Effective Debt Solutions: Debt Agreements

There can be many reasons why debt can become a serious issue. Becoming aware of spiraling debt at an early stage can help you to curve your credit spending, and get on top of repayments, but unforeseeable circumstances can cause hiccups, which can quickly become a snowball of missed payments and late fees.

There are effective debt solutions available from professionals who understand the ins and outs of debt solutions, and can help you to rise above your problems and become debt free. Every situation is different, so we offer a free debt consultation to help to assess the nature of your debt, the severity of your situation, and the appropriate options for solutions that could be employed.

What Debt Solutions Are Available?

There are many debt solutions available, both formal and informal. Here are some examples of some effective debt solutions that might help you to take back control of your finances:

• Debt Management: In some cases even a severe looking debt problem can be solved using debt management and budgeting, and if possible this is the preferred approach. Cuts to spending and credit can be used in combination with effective repayment methods to reduce debt.

• Informal Negotiations & Agreements: In some cases you may be able to negotiate with your creditors to ensure a more suitable and affordable repayment plan, and perhaps even a reduction to interest rates. This can help you to get back on top of your debt, and avoid fees from missed payments. Creditors are not obliged to accept the offer. 

• Debt Consolidation: Debt consolidation loans are useful in instances where you are struggling to meet repayments with multiple creditors. A loan is taken out to cover existing debts, and you pay one lender one monthly repayment that is based on what you can afford. In certain situation, and if used wisely, this can give you more breathing space, but it is still imperative that you meet repayments, and try to pay back more than the minimum.

• Debt Agreements: These are more serious debt solutions that have much more drastic consequences to your credit score, and are recorded on the National Insolvency Index. If you cannot afford to pay back you debts, then you can come to a debt agreement with your creditors that is legally binding, and often allows you to pay back much less than what you owe. Debt agreements are an alternative to bankruptcy.

Serious Debt Solutions: Debt Agreements

Debt agreements are a serious debt solution that is legally binding if accepted. They are legislated under Part IX and Part X of the Bankruptcy Act 1966, and were introduced as an alternative to bankruptcy itself, with less far-reaching consequences. An agreement is proposed to creditors which proposes an amount that you can afford to pay back, and a schedule for the repayment. If more than half of your creditors agree, then the new terms come into effect.

Though a very serious debt solution, debt agreements are often preferable to bankruptcy, while still providing effective relief from your situation.