Free Money To Pay Off Debt - How To Get Rid Of Debt

Being in debt can be a highly stressful experience, not least because it is often impossible to see any way out of it. When your debts build to a certain point it is easy to feel that you are never going to find a way of getting enough money to pay back the amount that you owe. At times like this it is natural to look at whether there may be free money available to help pay off the debt. This idea is sometimes reinforced by adverts which appear to suggest that such funds are readily available for the asking. Unfortunately this is not the case, and suggestions that there could be are deliberately misleading. However, there are several other very real alternatives which can help people to get out of serious debt, some of which can have the same effect as being given a substantial amount of free money.

While no-one is going to literally hand out free money for you to pay off your debts, there are some schemes which have the result of wiping out large portions of your debt, thus producing the same effect as if you had a substantial gift of cash. Such schemes exist in both the US and the UK and are designed to assist people who are experiencing serious debt problems, usually meaning five figure sums. The process is known as debt settlement in the US and the equivalent scheme in the UK is called an IVA. An IVA is an individual voluntary arrangement and involves making a reduced payment for a fixed period of time, after which your remaining debts are written off.

Debt settlement in the US is when experienced negotiators strike deals with your creditors to write off up to 60% of your debt in exchange for a lump sum payment of the remainder. The debt settlement process can take some time, and will usually mean that you stop making payments to creditors and pay what you can into a separate fund, which is then used towards your newly negotiated settlements. The end result should mean that you are debt free within three to five years.

IVAs were intended to provide an alternative to filing for bankruptcy, and as such are only for serious debt problems. When you set up an IVA you agree to make fixed payments to your creditors, for an amount that you can afford, over a fixed period. This period will not normally exceed five years, and at the end of that time your remaining debts are written off. It is therefore possible to get rid of a large proportion of your debt without having to declare bankruptcy, making an IVA an immensely popular option for many people in the UK with serious debt problems. US residents get the same result with debt settlement companies, who achieve the large reductions in the debt through negotiation with creditors.

There is of course a third option available in both the US and UK, which is the debt management plan. These allow you to consolidate all your unsecured debts into a single monthly payment. Please be aware that these are not debt consolidation loans, which just involve borrowing more money to pay off the full amount that you owe on your debts. With the debt management plan, you do not borrow any more money. What you get is the advantage of having experts negotiate with your creditors to agree reduced payments, lower interest rates, waiving of penalty charges, etc, which all bring down the total of what you need to pay out each month.

The difference between a debt management plan and either debt settlement or an IVA, is that debt management does not involve writing off any of the original debt. If you are unable to afford to meet the required payments for a debt management plan, then debt settlement or an IVA is most likely the best answer.

Whichever kind of scheme you are interested in, you need to take care to approach only reputable and well established companies, as there are many who will not only offer poor advice, but leave you in a worse situation than before you started. The safest way is to start with recommended companies that are known to be ethical and which have already helped many other people to get out of debt. Approach at least two or three and then compare what they come up with before making a decision.

Read recommendations for the most reputable debt management companies.