-income ratio
Evaluate your debt-to-income ratio and find out how much you can actually keep aside to make debt payments. Get rid of the bad debts like car loans and credit cards. You may be having student loans and mortgage loans but these loans may continue for few years to come.
• Work out the details of your debts
Compile information about your credit card debts and make a list of the interest rates they attract, which cards have higher balances, mode of payment, whether debts are secured or unsecured etc.
• Use credit cards less
Carry just one credit card with you so that you can use it if the need arises. Avoid carrying credit cards in your purse or wallet. You may get tempted to buy something even if you don’t require it now. So avoid impulsive buying.
• Reduce rate of interest
You can request creditors to lower your interest rates. If your interest rates are reduced, consequently the monthly payments are also lowered.
• Pay off credit card debts
Do not put off payments of credit card bills for a later period. If you have used a credit card, make payments at the earliest.
• Build up emergency savings
It is always desirable to have an emergency savings account. If you are in debt, it is better to pay off your debts with the money in the savings account. A savings account earns less interest rate. So, it is desirable to pay off debts with the money in the savings account than pay debts which attract high rates of interest.
• Invest wisely
Once you get out of debt, keep aside some money as savings or invest it in any program which assures you of giving good returns.
We understand that debt often arises out of unfortunate situations and is not always the result of reckless over-spending. Loss of job, divorce, injury and illness can all lead to financial problems and can happen to anybody. That is why debt management counselling is important and our specialists go the extra mile to give you the best service possible – without passing judgement. Alternatively you can call our approved advisers free advice line on 0800 014 7863
Ideally suited to debts of less than £5k with some disposable income available. Learn how to consolidate your situation and reduce your monthly payments by learning to negotiate with your creditors directly.
Designed for debts of up to £15k where creditor pressure is becoming too much to handle and you may have failed to agree to an overall acceptable monthly payment with your creditors directly.
Minimum total Debt of £15k to qualify for an IVA. Typically you can write off up to 75% of your debts and repay the balance over 5 years. This is a formal arrangement and failure to maintain it can have serious implications
If you have been refused an IVA or simply do not have any disposable income to come to an arrangement with your creditors Bankruptcy may well be your best option but professional help and advice is strongly recommended before entering into any formal arrangements.