Debt Management - An overview by Frontier Finance.

"Bad debt levels in the UK are higher than ever these days. An increasing number of consumers in the UK are finding it a real struggle to keep up with repayments on their unsecured financial commitments, and this is resulting in missed payments, late payments, charged being incurred, and adverse information on credit reports. Far too many consumers in the UK tend to bury their head in the sand when financial problems arise, but it is important to realize that this will only make the situation worse. It is important for consumers in the UK to learn about the different options available to them if they are struggling to repay their unsecured/secured debts.

One thing to remember is that if you are struggling with your debts and you have both secured and unsecured finance, you should always continue to pay your secured loans as a priority, as otherwise you will end up losing the asset against which the finance is secured. A Remortgage or Home Owner loan just might be the solution to your debt problems. An informal agreement with creditors could be one option for those with unsecured debts. This is where each of the creditors is written to, with a proposal for a more affordable monthly repayment. You will need to be able to offer a realistic amount each month, and if the creditor agrees to this the proposed sum will become your new monthly repayment. Another option that is increasing in popularity is an IVA. This stands for Individual Voluntary Arrangement and is an official agreement between you the consumer and the creditors. There must be a majority agreement from your creditors for an IVA to actually go ahead, and there are also other eligibility requirements involved – for instance, you must be in full time employment, and you must owe at least £15,000 collectively in unsecured loans and credit. If accepted, an IVA means that you will make reduced repayments on each debt based on what is agreed with the creditor, and you will continue to make these repayments each month for five years. After the five year period any remaining balance on each debt is written off and your repayments will cease.

IVAs have become a popular alternative to bankruptcy, with fewer long term consequences and less stigma attached to them. Bankruptcy is an option that should only be considered as a last resort because of the consequences attached. However, even with an IVA consumers should weigh up the pros and cons before make a firm decision to go ahead, as these can affect your credit and financial future for a considerable length of time."

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