|
The amount of people in the UK living in debt is sky-high. The average amount of debt for a person in Britain is £33,000. This is almost double the average level of £17,000 in 2000.
This is largely due to the rising cost of living. People are finding that their wages just aren't meeting the increasing bills. If they have existing debts, the interest charges on them could be higher than ever, rendering it almost impossible for the average homeowner to become debt-free. There are ways to get yourself out of the debt-trap, so explore all the options. Firstly, contact your debtors to see if they can arrange a new payment plan. Perhaps rearranging the debt, taking into account what you've already paid, and increasing the term can lower your monthly payments significantly. Not all debtors will do this however; it can largely depend on your past performance with them, and if this is your first time struggling to make payment. If you are honest with them at the start, they're more likely to help you. Some people choose debt consolidation. This generally takes the form of a loan tailored specifically to cover all your arrears, so they are paid off in one fell swoop leaving you with just the one payment to the debt management company. These types of loans can come with hefty interest charges, but they are often the easiest way of getting yourself out of debt relatively hassle-free. Companies that offer these types of loans tend to stipulate debts over £14,000 before they will help you. Declaring bankruptcy is an extreme, but occasionally worthwhile, option. If you find that your debts are simply too high and you can't even get a debt consolidation loan, declaring yourself bankrupt will give you the opportunity to write off your debts after a set period, usually a year. Bankruptcy should be seen as a last resort rather than an easy option. If you have many assets, bankruptcy may mean you will lose these to go towards your debt. Explore every other avenue before considering going bankrupt. An individual voluntary arrangement (IVA) is a better alternative to bankruptcy. An advisor will draw up a specific payment plan based on the full amount of your debts, which you then must keep up with. This then effectively clears your debts after a set period, usually 5 years. Again, it should only be considered if the debts are substantial and other options have been exhausted. J Tillotson is a financial author based in the UK. http://www.moneysupermarket.com/debt/ |
