Debt payment plans are known by various other names too, including debt management plans, debt payment programs and debt consolidation. These terms all means the same thing, which is a process of consolidating all your debts into a plan that leaves you with one monthly payment, which is lower than the sum of your old debts. An important point about this kind of debt payment plan is that it does not involve borrowing any more money, so does not increase your burden of debt any further.
Debt payment plans are arranged by debt management companies, who offer this service in the US, UK and other countries. You will need to approach a company that operates in your own country of residence. What the plan involves is the management company talking to your creditors to agree new deals for paying back their money. This tends to mean that interest charges can be reduced and some fees are often waived. The result of the new arrangements will be that your debt stops getting bigger and you get agreement to new payment amounts that you can afford.
When agreements have been set up with all your creditors, all you have to do is make one payment to the debt management company, and they pass it on to all your creditors. The more obvious benefits of such arrangements are that you only have to worry about one easy payment, and you no longer have creditors phoning you all day long to get their money.
You normally need to have quite a large amount of debt for a debt payment plan to be suitable for you, and the type of debts must be what are known as unsecured debts. All this really means is that you cannot include debts which are legally secured to assets, such as your mortgage. Unsecured debts refer to such things as personal loans, credit card bills and other unpaid bills.
The other requirement if you are interested in arranging a debt payment plan is that you have enough spare income to meet the regular repayments. It can be a useful exercise to work out your monthly income and expenditure, to see how much you could afford to pay. Include all your regular household costs except your debts, and see what you have left each month that you could put toward the debt payment plan.
If you find that you do not have enough spare money to meet the repayments on a plan, then you may need to look at other alternatives such as debt settlement. This is suitable for people with serious debts and not much spare income, and involves negotiating settlements with your creditors that include writing off significant amounts of the debt you owe. The equivalent to debt settlement in the UK is called an individual voluntary agreement, or IVA.
Most importantly, once you understand what a debt payment plan is and decide you wish to look into it, take some time and care over which companies you contact to help you. It is important to approach at least two of three, so that you can compare them against each other, but it is more important to only approach reputable companies. Look for well established and reliable organisations with a history of helping people to get rid of debt.
Read reviews and recommendations for reputable debt management companies in the UK and US.
Wednesday, 16 December 2009
Saturday, 12 December 2009
What Assets Can Be Taken In Bankruptcy
Bankruptcy is a drastic step, and one usually taken by people who feel they have no other alternative. When you are declared bankrupt you essentially lose control of all your assets. In the US there are certain modest personal exemption levels for different types of asset, intended just to cover the essential things you need to get by. Anything above these levels will be liquidated to raise money to pay off your creditors. What these exemption levels are is governed by state law and therefore varies from state to state.
In the UK full control of your assets is transferred to your trustee, with the only exceptions usually being what are classed as essential items, which includes clothes, bedding, basic items of furniture and any equipment you need to carry out your work. This can also include one vehicle if it is essential to your income. Even if some items are essential, you could still find them being sold and replaced by cheaper alternatives if they are particularly valuable.
By filing bankruptcy you basically lose everything, and there are lasting consequences in terms of your credit, future employment and reputation. It is a very serious step to take and one that should not be taken lightly. While bankruptcy proceedings will sometimes be started by your creditors, if you are thinking of filing for bankruptcy yourself, you need to ensure that you are fully aware of, and have properly considered, the possible alternatives.
To be looking at bankruptcy we will take it as read that you have a very serious amount of debt and you do not have the means to pay if back. In this situation, some people think that means their only option is to file bankruptcy, but it isn’t. You are probably beyond the reach of a debt management plan or debt consolidation, but there are more radical solutions which involve seriously reducing the amount of debt you owe.
The alternatives to bankruptcy will partly depend on what country you live in. For US residents, the main alternative to bankruptcy is called debt settlement, or sometimes debt negotiation. This involves using a specialist negotiator to work out new settlement terms with all your creditors, which normally means agreeing to significantly reduce the amount owed in return for an up front payment. You do not have to have money available for the up front payment, you just keep paying an affordable amount each month into a separate account. This money gradually builds up and is used towards the settlement payments as each agreement is reached.
If you are a UK resident, there is an equivalent to debt settlement, which is even better is some respects. The government introduced something called IVAs, or individual voluntary arrangements, and these are specifically designed to give you an alternative to the drastic step of declaring bankruptcy. They are formal agreements, which like debt settlement, involve negotiated agreements with your creditors, and usually involve a substantial part of your debts being written off. Because they are legally binding agreements, one advantage of them is that if you can get 75% of your creditors to agree, then the rest are legally bound by the arrangement too.
If you are considering bankruptcy and have not already discussed alternatives with a debt settlement or IVA company, then you should certainly do so. Do ensure that you only deal with reputable companies though, otherwise your situation could be made worse if you are given poor advice. Always look for well established companies who already have a reputation for delivering responsible debt solutions successfully. You should also consult more than one company, as offers and proposals will vary.
Read reviews and recommendations for reputable online debt settlement companies and UK IVA providers.
In the UK full control of your assets is transferred to your trustee, with the only exceptions usually being what are classed as essential items, which includes clothes, bedding, basic items of furniture and any equipment you need to carry out your work. This can also include one vehicle if it is essential to your income. Even if some items are essential, you could still find them being sold and replaced by cheaper alternatives if they are particularly valuable.
By filing bankruptcy you basically lose everything, and there are lasting consequences in terms of your credit, future employment and reputation. It is a very serious step to take and one that should not be taken lightly. While bankruptcy proceedings will sometimes be started by your creditors, if you are thinking of filing for bankruptcy yourself, you need to ensure that you are fully aware of, and have properly considered, the possible alternatives.
To be looking at bankruptcy we will take it as read that you have a very serious amount of debt and you do not have the means to pay if back. In this situation, some people think that means their only option is to file bankruptcy, but it isn’t. You are probably beyond the reach of a debt management plan or debt consolidation, but there are more radical solutions which involve seriously reducing the amount of debt you owe.
The alternatives to bankruptcy will partly depend on what country you live in. For US residents, the main alternative to bankruptcy is called debt settlement, or sometimes debt negotiation. This involves using a specialist negotiator to work out new settlement terms with all your creditors, which normally means agreeing to significantly reduce the amount owed in return for an up front payment. You do not have to have money available for the up front payment, you just keep paying an affordable amount each month into a separate account. This money gradually builds up and is used towards the settlement payments as each agreement is reached.
If you are a UK resident, there is an equivalent to debt settlement, which is even better is some respects. The government introduced something called IVAs, or individual voluntary arrangements, and these are specifically designed to give you an alternative to the drastic step of declaring bankruptcy. They are formal agreements, which like debt settlement, involve negotiated agreements with your creditors, and usually involve a substantial part of your debts being written off. Because they are legally binding agreements, one advantage of them is that if you can get 75% of your creditors to agree, then the rest are legally bound by the arrangement too.
If you are considering bankruptcy and have not already discussed alternatives with a debt settlement or IVA company, then you should certainly do so. Do ensure that you only deal with reputable companies though, otherwise your situation could be made worse if you are given poor advice. Always look for well established companies who already have a reputation for delivering responsible debt solutions successfully. You should also consult more than one company, as offers and proposals will vary.
Read reviews and recommendations for reputable online debt settlement companies and UK IVA providers.
Wednesday, 9 December 2009
Reputable Debt Management Companies And How To Find Them
When you have serious debt problems and you turn to a debt management company for help, you really cannot afford to take chances. All too often people make the decision to deal with their debt problems once and for all, they sign up with a company, and a year or so down the line they find that they have handed lots of money over in fees, but that their creditors are still chasing them for all their debts. This is a consequence of getting involved in one of the less reputable organisations who are currently operating in the field of debt help.
If you are going down the debt management route you need to ensure that you choose a reputable company to work with. Before you go that far, however, you should make sure that debt management is the right option for you, and that you have an understanding of the process you will be going through. The reason you need to understand the process is so that you can make an informed decision. It is also important to make sure you are opting for this route because it is the best solution to your problems, rather than because that is the only option you are aware of.
Debt management is sometimes referred to as debt consolidation, though this should not be mixed up with the type of debt consolidation that means taking out a loan. No borrowing or loans are involved in this kind of debt consolidation. The process involves a skilled negotiator dealing with your creditors on your behalf, to come to new arrangements for paying back your debts. The person will work for you to reach agreements that result in new payment amounts, which are combined together into one affordable monthly payment. You only have one payment to be concerned with, which you pay direct to the debt management company.
A reputable organisation will deal with your creditors for you, so you should not be hassled for payment any longer. The negotiations usually involve reducing or at least freezing your interest charges, or even writing charges off, which stops your debt growing and makes it easier to fix a timescale for becoming debt free. Debt management does not involve writing off any of the actual debt, so your creditors do end up being paid back all the principle amounts that they are owed.
For a debt management plan to work, you need to have some money spare each month to put towards the payments. You will therefore be expected to have a regular income. The debts you can include in the plan will need to be what are called unsecured debts, which are things like credit cards and household bills, rather than mortgages or hire purchase agreements.
If you think you will not have any, or enough, money spare each month to set up a debt management plan, you still have options available to you apart from bankruptcy. The main alternative is known as debt settlement, and is a process that involves negotiated settlements with your creditors which include writing off large amounts of your debt. The equivalent of debt settlement for UK residents is called an IVA, or individual voluntary arrangement.
Once you are sure that debt management is your best option, you need to find some reputable debt management companies to approach. The key points to remember when looking at companies is to only approach those who are well established and have a track record of helping lots of people already, and always approach two or three in order to compare the proposals they can offer you. Following reviews and recommendations can speed up the process of coming up with a shortlist of reputable companies.
Read reviews and recommendations for reputable debt management companies in the UK and US.
If you are going down the debt management route you need to ensure that you choose a reputable company to work with. Before you go that far, however, you should make sure that debt management is the right option for you, and that you have an understanding of the process you will be going through. The reason you need to understand the process is so that you can make an informed decision. It is also important to make sure you are opting for this route because it is the best solution to your problems, rather than because that is the only option you are aware of.
Debt management is sometimes referred to as debt consolidation, though this should not be mixed up with the type of debt consolidation that means taking out a loan. No borrowing or loans are involved in this kind of debt consolidation. The process involves a skilled negotiator dealing with your creditors on your behalf, to come to new arrangements for paying back your debts. The person will work for you to reach agreements that result in new payment amounts, which are combined together into one affordable monthly payment. You only have one payment to be concerned with, which you pay direct to the debt management company.
A reputable organisation will deal with your creditors for you, so you should not be hassled for payment any longer. The negotiations usually involve reducing or at least freezing your interest charges, or even writing charges off, which stops your debt growing and makes it easier to fix a timescale for becoming debt free. Debt management does not involve writing off any of the actual debt, so your creditors do end up being paid back all the principle amounts that they are owed.
For a debt management plan to work, you need to have some money spare each month to put towards the payments. You will therefore be expected to have a regular income. The debts you can include in the plan will need to be what are called unsecured debts, which are things like credit cards and household bills, rather than mortgages or hire purchase agreements.
If you think you will not have any, or enough, money spare each month to set up a debt management plan, you still have options available to you apart from bankruptcy. The main alternative is known as debt settlement, and is a process that involves negotiated settlements with your creditors which include writing off large amounts of your debt. The equivalent of debt settlement for UK residents is called an IVA, or individual voluntary arrangement.
Once you are sure that debt management is your best option, you need to find some reputable debt management companies to approach. The key points to remember when looking at companies is to only approach those who are well established and have a track record of helping lots of people already, and always approach two or three in order to compare the proposals they can offer you. Following reviews and recommendations can speed up the process of coming up with a shortlist of reputable companies.
Read reviews and recommendations for reputable debt management companies in the UK and US.
Tuesday, 8 December 2009
Letters To Write To Creditors - Advice About Negotiating Debt Settlements
When you are deep in debt and trying to find a way out of it, one option is to see if you can reach an agreement with your creditors yourself. This is a very positive step, and is certainly better than ignoring the situation and hoping that it might go away. If you are able to reach agreements with your creditors to change the repayment terms on your debts so that they become affordable for you again, this is certainly one of the most direct ways of dealing with debt problems.
Writing letters to your creditors is the best way of negotiating, as it ensures that you can state clearly what you want to say, and makes it easy to keep clear records of what you have said and done and what their responses are. You will need to write several letters, starting off with an initial one to explain what your situation is, how you got into it and to say that you are trying to address the problem. You need to ask each creditor to confirm exactly how much money they are owed, and get them to state clearly any interest charges or late payment fees included in that.
You then need to use the information you get back to make a list of all your creditors and how much you owe to each one. Before you can write letters to your creditors again, you need to split them into two groups. In one group you put all your priority creditors, and the other your secondary creditors. Priority creditors are ones where the consequences of not paying are serious, such as your mortgage. Secondary creditors are generally unsecured debts such as credit cards, store cards and unpaid household bills.
Before you can make offers to your creditors, you need to be able to demonstrate how much you can afford, otherwise they will not know if your offer is reasonable or not. You do this by preparing a personal financial statement showing all your income and expenditure. Do not include your secondary creditors in this for now. Your financial statement will show you how much money you have left over each month to go towards your debts.
This is when you write letters back to your creditors to make offers of payment. The fairest way to do it is to share out what you have spare proportionately among your creditors. This will be the easiest to justify and defend if you are challenged over the amount. Do not be persuaded to increase your offer to one at the cost of another, and start to make the payments you have offered even if they refuse your offer. That way at least you are continuing to pay off some of the debt.
This kind of personal debt settlement can be effective, but you need to know what you are doing and be very well organised too. If you do not feel confident about taking on the process yourself, you could approach a debt management or debt settlement company to help you. They will go through your finances with you and make a proposal for a way forward that best suits your needs.
If you do decide to talk to a professional debt advisor, you should be aware that some are better than others, and that some are definitely to be avoided. To make sure you get good advice, you should only approach reputable organisations who have been in business some time, and who can demonstrate a history of successfully helping people like you. You should also approach more than one, so you can make a comparison between what they offer you.
Read a full guide to debt negotiating on the author's Debt Help Website.
Writing letters to your creditors is the best way of negotiating, as it ensures that you can state clearly what you want to say, and makes it easy to keep clear records of what you have said and done and what their responses are. You will need to write several letters, starting off with an initial one to explain what your situation is, how you got into it and to say that you are trying to address the problem. You need to ask each creditor to confirm exactly how much money they are owed, and get them to state clearly any interest charges or late payment fees included in that.
You then need to use the information you get back to make a list of all your creditors and how much you owe to each one. Before you can write letters to your creditors again, you need to split them into two groups. In one group you put all your priority creditors, and the other your secondary creditors. Priority creditors are ones where the consequences of not paying are serious, such as your mortgage. Secondary creditors are generally unsecured debts such as credit cards, store cards and unpaid household bills.
Before you can make offers to your creditors, you need to be able to demonstrate how much you can afford, otherwise they will not know if your offer is reasonable or not. You do this by preparing a personal financial statement showing all your income and expenditure. Do not include your secondary creditors in this for now. Your financial statement will show you how much money you have left over each month to go towards your debts.
This is when you write letters back to your creditors to make offers of payment. The fairest way to do it is to share out what you have spare proportionately among your creditors. This will be the easiest to justify and defend if you are challenged over the amount. Do not be persuaded to increase your offer to one at the cost of another, and start to make the payments you have offered even if they refuse your offer. That way at least you are continuing to pay off some of the debt.
This kind of personal debt settlement can be effective, but you need to know what you are doing and be very well organised too. If you do not feel confident about taking on the process yourself, you could approach a debt management or debt settlement company to help you. They will go through your finances with you and make a proposal for a way forward that best suits your needs.
If you do decide to talk to a professional debt advisor, you should be aware that some are better than others, and that some are definitely to be avoided. To make sure you get good advice, you should only approach reputable organisations who have been in business some time, and who can demonstrate a history of successfully helping people like you. You should also approach more than one, so you can make a comparison between what they offer you.
Read a full guide to debt negotiating on the author's Debt Help Website.
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