Personal debt can be a thorn in the side of the most laid back and studious person.
With studies showing financial commitment causing anxiety. Often beginning as a trickle and ending like an ocean storm, finding yourself in seemingly unending financial problems can create an impossible-seeming predicament.
There are many ways of tackling debt, including debt consolidation, restructuring, or taking out personal loans for debt repayments.
Whilst these are valid schemes for some circumstances, keep reading for the government-led and charitable schemes you can approach for assistance.
Debt Management Plans (DMPs)
Debt management plans were introduced by charities and the government in the early 1990s. This was in response to a vastly expanding credit and financial network as a result of regulatory liberalisation in the 80s.
The result was more people in debt trouble. After numerous years of unscrupulous companies muddying the waters, legislation brought in new debt management rules.
Essentially, DMPs will negotiate with your creditors on your behalf to pay a simple amount, with a percentage going to each creditor – getting them off your back.
They are designed to be paid within 6 years on a consistent payment; if you aren’t able to make a payment of that type in that time, they may not be suitable for you. Crucially, DMPs are a customer-client negotiation and won’t feature on your credit report in most cases.
Individual Voluntary Agreement (IVAs)
IVAs are a little like a DMP; a number is arranged and an agreement made to repay. However, they have a set time limit – often 5 years – after which the debt is scrubbed off the record.
The flip side is that they are a contractual agreement and appear on your credit score, creating possible issues further down the line – however, once the agreement has run its course, your debt is certainly finished.
Bankruptcy carries with it a fair amount of stigma, seen as the hallmark of those with literally not a penny left and a series of bad decisions in their wake.
However, bankruptcies are helpful for those with assets outside of their home (except very high value properties) and tools of the trade or transport, which are typically left alone. The creditors will take your assets to offset the debt.
A bankruptcy may last a year, but once your bankruptcy is over, your debt is wiped clear. The problem here is the effect on your credit score and overall record; bankruptcy can affect your ability to gain employment in certain industries.
Debt is a pain in the neck for anyone suffering from it. However, there are options to tackle it and help ease your anxiety and money worries.