DEBT SOLUTIONS

If the total monthly commitments of all your unsecured, outstanding debt is becoming or has become unaffordable then Mortgages A2Z Ltd will be able to advise on the best debt solution plan for your circumstances. It is essential to find the most appropriate course of action when comparing the various debt settlement solutions. We will work out how much can be paid towards a debt settlement plan each month by taking monthly income (after tax), minus all essential outgoing expenditure.

1. For nominal debts up to £15,000 it might be best advice to take out a consolidation loan where possible but if the debt exceeds £25,000 this is not an option. The monthly payments on a consolidation loan are in general higher than other alternatives since the debt is usually repaid over a shorter term. The overall cost of the debt is therefore usually lower.

2. A Re-mortgage is often advisable if a reduction in monthly outgoings is a priority, is achievable and of benefit but certainly is appropriate if the debt is over £15,000 and possible. The debt is usually spread over a longer period so the overall cost can be greater.

3. A debt management plan can be most appropriate for lower levels of debt where consolidation, re-mortgage or an IVA is neither appropriate nor possible. It is not a final solution to a debt problem but can provide short term relief without the social stigma that a formal arrangement (IVA or Bankruptcy) has on credit rating. It is essential to seek professional advice from a reputable company since debt management is not regulated under the FSA. Debt Management Companies will agree an affordable monthly payment for the debt to be considered under debt management and then make contact with the creditors and try to renegotiate the debt on behalf of the individual. After that the debtor pays one payment to them monthly which they distribute between the creditors. Debt Management Companies often take the first monthly payment to cover the costs of their processing and the negotiations carried out on behalf of the debtors. They will take approximately 15% of any further monthly payments. The remaining money each month will be shared out pro rata between the creditors. Under debt Management the debt is not repaid and interest can accrue. Credit rating is impaired and further legal action can take place especially if the advice of a professionally reputable Debt Management Company is not used.

4. An IVA (Individual Voluntary Arrangement) is an alternative to bankruptcy and is often appropriate for debts over £15,000 and usually provides a final solution to a debt problem. It is a formal arrangement under the Insolvency Act of 1986 and the contract once agreed is binding on all parties and prevents any further action. All interest and charges are frozen and the IVA gives a determined time scale, usually 60 months, to the solution. The payments into the fund are supervised by an Insolvency Practitioner. Payments are based on what an individual can afford and usually, are significantly less than the existing minimum payments on other outstanding debt. It should be noted that no more borrowing is allowed during the IVA period and due to the impact on credit rating, further borrowing following an IVA settlement will be costly and more difficult to obtain.

WHAT SHOULD YOU DO?

Give us a call or complete one of our simple contact forms & you can choose whether you would prefer a fully qualified advisor to contact you to assess your situation or whether you would prefer to submit more information through our website & have a recommendation supplied to you within 24 hours.

Whichever method you choose, you are under no obligation to proceed with any recommendation. We have industry specialist advisors ready to listen to your situation & our advice is totally impartial. We feel confident that our advice will have significant impact on your financial circumstances.