In the previous part of this article I introduced the list of different paths you could take in order to resolve your debts. Now the list continues with many different ways you can clear your debt such as Debt Consolidation loans, IVAs and Scottish Trust deeds.

Debt Management Plans
Debt management plans are good for if you think you can realistically pay off debts in less than 5 years. With these plans they are organised so that debts are paid off on a pro rata basis, this is determined by what you can afford to pay after considering your cost of living.

Once this is agreed upon then you are no longer bothered by your creditors, you pay the assigned administrator who in turn distributes the payment to your creditors. One of the things to check is if the administrator has managed to secure that interest is frozen and further charges are ceased, whilst not mandatory, it is fairly common for creditors to allow this in order to get their money back.

Debt Consolidation Loans
When you see the word loan in the title and you’re already in debt you may have the thought to run in the opposite direction. However these loans are of a different breed, in many cases people are stuck with a large debt which is split amongst many different creditors, and each of them having varying interest rates. debt consolidation loans pay off all your creditors and allows you to pay one monthly rate to the loan company. With some of your debts suffering from huge interest rates this may seem like the best choice. These loans can come in one of three forms: secured, unsecured and re-mortgaging, you should look into what each of these mean and discuss it with financial advisors to make sure you don’t get a loan which may end up with you losing your house if you fail to meet repayments.

Once you are paying off one loan as opposed to multiple debts you need to make serious changes to your budget and make sure you stick to it, especially if you have gone for a secured loan.

Individual Voluntary Arrangement
An IVA is a less formal procedure open to insolvent individuals (even those who are already subject to bankruptcy proceedings). The procedure is extremely flexible and varies from case to case. For many people this is a viable alternative to filing for bankruptcy.

Like bankruptcy it is normally for larger debts (£35,000+) and for people who are realistically not going to be able to pay off their creditors. IVAs are spread out over 60 months, after which the debt is considered wiped even if the monthly payments haven’t covered the total debt.

In some rare cases there are “lump sum” and “Full and final” settlements, although these need to be researched before you choose to take this as a choice over debt solutions.

Scottish Trust Deeds
If you live in Scotland there is another debt solution option available exclusively to you. This consolidates the debt repayments into 36 monthly payments, an agreed amount for monthly payments is proposed and if no creditors with a third of the total debt owed do not reject this amount then the deed is protected.
The protected agreement means creditors have to stop further interest on the amount owed. So if you live in Scotland then this may be a possible avenue you may wish to explore.

So it is obvious from this article that there are many different ways to clear debt, and it is important to acknowledge that there is always a way out of debt, not to worry and more importantly to seek advice as soon as you feel you are unable to meet payments. There are many impartial debt advice organisations that you can consult with and they specialise in the most extreme levels of debt so don’t be afraid of seeking help with your debt problems.