Managing Debt - Can you do it yourself?

Many of us these days are trying to cope with high levels of debt, and for some of us managing our monthly budget can become extremely difficult simply because of the level of debt involved.

An increasing number of people have found themselves deep in debt over recent years, hence the concern over the level of personal consumer debt in the UK.

In fact due to the high debt levels and financial issues that consumers have to deal with, a number of resources and solutions have been put into place over recent years to help those in high levels of debt.

There are a number of different solutions that have been put into place to help those in debt, and consumers that feel that they could benefit from professional and expert assistance or advice in relation to their finances can look into the different options available in order to find the best one for their needs and circumstances.

You will find a wide range of agencies, firms, and industry professionals that will be able to offer sound advice, assistance, and put forward solutions to help you with your debt problems, but it is important that you research your options carefully in order to ensure that you choose the right route.

Amongst the different solutions that are in place for those in high levels of debt are bankruptcy, which is for the most severe cases of unmanageable debt; Individual Voluntary Arrangements, which are known as a softer alternative to bankruptcy; and debt management plans, where the consumer pays a set monthly amount to a debt management firm, who then distribute this sum between the creditors.

There are also a number of other solutions, and this includes simply seeking debt management advice from a professional or going to debt management counselling.

However, there are many people who would prefer to deal with their debt problems themselves rather than go through an outside agency or person. This is not to say that you should bury your head in the sand and pretend that you do not have debt problems that are causing you a problem – this is the worst thing that you can do, and could result in making the situation far worse, and it can quickly get out of control.

However, there are some sensible solutions that you could look at putting into place yourself, which can help to ease your debt problems and reduce your monthly outgoings.

Consolidation: Consolidating your existing debts is one way of reducing the financial burden without having to seek outside advice or assistance, other than finding a suitable lender to offer you a consolidation loan.

You will find a wide range of lenders offering this type of loan, and you can get consolidation loans on a secured or an unsecured basis, depending on your needs and circumstances.

The idea behind these loans is that you use the money to pay off your existing, more expensive debts, such as higher interest loans, credit cards, store cards, catalogues, etc. and this will leave you with just one debt to deal with each month rather than a variety of debts to juggle.

By finding a low rate consolidation loan you can also reduce the amount that you have to pay out each month, as the repayment on your consolidation loan may be far less than the combined repayments on your existing debts.

Coming to an arrangement with creditors: If you do not want to go on a debt management plan officially, but you do need to decrease your debt repayments in order to manage your finances then you may be able to come to an arrangement with your creditors individually.

In order to find out whether your creditors could help you out by agreeing to a lower repayment on the debt you should contact them in writing explaining your situation, outlining your income and outgoings, and putting forward a reasonable monthly repayment offer.

Wait a couple of weeks and then contact them by phone to see whether your letter was received, and whether the creditor is prepared to agree to your proposal. In the meantime, whilst you are waiting for a response, make sure that you keep up with repayments on your debts, as otherwise this could go against you.

Check your outgoings and make cutbacks: You may find that you can reduce your monthly outgoings by a significant amount simply by going through your outgoings and making cutbacks wherever possible.

Check through your outgoings carefully and make sure that you are not paying excessive amounts for services and products, such as insurance, mobile, etc.

If you feel you are, take the time to try and switch to a cheaper product of provider, as this could save you a small fortune.

Source: ThriftyScot