When someone is in debt, they can try a number of different things. Which one is best for you depends on your situation and how much or how out of control your debt is. Be honest with yourself. That's the best way to figure this out. Get all of your paperwork together and make a list of your debts. Don't leave any out at this point because you think "we can handle that one." The best way to deal with debt is to look at the whole picture and deal with everything in an honest, open, and critical way. Only then can you choose the best way to deal with and get out of debt. You must be committed to the way you choose to get out of debt. For example, a five-year plan is often used for an IVA or a voluntary agreement. To get out of debt, you must agree to the terms and stick to them for five years. On the other hand, a secured loan for debt consolidation can be set up for anywhere between five and thirty years. The most important thing about a secured loan for debt consolidation is that you feel good about the monthly payments and that you can make them without running out of money. If you don't save enough, you'll end up going back into debt as you borrow small amounts here and there. You'll end up back where you started. In this case, I think you should spread out your payments for as long as it takes to make sure that the monthly payment is really something you can afford. This way, you can start over with your money and only have to worry about one monthly payment. You won't have to worry about going into debt again. When you get a secured loan to pay off debt, you should really think of it as a fresh start, a new beginning in your financial life. Once the secured loan is paid off, you should cut up all your credit cards. Rip up loan ads and applications when they come in the door. But before we get into the details of the secured debt consolidation loan, let's look at all the ways you can get out of debt to make sure you're making the right choice.
Secured Loan for Consolidation of Debt
A Debt Consolidation Secured Loan is a way to combine all of your debts into one simple monthly payment. Most of the time, this monthly payment is a lot less than what you are paying for all of your debts right now. Anyone would be happy to pay less each month. As was already said, you can spread out your payments over a longer time, and the interest rate is often lower—sometimes a lot lower. Be aware, though, that if your loan is for a longer time, you will pay interest for a longer time, so the total amount you pay back could be bigger in some cases.
An IVA is the step before filing for bankruptcy. It will hurt your credit score for a while, so I think you should only go this route if you can't get a secured loan or use other ways to deal with your debt. An IVA is a formal way to pay off your debts. Most of the time, it can lower the interest you have to pay on your debts, and sometimes it can even stop you from having to pay them. It can sometimes lower the amount of debt you have to pay. You can also get legal protection from the companies you owe money to through an IVA.
Debt Management plans
Debt management plans are a way to talk to your creditors in a less formal way. Again, they can stop the interest you have to pay or cut it. They can give you more time to pay back your debts or spread them out over more time. Some debt management plans also let you get rid of some of your debt by writing it off. But you should know that these things can also hurt your credit history. They often also have big fees for providers written into the plan. These have sometimes made the amount of money owed go up by a lot. Customers haven't known about this because the company has only focused on how to handle a monthly payment.
