Get rid of Debt By means of a Debt Administration Firm

Debts arise out of money borrowed to meet some needs. Usually, a debtor has good intention when borrowing funds. With time, it becomes increasingly difficult to repay. Interest is charged on the money borrowed. The more you default, the higher the interest will be. Most people are in such a situation. They are in desperate need of debt advice. Some of the consequences of default include foreclosure and filing for bankruptcy. However, you can now seek help from a debt management company.

In today’s world, it is almost impossible to survive without relying on credit. Some decades ago, it was possible to live without having to borrow money. Nowadays, it is easy to get access to credit. This has tempted many people to take loans or use credit card debt recklessly. It takes a lot of courage to seek debt advice. Controlling expenditure requires strict discipline. If you are having problems with your debts, then you should contact a debt management company.

The first step towards managing your debts is to take stock of the situation. You might have noticed that you are making more repayments than what you take home. Should you be in such a situation, it is in order to ask for debt advice. Approach your creditors and discuss the possibility of formulating a repayment plan. The same can be done through a debt management company. Financial institutions are always open to negotiating with their clients to establish new monthly repayments.

Secondly, learn how to budget. This is a debt management tool that assists you to plan your expenditure based on the amount of income you have. On one side, you list down all the expenses. These may include fuel, food, electricity bills and insurance payment. A debt management company is in a good position to help you budget. Financial experts will give you debt advice on how to free more of your finances from your budget. This in turn leads to more money to repay debts.

Some of the debt advice worth considering includes reducing or eliminating unnecessary expenditure. A good example is the money you spend eating out or buying items online. From your budget, you will be able to spot such expenses. Whatever you find to be of little importance should be done away with. For instance, rather than eating out in expensive restaurants, you should carry packed lunch. Instead of buying music online, why not buy from a nearby music store? Contact a debt management company for more of these tips.

The secret to getting out of debts lies in knowing what those debts are. Visit an online debt management company. Most of these companies do have debt repayment calculators on their websites. Here you can list all your debts upon which the calculator will assist you formulate amounts to repay monthly over a certain period of time. Do not shy off from seeking debt advice. Remember you are not the only one in such a predicament. Read books and any material that offers debt management advice.

Master the art of Debt management

In making any purchase, you want that the item purchased must have a long term utility. However, while selecting the debt management technique a shift in the approach is quite noticeable. We find that short term debt management techniques like debt consolidation loans are much greater in use. Nevertheless, this is not double standard on the part of people. The choice is mostly influenced by the immediate pressure of debts.

Debt settlement techniques, which have a longer standing effect, are the rule of the day. People know them by the name of debt management in the UK. Debt management aims to strike at the roots of debt, instead of simply countering the after effects of debts. When debts are not allowed to increase, the use of debt consolidation loans and other short-term debt management techniques become redundant.

Why is debt management preferred to have a longer effect? The realisation is the result of people accepting that debt consolidation loans can give succour for only a time being, but not for ever. Even when borrowers are able to pay all the debts at a particular point of time, is there a guarantee that debts will not arise again? What shall one do at that time? Taking a new debt consolidation will not be a viable solution. The loan providers will be the first to deny loans to borrowers who have grown a habit of borrowing. And what about your home against which the loan is taken? Will it have sufficient equity left to be used for any other purposes? No! These are the reasons that have pushed borrowers towards seeking long term debt management.

Certain borrowers are perplexed at the inclusion of debt consolidation loans in debt management, when the debt management agencies themselves say that debt consolidation loans are of not much good. To this the debt management agencies reply in the following manner; “We do not recommend the total ban on the use of debt consolidation loans. What we recommend is a ban on the misuse of debt consolidation loans.”

Debt consolidation loans are rampantly used in the UK. It is because of the ease with which people are able to draw debt consolidation loans that people have started spending rashly; thus being further weighed down by debts.

Debt management agencies have come down on this habit of the people of the UK. Since debt consolidation loans abet people in taking more debts, debt management agencies also criticise debt consolidation loans.

Debt management makes a planned use of debt consolidation loans. Compare the situation with an ailment that a person is facing. Debt consolidation loans will be like a surgery to be performed. However, doctors will first try to cure the ailment through oral medication. The oral medication is to be given through debt counselling. Only when oral medication is not able to cure the ailment, doctors will suggest surgery, i.e. debt consolidation loans.

Debt counselling is referred to the advice to borrowers about the manner in which they can cure a debt problem. The advice is not general in nature. Debt counsellor, who is an expert, will sit with the debtor during a few sessions to discuss the details of the debt problem. When debt problem is at its preliminary stage, it will require efforts from the borrowers own side. Debt counsellor offers certain suggestions through which borrowers can bring upon a marked change in their finances. Debt management agencies have given a new look to certain age old principles of coping with debts. It is these principles that are made use of to inculcate debt sense in borrowers.

It is during these sessions that the debt counsellor will access the use of debt consolidation loans. The factors that will be considered while making the decision are as follows:

* What is the amount of debts that the debtor owes to one or different creditors?
* Does the borrower have sufficient available income to repay debts on his own without using debt consolidation loans?
* The nature of the debts- whether debts are accruing higher interest rate, and if they have already reached their repayment date.

The various tips that you learned during the debt management process must not be forgotten during repayment of debt consolidation loans. While debts owed to creditors have been settled, you continue to owe to the loan provider. Never must the borrower relax until the final instalment of debt consolidation has been made.

Should I Choose Debt Settlement or Debt Consolidation?

To begin with, the choice between debt settlement or debt consolidation is not a simple yes or no question. There many different factors that need to be considered before a person in debt can make the best decision. Debt settlement and debt consolidation are two diverse choices to relieve the burden of debt, and both have different benefits that may make it easier for the debtor to pay what they owe. However, the two methods are different in the way that they function, with each having their ups and downs, as well as advantages and disadvantages.

For many borrowers, debt consolidation and debt settlement cause a small dilemma. They may not know which one to choose to pay off their debts, though they are both better alternatives than bankruptcy. The first thing to consider is for the debtor to assess his or her finances and decide which method would be better for his or her specific situation. The bottom line is that you need to choose an option that will give you quick relief to lift the burden of financial strain. The important point to consider when trying to choose between settlement or consolidation is which method will save you the most money. One way to assess this is in the interest rate. Debt consolidation will work to lower the interest rate of the debtor, which consolidates all debts into one loan at a lower interest rate. This nets big savings in the long run, but it does not lessen the total amount of the loan. However, this is something helpful when it comes to paying taxes on the borrowed amount.

Debt settlement is a different opportunity because it allows the principal amount of the loans to be dramatically reduced by up to 50%. A debt settlement company will agree upon the amount to be settled so that the debtor will have less to pay back overall.
As you can see, both of the methods have their advantages, yet there are also disadvantages to take into consideration. The important thing to determine is which disadvantages may weigh more heavily on your present situation when making your decision.

When it comes to adverse effects, debt settlement makes a big mark against your credit score. It is almost similar to having a foreclosure on your record, although you do have the opportunity to improve your credit score over time. In the meanwhile, however, you will still have to work with worse rates due to a poor credit score when you borrow in the future.

Last of all, many people lean to debt consolidation because it dramatically lowers their interest rates. This will help you to better pay off all of your loans because you will be paying against one large loan at a lower rate. The disadvantages to this method is that there is no reduced amount in the total debt that you are paying off. Even though you have lower interest rates, you will still have to pay all of the money back. It will not dramatically impact your credit score as much as debt settlement, but you still need to focus on making timely payments against what you owe to come out on top.

Debt Management Plans

The amount of money owed by people in the UK is at an all-time high of some 1.43 trillion and, according to Credit Action, a national money education charity, average household debt (including mortgages), is 57,420. As a result of these rising levels of what’s known as ‘personal debt’, more and more householders are turning to debt management companies to help them balance their monthly income and outgoings.

What is a Debt Management Plan?

A Debt Management Plan is an arrangement you make with those you owe money to (ie your creditors), organised and usually run by a debt management company, which allows you to reduce your monthly payments to an amount you can afford. These arrangements are often called ‘informal arrangements’ as they are not legally binding. They’re generally suitable for people who only really need them for the short to medium term; to cover maternity leave or a loss of overtime for example. Debt Management Plans are designed to manage your unsecured debts, including credit card and store cards, overdrafts and unsecured loans.

How much can I afford?

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.

Advantages of a Debt Management Plan

* Debt Management Plans allow you to start paying creditors with a single, affordable payment each month.

* You won’t need to try and obtain more credit to pay your debts.

* As an informal arrangement they can be used as a short to medium-term solution.

* 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.
Disadvantages of a Debt Management Plan

* Your credit rating (ie your ability to get loans etc in the future) will be affected and, in general, you will be asked not to use your credit cards or other credit while in the arrangement.

* As you’re paying less towards your debts each month than originally agreed with your creditors, it may take longer to pay back your debts.

* Although your creditors don’t have to freeze the interest and charges they apply to your debts, they’re more likely to do so with a strong case and if you work with a credible debt management company.

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 in June 2008.

Debt Management Eligibility

Debt management plans are just one method of debt solution and are not suitable for everyone’s circumstances. As with all debt solutions there are criteria upon which your eligibility for debt management will be decided.
The list below will provide you with a general idea of whether a debt management plan could be the best way for you to deal with your debts;
1. Firstly, your debts should be unsecured. This includes things such as bank overdrafts, credit cards, store cards, unpaid utility bills and personal bank loans. Things such as mortgage arrears, student loans and vehicle H.P. agreements can’t be included in debt management plans.
2. Your total level of unsecured debt should be at least 8,000 in order to qualify for debt management. However, if your debts are above 15,000, then another debt solution such as an IVA may be more appropriate.
3. You’ll need to have at least 100 of disposable income once you’ve made the repayments on your secured debts in order for a debt management plan to work.
4. Having at least 3 separate creditors is another pre-requisite for debt management. This has to be unsecured debt with 3 different organisations. So for example you had a personal loan, overdraft and credit card all with the one bank and no other debts, you would not be eligible for a debt management plan. However, if you had each of these things with separate lenders then that would be acceptable.
5. You’re experiencing difficulty in meeting your monthly unsecured credit repayments. This could be due to high interest rates on catalogues or store cards, having too many credit cards with a large combined repayment amount or a number of other reasons.
If your financial circumstances fit in with the criteria listed above then debt management could be the best debt solution for you.
This information is only intended as a guide and is therefore not a substitute for professional debt advice which you can get from one of our trained, friendly and professional advisors.
Contact Debt1 now to learn how debt management could ease your money worries

Debt Management Program for Better Debt Handling

There was a time when you could buy your heart’s desire with just few pennies in your pockets but these days to buy those same things even a dime is not enough. Thanks to the loans offered people are able to afford such expenses and live in luxury. But again loans are addictive and people who once start taking loans don’t stop at one loan and sometimes fail to make repayment on time. Sometimes people fail to manage the loans and end up with a lot of debt and no management. The result being tension, worries, sleepless nights and nightmares of facing legal proceedings.

Well it is always said prevention is better then cure but nobody takes it seriously. But you still have time in spite of such high debts you can still manage it and make life easy. All you have to do is go to one of these debt management programs and enroll yourself there. These debt management programs help manage the loan and plan the repayment for the borrower thus making life easier. The debt management consultants will go through your income, see the amount of debt you have, list out all the lenders, prioritize them and plan a repayment plan accordingly. In this program you need not bother about the repayment as they will take care of all such things. They might suggest you to go in for a debt consolidation where you will have to repay all the debts by taking a loan at a lower rate of interest if that would solve your problem. Sometimes they will negotiate the interest rate of an already taken loan and bring it down. For people with bad credit this program makes them improve their credit. The charges that these programs have are very minimal in comparison to the work that they do.

Debt Management Regulation

Companies in the United Kingdom who offer help with debt problems must hold a Consumer Credit Licence, which is issued by the Office of Fair Trading (OFT). This includes firms who offer debt management plans, or Individual Voluntary Arrangements, or who negotiate with creditors on behalf of borrowers. If the OFT finds that a firm has acted improperly, its enforcement powers can include removal of the Licence.

The OFT first issued guidance to the debt management industry in December 2001 and updated this guidance in September 2008. The OFT guidance places obligations on firms such as:

– Treating customers fairly
– Being transparent about fees and charges
– Fully and fairly investigating customer complaints and offering appropriate redress where due
– Compliance with the Data Protection Act in the handling of personal data
– Not engaging in high pressure selling
– Giving equal prominence in advertising to both the advantages and disadvantages of a debt management option

In September 2010, the OFT carried out a compliance review of the debt management industry and found several issues of concern in many companies who help customers to manage debt repayments. Identified problems included:

– Lack of competence among staff
– Misleading advertising, especially regarding transparency in disclosing the fees due
– Lack of awareness of the Financial Ombudsman Service complaints procedure

Largely based on the findings of the compliance review, the OFT updated its guidance in March 2012. The revised guidance explicitly stated that certain practices were unfair, such as:

– Sending unsolicited text messages or emails
– Remuneration structures that may give inappropriate financial incentives to sales staff
– Using misleading trading names, such as ones that incorrectly suggested the company was a charity or government helpline

The OFT is particularly concerned about standards in this industry as many customers seeking help with debt relief may be classed as ‘vulnerable’ customers as a result of the fact they are experiencing financial hardship.

As a result of the 2010 review, 129 companies who offered help with debt payments were instructed to take immediate action to improve their practices, or risk losing their Licences. This led to 87 companies exiting the debt management market, either voluntarily or forced out by the OFT.

Debt management companies who are members of the Debt Managers Standards Association (DEMSA) must also comply with that body’s Code of Conduct. This Code places additional requirements on member firms concerning areas such as staff training and advertising. DEMSA can also investigate customer complaints and carry out its own disciplinary investigations, with its range of sanctions extending to expulsion of a member firm from DEMSA.

Debt Help from Trust Deeds and Debt Management Company

A debt management company is the one that can help you out in many ways by giving you a debt management plan to work with. You can get help from the debt management company, let the creditors talk to the company and on your behalf, the debt management company will let them agree on easy terms and conditions on how you pay the debts to them with what interest, which is feasible for you. Other than the debt management company, you can get help from trusts deeds as well.

How Trust Deeds Are Set Up

Debt repayment options are many, but not all options are best for you. Most people will choose debt consolidation as the debt repayment option. However, deeds of trust are becoming a popular method of debt repayment. Trust deeds allow people to pay off their debts on the terms that are more suitable to them. That is why; the repayment ration of trust deeds is higher, than other options.

In order to set up deed of trust between you and your creditors, you will need to hire an Insolvency Practitioner (IP), who will be the trustee in this deed. The IP will discuss all of your financial details with you in order to determine how much you can repay your creditors and how much you can afford to pay every month. The IP will then contact your creditors and get them to agree on your terms. If they agree, the trust deed is set up and you can start repaying your debt now.

Why people prefer this option

You now know the details of the trust deeds. This is why people usually prefer this debt relief option. They either go for hiring the debt management company or the trust deed. Trust deeds are one such debt repayment option, which helps people to repay their debts in an easy manner. Many people prefer this options these days due to a number of reasons. One of the major reasons of choosing trust deeds is that people can repay their debts without facing any sort of pressure from their creditors.

Due to the trustee role in a deed of trust, your creditors cannot directly tell you anything. Everything, whether it is information, intimation, or your monthly installment, must go through the trustee to the creditor and the other way around. Moreover, if you are facing difficulty in paying your monthly installment, you should intimate your trustee about your situation, so he can renegotiate with your creditors to lower your monthly installments.

You can get more information on both the above options of debt help from the internet and then you will know, which is the best suited option for you, as it depends on your financial issues what you need the most.

Debt Management Program Versus Debt Settlement

If you’re in debt up to your ears then you’re probably trying to do something about it. There are many options but essentially it comes down to a debt management program versus debt settlement. Although neither of these options is really something anyone of us wants to do it is sometimes necessary. Let’s compare the two so we can have a better understanding.

First we will look at debt management. Debt management programs will take all your bills and compile them into one huge bill. Then you pay a monthly payment on this bill until it’s paid off. Most major companies will work with debt management program as their first choice compared to turning you over to a collection agency.

There is one catch though. During this you cannot apply for new credit of any kind anywhere. This is done to keep sleazy people from messing around and trying to take advantage of the system. This repayment program can take up to two to three years to pay back.

Now let’s go over debt settlement. Debt settlement differs from debt management as instead of paying a monthly payment, you pay the whole amount up front. In order for this debt settlement plan to work you have to have a large amount of money on hand for a one time sum. Inability to meet this requirement will probably end up with you getting calls from a collection agency.

Both of these choices however are something no one wants to make. Keeping all your bills paid down ahead of time is a good way to avoid this. Things do have a habit of happening when we are least prepared though. You do have these two options if things get bad, you may not like them but they are there.

There is one major difference between these two options. Debt management usually ends with your debts being paid and your credit reset. You can rebuild easily from this. Debt settlement isn’t so forgiving and your credit is damaged, sometimes badly. Recovering from this may take a while.

You usually won’t consider either of them unless you’re in financial trouble. Just remember management equals monthly payment, settlement equals one big lump sum.