Being in debt is never enjoyable, but starting off your new year being in mountains of debt has got to put a damper in your mood. Here are a few steps that you can take to clear your debts for good:
Identify your Debts
It sounds boring, we know, but identifying what you owe and how much is a great way to take control of your finances.
Start by writing down your income and outgoing expenses. Your expenses include your mortgage payments or rent, phone bills, groceries and so on.
By doing this, you can find out how much money you’re spending, and how much you have left over to pay off your debts. Remember to take into account the interest rates and charges that each of your loans and credit cards are accruing.
Are you a big spender?
If your answer is yes, then you’re going to find it pretty tough to pay back what you owe, but a few small changes is all it takes to lower your expenses. Find out how much roughly you spend a day, then find out what you spend it on.
Going through your bank statements would be the best option, as it will help you identify what you need to spend less on.
If you have more than one debt to repay, you might want to consider consolidating them.
Consolidating basically means turning your debt into one single payment at a lower rate. For some homeowners, this usually involves taking out a secured loan or remortgaging their property to reduce monthly repayments.
However, this option isn’t for everyone as it can result in extra costs, which is why it would be best for you to speak to one of our qualified advisors to help you find the best financial solution available to you.
Here are some solutions that could help you:
A Trust Deed is only available in Scotland, and it’s an agreement that you make with your lender to pay back your unsecured debts, such as personal loans and credit cards. You agree to make monthly repayments over a set period of time to clear your debts. Once that period is up, any remaining debts will be written off.
By applying for a Trust Deed, your lenders will no longer try to contact you asking for the money that you owe, and your debt becomes more manageable as you can pay them in affordable monthly sums.
An IVA is an agreement that is made with all your creditors to pay off your debts within a set period of time.
It is similar to a Trust Deed, but it’s only available to those who live in England, Wales and Northern Ireland.
Again, you only have to pay back a certain amount of your debt within a set period of time, and once that period is up, any outstanding debts will be written off and you can move on with your life without your debts weighing you down.
A Debt Management Plan is simply another agreement you make with your lenders to clear your debts without having to go bankrupt.
The benefit of a Debt Management Plan is that it is not legally binding, which means you don’t have a set time to pay back the debts. You can cancel it at any time.
The good thing about a debt management plan is that the charge you pay on interest will be frozen, meaning that you can focus on repaying your debt without worrying about extra costs.
Your Next Steps!
If you feel that you one of these options is for you, then get in touch with Basik Money today. Our team of qualified advisors are here to give you the best advice, and we search all lenders to find you the best possible solutions.
Get in touch with us today on 0330 041 2299 to find out how we can help you.