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With so many consumers struggling with personal debt, I though it made sense to write a post looking at the various solutions to getting out of debt. This article takes a quick look at three types of debt solutions available to UK consumers; debt management, debt consolidation & IVAs.

Debt management:
Debt management is an informal arrangement between a creditor & a debtor. With debt management there is no requirement for the consumer to take out further loans to repay their debts. Instead, a debt management plan involves working directly with creditors to re-negotiate payment terms for the debtor. The aim is to bring debt repayments down to a more manageable level on a month by month basis and repay the debt over a longer period of time.

Debt consolidation:
Debt consolidation works by allowing a consumer to take out one large loan that is used to pay off all existing creditors and consolidate all existing debts into one monthly payment. The idea is that the new loan repayment should be easier to manage, and the monthly payment cheaper, than the original monthly repayment. Debt consolidation loans are often secured against property.

IVA (Individual voluntary arrangement)
An IVA is a legally binding formal contract between a creditor & a debtor designed to recover as much money as possible for the creditor (usually over a period of 5 years). Originally created for sole traders who were facing bankruptcy, the IVA has risen in popularity with private consumers in recent years.

Filed at 9:14 am under Commerce Marketing, Finance News, Instant Cash Resources
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