Finding Debt Help

16-Aug-2007

Finding debt help in Britain today is not as tricky as it once was. As little as 20 years ago a consumer would have to look long and hard to find an agency or a service that would offer them debt help. This is not so today. There are hundreds of charities and agencies just a phone call away that provide debt advice on how to stay out of debt, or if you are already in it, the best way to clear what you owe. It is also easier than ever before to get credit in this country. There are hundreds of credit cards on offer and they are handed out to consumers far more easily than before.

British consumers owe more than £1,004,290,000,000 on credit cards, mortgages and loans, which is over £17,000 of debt for every man, woman and child in the UK. It is not surprising, then, that more and more people are overspending and finding themselves struggling to keep up with repayments. Thankfully, there is plenty of debt help available.

A Google search or a leaf through the yellow pages will reveal a huge choice of debt counseling agencies. Many of these are non-profit agencies that provide a quality service and are the first port of call for many people seeking debt help. There are also many private agencies that will charge a fee for their debt help services, but they may be able to devote more time to your needs than a non-profit agency would be able to. Or alternatively, you could go it alone. There are countless books, magazines and websites that give advice on tips and tricks to get out of debt.

Whatever method you choose, you will be faced with the same choices and, in the end, the money must be repaid somehow. But there are a number of debt help options available:

Debt Consolidation

One debt help option is debt consolidation. Basically this means adding up the total of your debts and taking out a loan to pay them all off in one go. You will, of course, still have to pay the loan but the repayments are likely to be significantly cheaper than if you were paying all of the debt payments separately each month. Interest on a credit card debt is about 20 percent, while a consolidation loan would cost closer to 6 percent, which is a significant difference. Interest rates on hire purchase, store cards and other common debts also tend to be high so there is a lot of money to be saved from debt consolidation.

The main problem with debt consolidation is that lenders will be reluctant to give you such a loan if you are already in financial trouble. Unfortunately, you will probably be required to provide something of significant value as collateral. People often refinance their homes or get second mortgages, or use the equity on their home as collateral.

Debt consolidation loans tend to be paid back over a long period of time. You should try to repay the debt as quickly as possible because the longer the term of the loan, the more it will cost you.

Debt Management Plans 

As mentioned above, debt counseling provides the most common option for people looking for debt help. These services will help you make a total of your incomings and your outgoings, calculate your disposable income and come up with a realistic monthly plan for you to pay off your debts.

They will also help you make a budget and keep to it. All of this usually comes in the form of a debt management plan (DMP). DMPs are recognised by many financial institutions and can be very helpful when entering into negotiations with banks.

Debt counseling agencies are also skilled in negotiating with banks. They will usually be able to negotiate a reduced rate of interest from creditors. However, it is vitally important to keep up repayments once an agreement has been reached, or it could make a very serious negative impact on your credit rating. But if you do keep to it, this debt help option can be a quick and effective method of getting out of debt.

Debt Settlement

A much less commonly-used approach to debt help option is debt settlement. You must consult with a debt settlement company to come up with a monthly payment schedule that is within your budget, and it will plan a timeline of when you can pay off your debt.

Most companies estimate the full repayment as a 50 per cent settlement plus fees. It is possible to become debt free in this manner usually within 24 to 36 months. However, it can negatively impact your credit rating.

Finding debt help is not really a problem in Britain these days as there is no shortage of debt help options. The trick to getting out of debt fast lies in examining the debt help options available to you and making the best choices relating to your situation.