Debt on Credit Card
Financial problems through credit card debt?
One of the easiest ways to gain financial problems is through credit card debt. In recent years, it wasn’t uncommon to receive several offers of credit cards through the post every day. Banks are now tightening their grip on finances, with credit card debt one of the main areas for recovery.
Personal debt can be accumulated in a very short space of time and with relative ease. Owning several credit cards can cause debt to gradually amass over each one, making the total debt discreet and unmanageable.
With high interest rates, paying off debts can soon evolve into paying off the interest on debts, and before you know it, the vicious circle can spiral out of control.
A debt management plan may be the best way to structure a way to financial freedom. Debt management plans are easy to set up and are ideal for gathering credit card debts into manageable repayments. A debt manager can develop an achievable payment schedule by communicating with your creditors, and often negotiate lower interest payments.
A debt management plan is often the first choice for repaying credit card debt, as there are no legally binding agreements made.
IVA as a solution for debt on a credit card
An IVA (Individual Voluntary Agreement) may be offered if the creditor will not agree to a debt management plan. A major difference between an IVA and a debt management plan is that an IVA is a legally binding contract, which must be signed in the presence of a certified insolvency practitioner. The agreement is usually set out over a 5 year period.
Failure to meet these repayments could result in property, possessions and savings being acquired to finance any outstanding debts.
Bankruptcy as a solution for debt on a credit card
Bankruptcy may be the only option left if your debts have reached a point where your creditors refuse to accept a debt management plan and an IVA isn’t possible due to lack of funds and income. Those who are unemployed are often forced into bankruptcy when their debts become uncontrollable.
Bankruptcy has many obvious negative effects, such as bad publicity the loss assets, savings, businesses and investments in order to cover outstanding debts.
Case study
Johnny Renson 27, from Chorley, was listening to the radio and it said that if you got your credit card before March 2007 you can wipe away the debt left outstanding on it. He had a look online about this but after a call to Money Advice Direct he was informed that he would be better off filing bankruptcy.
See also: Credit Card Debt Advice
Money Advice Direct is an established provider of confidential and non-judgemental debt advice in the UK on serious debt problems. Whatever solution we recommend, honest, best advice is available 24 hours a day, 365 days per year. If you are in debt call us without obligation today on 0800 074 6918 or apply for debt help online and make a clear start today with your debt on a credit card.
Listed below are some of the frequently asked questions on Debt Management Plans
- How do I know whether a Debt Management Plan is right for me?
- What are the advantages of a Debt Management Plan?
- What are the disadvantages of a Debt Management Plan?
- Is a Debt Management Plan a type of loan?
- How long will I have to pay a Debt Management Plan before I am debt free?
- How much does a Debt Management Plan cost?
- How much money will actually go to the companies I owe money to under a Debt Management Plan?
- How do I make the payments?
- If I have a change of circumstance can I stop the Debt Management Plan?
- Who tells the companies I owe money to that I am actually in a Debt Management Plan?
- Will the companies I owe money actually accept a a Debt Management Plan?
- How a will Debt Management Plan affect my credit status with Experian, Equifax and Callcredit, the three main credit reference agencies
- Will a Debt Management Plan stop all the companies that I owe money to constantly telephoning me and sending me letters?
- Will I receive a regular report to inform me that my debts are actually going down?
- After the Debt Management Plan is set will I receive be able to get any additional help and advice?
- After the Debt Management Plan is set up can I still use a credit card or apply for car finance if I budget for it?
- Once the Debt Management Plan has been set up does it mean that I will have to keep paying interest and bank charges?
- Can I include secured loans in a Debt Management Plan, such as car finance or mortgage?
- Can the companies that I owe money to threaten to take my house or flat once that I am in a Debt Management Plan?
- Can I include all my debts in a Debt Management Plan?
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IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]