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Get Out of Debt

Updated on November 11, 2011

Debt Free

I am in debt, I am worried about debt and I want to get out of debt quickly. If this is you then you are not alone, millions of people are in debt and they all have similar words going around in their head with one goal in mind; debt free!

This article hopefully will help you focus on dealing with your debt in a practical way. Often once you accept you are in debt and start dealing with it the worry lifts and you can start living your life again.

I want to bring you information about becoming debt free and introduce you to organisations that offer free debt advice. I will not be talking about debt services that charge or mad schemes that actually cost to deal with debt.

How did you get in debt?

Getting into debt is one of the easiest things in the world to do, getting out of debt is much harder. When you took credit out you most likely had the means to pay, sadly life changes, we lose jobs, become ill, relationships breakdown or we can over stretch ourselves financially. When our income is less than our financial commitments we are in trouble, debt has the potential to spiral out of control if we delay dealing with it.

Sadly delay dealing with debt is what most of us do, usually until our creditors are banging on the door, sending nasty letters or harassing us on the phone.

What are my debt options?

This information is aimed at United Kingdom residents.

The first thing you need to do is seek advice from a free debt solution service and take stock, figure out how much income you have then calculate how much you owe. All of the debt solutions below will start by creating a financial statement, they will explore ways you can increase your income including checking your benefit entitlement.

The second thing to do is advise your creditors that you are dealing with this problem, most of us stick our head in the sand and hope they will go away, the fact you have started dealing with your debt problem will encourage your creditors to be much more cooperative.

Once you have a financial statement and a budget for daily living they will the consider one or more of the following options.

Write Off Debt- With any debt the first thing that needs to be established is are you responsible for this debt, you will be surprised how often people are bullied into paying debts they do not actually owe. Some debts are unenforceable due to a mistake in an agreement or time barred. If a debt can be written off then you or your adviser should ask; they might just say yes.

Debt Management Program- There are many debt management plans touted around by commercial debt management companies, avoid these like the plague. You should not have to pay to have your debt managed as this exacerbates the problem. There are plenty of free services that will help you negotiate with your creditors and agree lower monthly payments on your debts.

IVA- Individual Voluntary Arrangement- This is a legally binding formal agreement between you (debtor) and your creditors. You agree to pay your non priority debts in part or full over a fixed period of time, this agreement is dealt with by an insolvency practitioner. The advantage of an IVA is that when the fixed term comes to an end and assuming you have kept up with your payments you are released from your liabilities.

DRO- Debt Relief Order- This is a new procedure in the UK, it is designed to help people for who bankruptcy is too expensive. There are specific rules for instance, must have less tha £15000 or less of debts, have an available income of £50 or less per month and have assets less than £300. They are set up by Approved Intermediaries(CAB).

Bankruptcy-This is a serious step and should never be taken without careful consideration, not least because it will be on your financial record for at least 6 years. A bankruptcy order is dealt with by the court system and the official receiver in the insolvency department. There is a cost involved, normally in excess of £400 however some help with these fees may be available.

 

Where to get free debt advice.

Below are three respected charities that can offer you free, impartial, confidential and non judgemental money advice.

Citizens Advice Bureau

The Citizens Advice Bureau is a registered charity that help people with all kinds of problems including welfare benefits, debt, housing issues, employment and consumer rights.

They are a leader in free debt advice and will never turn anyone away, advice can be accessed by visiting your local bureau, helpline or on their website.

National Debtline

National Debtline is a charity, they have a dedicated telephone helpline manned by trained debt advisers. Each call is confidential and tailored to your individual need.

Because the law on dealing with debts is different in parts of the UK their website is set up to deal with each part of the country. The website itself is interactive with many financial planning, budgeting and money advice tools.

There is also information on there about National Business Debtline, this is a dedicated section for business debts.

Consumer Credit Counselling

The Consumer Credit Counselling Service is also a charity offering free advice to people in financial difficulty.

A freephone call starts the process were your call will be answered by a trained debt adviser, emergency debts are dealt with first and then a plan to manage your debts will be arranged and agreed.

They have a website with plenty of information and useful money management tools.

Get Out of Debt Summary

I hope that you have found this article useful, debt will ruin your life if you let it, the secret is to deal with it before it gets out of hand. Pay off debts as quickly and sensibly as you can, debt free should be your goal, with quality free advice you can say goodbye to debt.

There is plenty of impartial, confidential and free debt advice out there but you must take action before it's too late.

I will reiterate do not pay for debt advice, do not enter into a money management plan without seeking free advice first. This article is meant for information only and in no way is it offering you debt or financial advice, always seek professional advice.

If you think someone you know may benefit from this information please share it with then using the share buttons below, vote it up and leave a comment.

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