Journeys Finance

If you are struggling with severe debt problems – usually £15,000 or more – an IVA (Individual Voluntary Arrangement) could be for you. An IVA involves making reduced monthly debt repayments to your creditors, based on how much you can afford, usually for five years. Once the IVA is completed, your remaining debts will be considered settled. Who is an IVA best for? In general, an IVA is best suited to people with very large debts that they do not feel they will be able to repay within a realistic timeframe. As a legally-binding debt solution, an IVA requires full commitment to repaying your debts. Your payments will be based on how much you can afford after paying your essential household costs, meaning you will be left with no disposable income for the duration of the IVA (usually five years). An IVA is widely considered a preferable alternative to bankruptcy, since it avoids several of the disadvantages. For example, unlike bankruptcy, you will not lose your home, although if you are a homeowner you will be expected to release some of the equity in your home in the 54th month of the IVA. Should I consider other debt solutions? Before choosing any debt solution, you should always speak to an expert debt adviser. They will be able to discuss your situation with you to help decide the best course of action. Just because you have debts of £15,000 or more does not necessarily mean that an IVA is the most appropriate debt solution – it really depends on your circumstances. So long as you can afford to repay the debts in a realistic amount of time, another debt solution, such as debt consolidation or a debt management plan, might be your best option.  Read More →

Manchester City Council has seen a steep rise in demand for its debt advice service. Many people are waking up to the need for debt advice at the start of the New Year, as they realise they’ve spent too much on their credit and debit cards – and the number of calls to the service had already grown by around 40% between January-February and October-November last year. “Christmas is a period which makes it particularly easy to pick up a lot of debt in just a few days,” said a spokesperson for Debt Advisers Direct, “but paying it off can take much longer. All too often, people forget that everything they put on a credit card in December will have to be paid off in January if they want to avoid paying interest on it.” Credit card debt advice In itself, credit card debt isn’t necessarily a problem: “For people who do manage to pay off their credit card debt every month, credit cards can be a useful, convenient way of paying for purchases – and as long as the balance is paid in full every month, it needn’t cost anything at all. “However, anyone who carries a portion of their balance over to the next month could find themselves paying a lot more in interest than they’d anticipated. “Carrying some credit card debt for a few months might not be much of a problem, but when people find they’re regularly entering a new month with a substantial credit card bill, they should take this as a warning sign their debts might be getting out of hand. “For anyone in that situation, the important thing is to talk to a professional debt adviser before the interest really starts adding up – with the right debt advice, they may find that getting their debts under control is easier than they imagined.”  Read More →

Are debt consolidation loans still available? By definition, a credit crunch is a period when credit is hard to access, so many people with debts might wonder if there’s any point looking for a debt consolidation loan in today’s economic climate. The good news is that credit is still available. The news may be full of stories about credit becoming restricted, but don’t forget that many of these references are comparing today’s credit markets with early 2007, when credit availability was much higher than it ‘traditionally’ has been. Secured debt consolidation loan availability And many homeowners still have an excellent chance of finding the right secured debt consolidation loan – lenders are often more likely to agree to a loan if the borrower can use part of their equity* as a guarantee they’ll repay it. Even now, after 18 months of falling house prices, the average house is still worth a lot more than it used to be. The Bank of England’s latest Quarterly Bulletin (Q4 2008) reveals that over 80% of homeowners had at least 25% equity in their property – and almost 60% owned 50% or more. Even today, with most lenders unwilling to provide secured loans that’ll reduce a borrower’s equity to 30% or less, it’s clear that secured debt consolidation loans are still very much available to many millions of homeowners. Alternatives – when debt consolidation loans aren’t the answer Even so, debt consolidation isn’t always the answer. Some people may find they can’t find a debt consolidation loan, while others may be unable to get one at what they see as a reasonable price. After all, the worse someone’s credit rating, the harder they’ll probably find it to be approved for a loan – especially one with a low interest rate. And some people might discuss their finances with a debt adviser and find that debt consolidation simply isn’t suitable for them. Depending on their circumstances, another debt solution, such as a debt management plan or IVA (Individual Voluntary Arrangement), could be a better way of clearing their debts. There’s no easy way of knowing which debt solution is most appropriate without talking to a debt adviser – but anyone who wants to know more about debt consolidation loans, debt management plans and / or IVAs can click on one of these links or phone Debt Advisers Direct on 0800 074 8639.  Read More →