Debt Management Tips

Debt can weigh heavily over a family and create a rift between relationships. Debt is one of the main reasons relationships fail and can lead to a number of wider ranging mental and physical illnesses induced by stress.

Changing circumstances can be the main reason many get into debt. Losing a job, a spouse or rapidly changing interest rates can make a manageable budget suddenly get out of control. Once you recognise that the income you have ins insufficient to cover all the debts and daily living costs you have to take action fast. Ideally, you spot that things are getting tighter before you reach this point!

Start by completing a family income and expenditure budget. This need not be complicated or overly detailed but will help you to focus on the higher priority expense items and identify where your disposable income is being spent.

You must prioritise the important expenditure items such as mortgage or rent payment, council tax, gas, electric and water. This provides the basic shelter and allows you to keep the family unit together. Next look at any loans on credit or store cards and consider a debt consolidation loan. This may help reduce the interest rate being charged by transferring the balances into a sensible term fixed rate monthly payment.

Next, cut out the more discretionary spend items such as health club memberships, smoking or other subscriptions. You are in the realms where every penny counts and until you get the debt under control you need to consider changing your shopping habits and moving to lower cost options. Shop at Asda rather than Waitrose, for example and look to fresh foods rather than prepared meal options.

But this only provides respite for those with temporary or small debts. If the debt has taken grip or there is a significant change in personal finances then more radical action will be needed. 

There are a number of well developed procedures to help with debt management. There are informal debt management plans that involve voluntary arrangements between borrower and lender to reschedule the loan payments to something more affordable. However, these remain informal and can be changed at any time. 

When total debts exceed £15,000, a more formal arrangement is a Individual Voluntary Arrangement (IVA) which is a formal, court approved agreement between you and your lenders where you agree to make a certain level of repayment each month. In return, at the end of the IVA agreement (which can be up to 5 years) any remaining balance is written off and you start again with a clean sheet - but impaired credit history.

IVA`s must be made via a registered insolvency practitioner but do offer a way out of significant debt problems. Whilst not offering "http://www.cashback.co.uk/" free money they do afford a more friendly and private way out of debt than declaring yourself bankrupt. Where an IVA fails or cannot be agreed, bankruptcy may be the only option available.

Hello byronlewis and welcome to the site.

Very true words that you have written.

I would also suggest that if you are tempted by going into an IVA, do your research!! They may sound like a wonderful solution, but they can also be very, very dangerous, especially if there is a property involved!!

Well said - with the right planning and advice there are excellend solutions out there.

 Tips to help with debt management..

sounds is good.I suggest you to,do reseach.I think this will be the best solution.

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