Using Forward Planning to Get Rid of Debt and Avoid Bankruptcy? 2
Debt problems can cause untold damage to domestic life. When money is tight even the strongest relationships come under pressure so getting debt under control should be a prime and urgent requirement before it escalates into a serious problem that can only be solved by bankruptcy.
Debt management plans have become a popular and efficient way of getting back in control. All start with making a budget of income and expenditure and by prioritising expenditure and cutting out that which is not necessary or can be done without. That usually means a change of lifestyle and spending habits although even simple changes, like shopping at a cheaper supermarket for the weekly groceries, can save valuable pounds.
Key to understanding your debt problem is to look at all your sources of income and where you spend your money. By drawing up a debt management plan you can tell where your money is going and where it needs to be spent. A hard look at the expense side can readily identify the essentials that must be paid for (like mortgage or rent, council tax and gas/electric bills) with others that may be more discretional. These may include club memberships, entertaining and holiday plans.
Getting on top of debt means short term sacrifices and a change in spending behaviour to match the new level of income available. With energy prices and interest rates likely to increase in coming months you must build in a buffer to include likely price rises.
For those with debt over 15,000 there is a new intermediary step to debt management that can avoid bankruptcy all together. An Individual Voluntary Arrangement (IVA) is a formal agreement that is brokered between you and your lenders by a licensed insolvency practitioner. They will negotiate a sensible and affordable monthly payment plan with all your lenders that will allow you to keep your home and reduce your debt over a few years.
Even if you have major debt problems (over 15,000) an experienced and licensed insolvency practitioner can guide you back to financial wellbeing by working with you and your lenders to get a plan that is affordable and that keeps you in a home. Something that bankruptcy certainly will not do.
Family budgeting may be easier for those with small amounts of debt. But for debt problems involving significant amounts there is always the possibility of bankruptcy unless more radical action is taken. For this, you may need some help and assistance since if you have allowed debt to build the chances are that your approach to managing the situation needs some external assistance.
PayPal have some great advice on debt problems so if you need some debt advice speak to them to help you out.
