A Complete Guidance: How to resolve any Debt Issue in UK
If you are dealing with a serious debt crisis then you are not alone. There are thousands of other people too in the UK who are suffering from debt issues. Debt management is something that every individual should be aware of.
If you too are facing trouble while paying off your outgoings like mortgage, rent, energy bills, and credit cards, etc then the best solutions are required to help you get out of all debt-related issues.
Best Tips for Dealing With Debts in the UK
Following certain basic rules and patterns and incorporating healthy expenditure habits, help to keep off all the debt issues. Here, you get to see 5 ways to deal with Debts in the UK:
Tip 1: Draw Up a Budget With the Help of a Budget Calculator
The first thing you must do is to set a budget for your betterment. Budgeting is very important not only when you are surrounded by debt load but also before taking the loans.
You can budget with the help of the Financial Authority’s Online budget calculator. This calculator will tally your total income against your expenses and let you know the excess amount. Thus, you can take out this excess amount of money and repay our loans.
With budgeting, you can even control your extra expenditures and use it towards something useful.
Tip 2: Transfer High Credit Card Balance to a Zero Percent Credit Card
In case you have got several expensive credit cards, you can try transferring your debts into a zero percent debt transfer credit card. You must be wondering what zero percent credit cards are!
These credit cards are very smart and eliminate the higher rate of interest charged on your credit cards. But remember, this is an offer period and you have to repay the owed amount of money within this time. If you do so, this card will make sure, whatever you have paid in this short time of period, lower down the amount you owe to your creditors.
If you want a longer period of time to repay the loan amount, you should go for a long term, low rate credit card. The interest that you will pay for this credit card will be lower than the other credit cards.
Note: Before applying for these credit cards, get a copy of your credit history from one of the three UKs credit referencing agencies. These agencies are Experian, Equifax, and Callcredit. The reason you have to do this is that these cards require almost flawless credit ratings.
Tip 3: Adapt the Snowball Method to Reduce Your Debt Load
When you are facing problems to handle your debts, you can choose the Snowball method to lower down your debt load. Here, in this technique, you focus on paying off the smallest amount of debts first and then go up for the bigger debts. This method gives you confidence that you are eligible for paying off the outstanding amounts.
The main focus of the snowball technique is to reduce the numbers of your creditors. When the number of your creditors decreases, you feel motivated and that’s what the snowball method tries to do.
Tip 4: Find out all the Overdraft Options available for You
Your debt issues naturally increase when you are paying too much interest on your overdrafts. If the same case is happening with you too, find out if there is an option to switch the account to the current account that too with a 0 percent overdraft.
Tip 5: Keep Checking Your Credit report to Improve Your Credit Score
Checking your credit report regularly is a healthy way to monitor your debt issues. Your credit report will show up if you have made any mistakes in repaying the previous debts. So, you can learn from your previous mistakes and this time you don’t repeat them over again.
According to the new GDPR rules in the UK, you don’t have to pay more to check out your credit card report from any credit reference agencies. So, you have the legal right to access your credit card report for free.
This also helps you to improve your credit scores. As you keep on checking your credit card report regularly, you get to know whether your credit scores are low or not. If your credit scores are really low, then there is always a way to improve it within time.
Additionally How to Solve Your Debt Issues?
You can resolve your debt issues easily if you take some extra care regarding your expenditures. Focus on giving up expensive habits which leads you to suffer even more.
If you can do this, you will get to see some extra amount of money in your hand at the end of each month. You can save this money and use it to repay your debts.
Debt Eliminating Schemes in the UK
Besides all these techniques, there are various schemes that can help you to get rid of your debt issues.
IVA or Individual Voluntary Agreements
IVA is one of the topmost recommendable schemes in the UK for dealing with debt issues. IVA is an amazing way to get rid of the debt issues especially for those who are surrounded by a huge debt load. It is an official agreement between you and your creditors. This notifies that you will pay off their money but according to new terms and conditions.
An insolvency practitioner will be involved in this agreement. They are often referred to as an IP. The best part of an IVA is, your creditors are bound to stick to the agreement as the court permits you to do so. This insolvency practitioner (either a lawyer or an accountant) is the medium through which you will pay off your debts. He or she will plan the entire repayment method and you just have to follow his or her instructions.
According to the new terms and conditions, you will hand over the money to the practitioner and he will divide this money among all your creditors. But for this, you will have to provide the insolvency practitioner your personal details.
For example, your assets details, total income per month, the total amount of debts you owe to your creditors and the total number of your creditors. IVA tends to give you more control over your assets than bankruptcy.
DMPs or Debt Management Plans
Another most effective debt relieving scheme in the United Kingdom is DMPs or Debt Management Plans. Debt Management Plans help you to manage your debts by reducing the monthly installment amount.
This is an agreement that is made between you and your creditors in order to pay off all that you owe to them. A DMP convinces your creditors to lower down the monthly installment amount. Thus, you don’t have to face difficulties regarding paying off your debts. By this, you only pay what you can afford to pay at the end of each month.
In case you arrange the debt management plan through a debt management company in the UK, you will have to make regular payments to that company. After receiving that payment, a licensed debt management company will distribute the money among your creditors.
In the UK, you should make a Debt Management Plan with the companies that are authorized by the Financial Conduct Authority. Or, if you want to do it for yourself without taking any help from the debt management companies.
You can try convincing your creditors so that they reduce the amount of the monthly installments. Some of the creditors are very stubborn, they may still contact you asking for money.
Note: You need to provide the licensed debt management companies all the detailed information regarding your current financial situations. The list primarily includes assets, monthly income, total debts and a total number of creditors.
Besides these schemes, if you are having massive problems handling your debts, you may consult with us, to help you find a professional debt advisor in the UK. He will guide you on how you can be debt-free.