Anyone who is in debt knows that it’s a depressing place to be. Debt can cause sleepless nights, feelings of guilt and stress.
The more you owe, the worse those feelings will be, and the longer you remain in debt the more the interest mounts up on those individual debts – be they credit or store card debts, overdraft debts or other debts such as non-payment of council tax and household bills.
Debt can begin to feel insurmountable, but there is always a way out of debt. Depending on your personal circumstances, there will be different options available to you. You may be able to structure your household budget so that your outgoings stay below your income, and any excess you have left over, you use to gradually pay back the money you owe. But if you feel that you will never get on top of your debt situation, then it may be best to seek expert financial advice from a debt management company.
Depending on the level of debt, it may be suggested that you work to a debt management plan or take out a debt consolidation loan.
A debt management plan is where the debt management company deals with your various creditors and negotiates repayments on your behalf. The company charges you a fee to do this, but it can take a lot of the stress out of your debt situation, as you won’t have to deal with the individual creditors directly and you only need to make one monthly payment to the debt management company which then redistributes that payment among your creditors. Creditors are usually willing to work with debt management companies as it is more likely that they will recover their money this way than by dealing directly with the people who are in debt.
Some people in debt may be wondering what is debt consolidation? A debt management plan is a form of debt consolidation – but it can also be where you take out a new loan to pay off all your existing debts. You end up borrowing more money to pay money you already owe, but the debt consolidation loan is usually at a lower interest rate than the interest you will be being charged for the various credit cards, overdraft facilities and other debts outstanding. Most debt consolidation loans are structured over a longer payback period, so you will probably end up paying more in the end, but you have the peace of mind of knowing that your existing debts are cleared and you only have one monthly payment to make.
The danger for some people with a debt consolidation loan is that they are then tempted to spend again, before they have paid that loan back. Going down the debt consolidation loan route requires self-discipline to avoid making a bad situation worse.
Read more about your debt management options here
