What debt solutions are available to those afflicted by debt?

People coping with debt problems have a range of options, including a consolidation loan, to help them clear their arrears.

One of the debt solutions available to those who have borrowed too much money, either through a loan or a credit card, is a debt consolidation loan.

A debt consolidation loan lumps the outstanding balance into monthly affordable repayments, meaning that consumers can pay it off at a rate they can afford.

They also tend to have lower rates of interest than other forms of borrowing so the debt can be paid off quickly.

The only downside to this option is that they are difficult to obtain if you have a poor credit rating.

Another option could be an Individual Voluntary Arrangement (IVA).

This is a legally binding legal arrangement, agreed with your creditors, to pay a fixed amount of money for a set period of time.

The interest and charges on the debt are frozen, enabling someone to pay off the debt without accruing more interest, and 60 to 70 per cent of the debt is written off.

A debt management plan could also be a solution for some.

These plans are an informal agreement, which allows you to choose how much you can pay each month. This could take longer to pay as none of the debt is written off.

The very last resort could be bankruptcy as this is the most extreme option although it is not the end of the world if the right help is sought.

Bankruptcy could be a choice for those who cannot pay their debts. It allows your creditors to use your assets to pay them, such as a home or business.

David Rodger, managing director of the Debt Advice Foundation, urged consumers to seek advice on these debt solutions.

He said: "No two circumstances are the same so it’s important for people to get the advice that is right for them."

Source: moneyexpert.com