If you are in a huge puddle of debt, chances are your credit score is hurt already. Therefore, when you consider IVA as an option, there's no point worrying about how the move would impact your credit rating, for it is already in tatters. With an IVA, you don't just set yourself debt-free after five years but also improve your credit rating tremendously. If you are already in debt, it's time you don't wait any further and start resurrecting your financial position as early as you can.
If you can’t keep up with paying debts with accumulating high interest rates within a short period of time, you may need debt help with a trust deed in scotland or iva in england.. Most debt advisors would suggest that you take some debt consolidation loan to pay off those problematic debts. Debt consolidation loan is a secured loan that is used to pay debts that are continuously increasing in terms of interest and you have no other means to pay it off. The security for this loan is usually your home equity or your car. Because this is a secured loan, providers of debt consolidation loan have lower risks faced.
Consolidating your debt into one loan may sound like a debt help. Indeed it is a debt solution given the following pros:
- It pays all your problematic debts while you pay the single loan.
- The loan has lower interest rate because of the security, and it is paid in longer period, reducing your monthly payment.
- You get rid of pressures from creditors as you pay them your debts including the accumulated interest.
- You have no other debts pending except the debt consolidation loan.
- The loan amount and its repayment is based on your debts, your capacity to pay and the value of the security.
- Lenders will not have problems with your debt consolidation loan because it is secured.
- Since your property is at stake, you have the tendency to pay on time with the agreed amount.
- It can help rebuild your credit rating if you are diligent with paying the debt consolidation loan.
While debt consolidation provides debt help, you also need to be aware of the possible cons. This way, you will be able to evaluate further if debt consolidation is for you. The following are the cons:
- Payment for debt consolidation is long term, and you are bound to pay for it even if there are changes in your finances (i.e., you lose your job).
- There will be new arrangements and conditions that may be presented by your creditors.
- Your property is at stake. Should you fail to meet your commitments, the creditors have the right to take your property.
- Debt consolidation loan is hard to approve if you have bad credit background.
- There may be tendency for you to make more debts if you think you can manage paying the debt consolidation loan.
- It’s possible that though you have debt consolidation loan, there are other debts that are not covered for the loan (i.e., other family debts).
It is important that you consider all angles in debt consolidation before signing up. This is a vital decision for you because you involve your assets in solving your debts. For some, debt consolidation is even the last debt help resort.
To fully understand the need for debt consolidation, you may need assistance from a debt advisor. He will tell you how the system works, possible terms and conditions, and evaluate whether you are capable to secure the loan. If you think debt consolidation is not for you, there may be other options that he can suggest for debt help.
Individuals who would like to avoid bankruptcy may prefer to Apply for an IVA. An Individual Voluntary Arrangement is a lawful repayment plan that is usually drawn-up by an experienced insolvency practitioner. The proposed repayment plan is then handed over to the debtors creditors. Any debtor who enters into an IVA is entering into a contractual agreement with their creditors. In general such repayment schedules are based on the debtor's income, capital and third-party payments.