Debt can be a burden on us in many different ways, for some it can be a close call come each payday, for others it can be a little more serious. Having a debt problem is often seen as a sign of weakness, but in our current climate anyone can fall into debt. While this can be seen as worrying, in most cases there is a solution available to help alleviate the burden.
Speak to Your Creditors
Speaking to companies to whom you owe money can feel a little awkward. However, you will find that many companies have departments set up for those who have fallen on hard times. Such department may be able to offer an arrangement over a set period of time, or having the interest frozen for a certain amount of time.
Some companies may offer leeway than others, it really depends on their business model. You should only offer to pay the companies what you can afford to pay, as offering an amount you know you can’t keep to will only make the situation more worrying, and cause you unnecessary stress.
Prioritise Your Debts
When we’re struggling with debt, we often deal with those creditors who are chasing us the most in the first instance. When you first start sorting out your finances, you should make a list of things that need to be paid without fail each month. This can include your fuel bills, your mortgage and your housekeeping. If you have children, it also helps to include any additional expenses, such as childcare and clothing.
Once you have made the list, you should have a better idea as to what is owed to whom, and how urgent each of these payments are. This ensures that your everyday needs are taken care off, while still being in a position to pay off what is owed in relation to your unsecured debts.
Debt Arrangement Scheme
If your debts are a little overwhelming, and you find that although you’ve been through your finances with a fine tooth comb, there’s still not enough to pay your creditors, then you may be able to apply for the Debt Arrangement Scheme. This is a scheme that allows Scottish residents to repay their debts in-line with their own circumstances, as well as reducing their monthly payments.
Those who enter into an arrangement will go through an income and expenditure form, which will determine how much should be paid to your creditors. To be able to apply for the Debt Arrangement Scheme, there has to be surplus funds available once you have paid out other household expenses.
A trust deed allows you to pay part of what you owe your creditors, normally over a three-year period. After the period has ended, the rest of the debt is written off. To be able to take advantage of a trust, you need to have disposable income after you have paid your important debts, such as the mortgage and utilities.
If you don’t have the funds to make a payment to your creditors, then you could use any assets you have to help pay towards your debt. There can be a series of fees involved with the setting up of a trust deed, as to how much really depends on the complexity of your trust deed.
As with anything related to finances, you should seek advice before deciding to go ahead with a trust deed to ensure that is the correct path for your particular set of circumstances.
Struggling with debt is never a pleasant experience, and the ramifications alone are enough to make us pretend the problem isn’t there. However, this approach can present us with a whole new series of problems, along with some financial implications due to added interest and late fees.
Seeking the right kind of advice and acting on it as soon as possible helps stop the debt spiral out of control, as well as giving you some breathing space while you consider your current options. There is no one solution that fits every kind of situation, as there can be a number of factors that help determine the correct process you should take.