Managing and eliminating debt is a great relief to many. An individual no longer needs to worry about denting his financial statements or possible lawsuits from angry debtors. Debt management solutions include debt consolidation, Individual Voluntary Arrangement (IVA), bankruptcy, and use of a trust deed Scotland. When one settles for an appropriate arrangement, he is able to direct his finances towards viable financial projects.
Debt consolidation happens to be the most popular solution. It entails accumulating all the debts of a person into one account instead of settling every debt separately. For this arrangement, an individual makes one payment to cater for all his debts. This method is quite advantageous as it attracts low monthly instalments and fixed interest rates. Consequently, a debtor spends less as compared to settling each debt alone.
This route is not without a drawback. The possibility of fraud always lurks in the vicinity. In reality, when one does a search concerning debt consolidation frauds, the results are overwhelming. The reason for this situation is many illegitimate firms exist masquerading as legit debt management consultants to steal from unsuspecting debtors. To avoid falling prey to their schemes, it is important to carry out thorough research on available debt consolidators.
Bankruptcy is the next arrangement to consider. One who is unable to settle his debts gets this legal status. Many jurisdictions declare bankruptcy by means of a court order. A debtor often initiates this status. To succeed in this solution, one will need a good bankruptcy lawyer. This professional ascertains whether one qualifies for the debt relief and helps one with all the legal aspects.
Filling for bankruptcy has several pros. The biggest advantage of this route is that the settlement will trigger automatic stay, which prevents creditors from carrying out any action towards collecting their debt. In this case, the creditor cannot call the debtor, sue him, or send him threatening letters. Bankruptcy exemptions also prevent property loss on the part of a debtor.
The disadvantage of this method is the fact that when one files, he may not get tax refunds from local, state, or federal governments. It also spoils the chances of an individual getting the post of director of limited companies and getting some jobs or home financing. On top of that, after bankruptcy, debts such as student loans, support orders and tax debts may become non dis chargeable.
If one does not want to declare bankrupt, debt settlement is a great alternative. This option is practical when an individual is eligible for a bankruptcy relief. Here, a person seeks out a reputable agent who will negotiate with creditors on his behalf. This method is suitable for an individual who is in serious financial problems. The agent sheds light on the dire financial situation of a debtor.
Debt settlement can help one eliminate highs of sixty percent of total debt. Practically all creditors are usually sceptical of this arrangement. However, when they think of the long-term situation, they consider the offer as a full payment. The reason for this change of mind is mostly that they reason that a small payment from a debtor is better than no payment at all.
Individual Voluntary Arrangement works is another way to avoid bankruptcy. This method entails settling upon a flexible arrangement with a creditor based on the income of the debtor, capital, and current financial situation. The advantage of this method is that one is able to make fixed monthly payments while avoiding legal action at the same time. One is also able to eliminate debt within five years. On the downside, it taints the credit rating of an individual. An individual cannot also include debts such as fine and penalties that the court imposes.
Trust deed comes in for one who wishes to relieve himself the stress of debt management and transfer to a person he trusts. In this case, a debtor enters a voluntary arrangement with a creditor to repay a portion or all of his debt by transferring rights to his property to a trustee, who sells them in order to offset debt. The advantage of this method is that once one gets a trust deed, creditors cannot take further action against him. In addition, one makes a single instalment every month when the deed is in force. A major downside of a trust deed is that one`s credit worthiness greatly reduces.
In conclusion, there are a couple of debt management solutions. Before one settles for any particular solution, he needs to analyse his needs. One can do this analysis with the help of a financial adviser who will state the best method to go for.