Why You Should Get Debt Consolidation Loans?

Have you spent the whole year drowning in the high-priced utilities, unaffordable bills, contractual debt repayments and overwhelming financial stress? Don’t let another year of debt chaos go by. It’s time to automate and simplify your debt management plan. There is a range of debt solutions available that might be more suitable to your circumstances.

You can sort out your debts without negotiating repayments with the creditors you owe as you may need for IVA or DRO, etc. Hence, debt consolidation is the simplest solution possible. It involves taking out new credit in the form of personal debt consolidation loan to pay off your existing credit.

Consolidating debt may involve some additional cost, so you must understand the downsides associated with this type of debt settlement. So, it’s important to seek expert debt advice before going ahead. Most of the people opt for settling their overwhelming debts to reduce:

·        Interest rate on debt

·        Monthly repayments

·        Number of creditors

Besides, decreased monthly pat amounts at lower interest rate you will be dealing with decreased number of creditors you owe money to. Typically, as you take consolidation loan, you owe money to a single creditor since all your debts are consolidated into one amount you need to pay at an agreed time.  

What Else?Debt consolidation can also be done as you transfer the balance to your lower interest cards. However, you must understand that debt consolidation loans aren’t right for everyone. Therefore, it is important to know and evaluate all available options necessary to make sure you are making the right decision. While it sounds like a promising debt help UK, it could make your situation worse if you are having a poor credit history.   

Debt Consolidation vs. Debt Management :Debt consolidation is considered as a debt settlement solution, but it’s not a debt management plan. Confused? You need not to because here’s the simple explanation.

·      - In debt consolidation, you apply for new credit through bank loan or personal loan on your asset(s) to pay off your debts.

- In contrast, debt management needs you or your insolvency practitioner to negotiate affordable payments with the creditors you owe money to. 

Just like an IVA calculator, you can use debt consolidation calculator that will quickly help you find out whether or not you need debt consolidation. If, for any reason usually poor credit history, you do not qualify to apply for consolidating debt, you must seek free debt advice from experienced IVA Experts UK. 

Is Debt Consolidation Worth it?

Before taking out a consolidating loan on your credit card, you should consider following to avoid any troubling situation because if not planned well it could be the worst decision you ever made in your life.  

• Always pay your existing debt amounts in full.
• Cancel all previous credit agreements in writing
• Transfer the balance to lower interest cards 

Get free consultation and impartial debt advice UK from expert financial advisors before starting with this option – there may be some better solutions for your unique situation to deal with your debts.

How to Get A Break in the IVA Program?

If you are consistently facing acute financial distress and trying hard to keep up with your contractual payments and utility bills, Individual Voluntary Arrangement is the most suitable solution. An IVA program helps you pay back a portion of your debt through a legally binding agreement between you and your creditor(s).

It’s important to know how you can enter into an IVA and what is the process involved. Here comes the need of hiring a licensed insolvency practitioner who will work out your monthly income and expenses, and the leftover amount you can payback to write off your unsecured debt.

However, remember that life can throw you curveballs any time that could turn your signed five-year agreement into a daunting prospect. Well, it’s a great solution not as a rigid process as other debt settlement plans such as Debt Relief Order and Bankruptcy since it provides a person with debt a payment breakdown option for emergency circumstances.  

Conditions to Apply for Payment Break :

Under the following circumstances, you can have a payment break from your IVA.

• First and foremost, your IVA has to be established under the IVA protocol, which is a voluntary code of practice signed by all insolvency practitioners (IP) and most of the creditors. If your IP hasn’t signed that protocol, he cannot claim a payment break from this debt management plan.
• Your IP can decrease your monthly repayments up to 15% if your IVA falls under the protocol. He doesn’t even need to ask your creditors. For more than 15% reduction, he must get permission from your creditors. But, for this, he may charge you a little fee.
• In case your creditors don’t accept your IP’s request by disagreeing to the change, your IVA will end since you cannot keep up the payments. Now, you have to find some other solution to write off your debts. Else, you may face bankruptcy. 
• Therefore, your IVA should be made under the protocol. For this you should check the paperwork is done by your insolvency practitioner to know if your IVA plan can be changed to accept lower monthly payments from the already agreed amount if your circumstances change.
• To get the repayment break, you need to provide evidence to your insolvency practitioner about your emergency situation. For instance, benefits letters, bank statements, or buying receipt of an emergency item. You can seek debt help UK from a reliable debt solution provider to confirm the extremity of your situation.
• Ensure that IVA proposal that your insolvency practitioners has prepared and presented to your creditor(s) for approval should guarantee as much of a living allowance as possible so that you can have enough budget already in hand for such unwanted occasions.  
• Any payment break as authorized by your insolvency practitioner according to IVA guidelines will be ultimately added onto the end of your IVA scheme and your creditors will essentially have to accept getting paid late.  

Here’s a few things a debtor can request a repayment break for includes, but not limited to :

• An unexpected vehicle breakdown with excessive repair cost.  
• An emergency household repair or essential replacement.
• You may need to pay some fine or travel for a family funeral.
• An unexpectedly placed attachment on your earnings by your creditor. 

Make sure it’s a legitimate reason and it means ‘an emergency situation’ that disturbed your finances such as excessive car repair cost or unexpected attachment of earnings, etc. Remember that for minor issues your insolvency practitioner may ask you to use your services allowance. So, your problem must be genuine for which your IP can put forward your case with the confidence of definite approval.   

You will be offered no more than 9 payment breaks throughout your IVA. For this, you have to talk to your IP and he will consult with your creditor about your change situation and once accepted by them your debt repayments will be adjusted accordingly.

If you are considering Individual Voluntary Agreement as a possible debt settlement solution, it is important to get free debt advice from an expert advisor, such as ours at IVA Experts UK, to determine whether or not it would be suitable to your unique situation.