Taking the First Steps to Getting Out of Personal Debt
If you, like so many thousands of people in the UK, have found yourself taking on more and more personal debt and are beginning to feel the strain it can be easy to get overwhelmed. Knowing where to turn when your personal debt is becoming unmanageable can be tricky in itself and there is lots of conflicting information and advice on what to do when your situation looks difficult. These stresses, both financial and emotional, put a lot of pressure on individuals and families that can end up having terrible effects on our mental health. No one likes being in debt, and it can make us feel ashamed and like we have made too many bad decisions.
The truth is, there are no end of reasons why people end up accruing large amounts of personal debt. It is not a reflection of a person’s morality or personality, only of their circumstances. Nevertheless, it can be challenging to find the help you need without feeling like you are being judged for your actions. Any good debt advisor understands that human beings are complex and the reasons we do what we do and the situations we find ourselves in are not straightforward and black and white.
A good debt advisor will be able to take a pragmatic approach rather than an emotional one, and will work with you to find the best solutions to your situation. For people looking to take the first steps to get out of debt, the best thing to do is to seek free, impartial debt advice from a specialist source. You can look for a debt advisor or financial planner, or you can reach out to organisations such as the Citizens’ Advice Bureau for information. There are even advisors operating online that are extremely convenient to speak to, as well as many counselling services that can help you with the emotional side of things.
Examples of debt solutions
One of the most popular debt solutions you might like to look into is the IVA, or individual voluntary agreement. These are agreements that are mediated by an advisor who is experienced in IVAs and will help you apply for IVA assistance, and the companies to whom you are in debt. It is a legal agreement between you and your creditors to pay back your debts over a fixed period of time. This period is usually five years, but can be longer if you have a large debt.
An IVA can be used to repay any kind of debt, including credit cards, store cards, personal loans, and overdrafts. If you are struggling to make your monthly payments, an IVA can help you get your finances back on track. The payments are made to an insolvency practitioner, who then distributes the money to your creditors. Once the IVA is completed, any remaining debt is written off. If you are considering an IVA, it is important to seek professional advice to ensure that it is the right solution for your situation.
Another common solution is to declare bankruptcy. Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency.
In some countries, including the United Kingdom, bankruptcy is limited to individuals; other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings. In some countries, such as in Finland bankruptcy is rare because companies have the possibility to reorganise themselves through negotiation with their creditors.
One option is to try to work out a payment plan with your creditors. This can be a difficult process, but it may be worth it in the long run. Try to negotiate a payment plan that is affordable and realistic, and be sure to keep up with your payments. If you are able to successfully complete a payment plan, you will be able to avoid more serious options like bankruptcy or an IVA (Individual Voluntary Agreement). Of course, this is not always possible, but it is worth exploring all of your options before making any final decisions.