Factors To Consider When Seeking Debt Management Solutions

Debt management solutions are a viable and legal way out of debt. Employing debt management solutions is not a walk in the park as there are a number of considerations that you need to think about before you indulge in any solution. Different debt management solutions will require different considerations. These are explained below.

Cost

The cost of debt management solutions differs depending on the solution you select. For an IVA, the cost entails the setting up cost of the arrangement and the fees charged by the insolvency practitioner.  The fees charged differ from one practitioner to another especially due to differences in location and the experience. In any situation, ensure that you hire a practitioner who is well within your financial capabilities. This will prevent a further plunge into worse debt scenarios. The cost of the trust deed entails the cost of setting up the entire arrangement plus the fees to the trustee.

Benefits

Different debt management solutions will have different benefits to you as the debtor. Take the case of a trust deed Scotland. The benefits include availability of a longer duration of time during which you should raise the money you owe. The period will vary but is usually 48 months. Another benefit is the fact that the trustee is responsible for payment of the creditors.  If you have a mechanism of submitting the money to him, you will be free from any other responsibility. You should also know that the trustee should offer valid advice before you make any major financial transaction. Therefore, he or she should help you avoid falling into more debt traps.

When it comes to an IVA, the following will be the expected benefits. First, the arrangement protects you from any legal action by any creditor whose debt is included in the arrangement. The creditors can also not take over your assets or ask the court for an injunction to sell them and therefore, all your property will be protected. In addition to this, the debt does not earn any interest nor is it charged any penalty during the course of the arrangement. After the period of the arrangement expires, you will have a brand new start since all unpaid debts are written off.  The insolvency practitioner should provide you with sound financial advice especially when large transactions are involved.

Demerits

These methods also have their own disadvantages. An IVA is registered and so is a Trust deed Scotland. Therefore, anybody may come across the information when carrying out a background check later on. When this information becomes public knowledge, it may lead to uncalled for stigmatisation by your peers. This may make your life harder as compared to the life of those people without such records.  Some employers do not support their employees when they are facing such challenges. This may lead to loss of employment. Alternatively, when looking for a job in future, an IVA or a trust deed Scotland may hinder your chances for employment. Some companies have strict policies when it comes to dealing with people who have hard such arrangements before. Therefore, this may work to your disadvantage.

Both the IVA and the Scottish trust deed have an impact on your credit rating. The effect is high immediately after the lapse of the agreement period but this subsides with time. Therefore, you may not be able to obtain credit easily in a number of years following the end of IVA or trust deed Scotland arrangements. During the course of the IVA or trust deed arrangement, your family financial activities may be under immense scrutiny from the insolvency practitioner of the accountant in bankruptcy. This may be demeaning for some people and it may lead to esteem issues.

Despite all these, debt management solutions are important to those who wish to gracefully redeem themselves from huge debts. The solutions give you a second chance but they should be used carefully to avoid negative future implications. In addition, you should ensure that you get sound financial advice to ensure you choose the method that best befits your circumstances. Do not allow yourself to wallow in debt until all your assets or properties are sold or repossessed.