Debt Management – Self Help
Debt Management – The Breathe Financial Way is an Informal Arrangement with your Creditors
Making negotiations with your creditors ought to be the first thing that you do. However, not all creditors listen or consider the needs of the individual. Unlike Bankruptcy and in most cases with an IVA (aka Individual Voluntary Arrangement), this is not court-led. The risks involved in this method are that there is no debt forgiveness.
Creditors are not obligated to accept any percentage in Full and Final settlement, they are not obligated to freeze interest whilst you attempt to discharge your debt to them.
Further, should they decide a day to three years in that they no longer wish to be bound by any terms that you initially agreed to, they can simply instigate insolvency proceedings against you and you will be rendered powerless, unless of course, you are able to pay them in full. However, should you be made bankrupt within 6 months of doing so, you leave yourself open to criticism for preferring one creditor over another and penalties may be awarded against you.
Another option that people in debt often take is Debt Consolidation. In theory this may seem like the answer to all your problems, but to many, it is just the beginning of a nightmare. If you think about what Debt Consolidation actually is, it is using debt obtained from either a loan or equity in your property to pay off debts. Unfortunately, the reality is that once all the cards are paid off and the pressure is off, how many people actually change the way that they spent in the past and then within an even shorter time period, are back to square one and probably owe more than when they consolidated the first time. Only now their situation is worse as they have probably taken the majority of the equity out of their property, their mortgage is higher or the credit card and loan repayments are beyond repayment and most options have been exhausted.
It is always better to get the best advice from reputable insolvency professionals before attempting to clear your debts.
Get it right and you will be DEBT FREE. Get it wrong and you may be penalised heavily under insolvency legislation.