After the recession of 2008/2009, many of us have been left with a few debts we would rather not have.
Some of us will be able to afford our repayments, while some of us won’t – it all depends on individual circumstances.
So, if you have been left with debts after the recession… what could you do to pay them off this year – or at least make some real progress towards that goal?
Enter an IVA
An IVA (Individual Voluntary Arrangement) is a legally binding agreement between you and your unsecured creditors. It may only be suitable for you if you are struggling with an unmanageable level of debt that you can’t afford to repay, but that you can afford to make regular reduced payments towards.
You must be able to commit to making these payments for, in most cases, five years. If you can commit to this, your creditors may agree to write off the portion of your debt that you can’t afford to repay – but note that they’d only do this once you’d fulfilled your side of the agreement.
Enter a debt management plan
If you can’t afford to keep up with your repayments as you had originally agreed, but you can afford to repay your debt within a reasonable period of time, a debt management plan may be suitable for you.
Basically, debt management involves talking to your lenders and asking them to accept changes to the original repayment plan. They may agree to accept lower monthly repayments and/or freeze/reduce interest and charges – allowing you to repay your debt in a realistic and affordable way.
Take out a debt consolidation loan
You could take out a debt consolidation loan and use it to repay your existing unsecured debts. This can help to make your finances much easier to manage and help you keep on top of your monthly debt repayments. A lot of people consolidating their debts take the opportunity to slow down the rate at which they are repaying their debt: by arranging to repay it over a longer time frame, they can lower their monthly payment. Having said that, remember that the slower you repay any debt, the more time it’ll have to accrue interest.