Government Grants For Women Can Assist Single Moms And Their Kids

Millions of dollars in totally free grant money have been allocated yearly by the government. Grants can certainly help single moms get out of debt, receive a higher education degree, and even start their own business enterprise. The federal government also awards housing plus family grants!

Unfortunately, a large number of single moms don’t know there’s such an abundance of grants out there or even the way to receive them.

Single mothers are usually hit harder in comparison to other people during tough economic periods. Considering they are the sole source of income for the family, a single mommy is normally under loads of burden and strain to care for their self as well as their kids. Government grants for moms have been introduced in an effort to reduce the financial load on single mothers to allow them to enjoy more time to focus on what is really important – their families!

Many varieties of government grants are available, like:

Schooling Grants – funds are designed to assist single moms gain an advanced diploma as well as frequently help provide for a few living costs.

Education Grants for Children – meant for single moms who may have difficulties funding their kid’s academic costs, child education grants can help single moms.

Housing Grants – can offer funds regarding house upkeep, restoration and even to buy a brand new house!

Household Grants – may help single mothers pay expenses, such as gas, and even food shopping! A powerful way to assist the reduction of a family’s expenses significantly.

Considering the large numbers of US government grants offered to single moms, it is possible you will be eligible for a lot more than one. And several grants tend to be simple to submit an application for and require nothing but the application. With certain government grants for women, single mothers may possibly get the funds within a week!

Please don’t allow the present economic environment hurt you or your loved ones. Receive the free grant money you absolutely need and deserve – from the Federal government! Discover more about government grants for single moms right now.

Get Out Of Debt : The Basics Explained

Once you decide to take action to get out of debt, you have made a significant step in the right direction. You have accepted that you have a problem, and are no longer living in denial. The processes for removing yourself from debt are certainly not simple, but they are also not particularly hard either. It may take some time to fully eradicate the debt, but commitment will see you succeed. Here is a list of debt solutions…

The convenience of using credit cards is most likely, the primary reason most people are in debt. So on that basis, you must be prepared to either leave your credit cards at home or destroy them completely and use cash for all purchases. Simply put, using your credit cards will only ever increase the amount you spend and therefore your debt too.

Check your credit card interest rates. If you are paying a high rate of interest (generally above 16%) then you may be able to negotiate with your card company a lower rate due to your position. Make it clear of your intentions to pay off your debt, and discuss the possibility of transferring the balance to another rival company, these points generally push the companies into trying to accommodate your issues, and reducing the rate to on or around 10% is quite achievable.

Do not just pay the minimum balance. If you just make minimum balance payments then you are barely keeping your head above water, if at all. This is what gets most people into trouble in the first place and is one of the reasons why credit card companies get so rich. Nearly all of your minimum balance payment goes to paying off the interest and not the actual amount that you borrowed. So, pay off as much you can each and every month.

Use a debt consolidation service to consolidate all your negative balances. Paying one balance per month, rather than 5 for example, makes controlling your debt easy, and also it makes it simpler to see how much you owe and how long it will take to remove yourself from that debt. First, research debt consolidation companies to find the lowest interest rates, then transfer all of your debts to this one main account. Make sure you close all other accounts once the transfer is complete as it is easy fall back into the temptation of a credit card.

Find Out More – Credit Repair

Tips On Making Your Debt Reduction Plan Work For You

Coming up with the right debt reduction plan in order to assist you and your family overcome debt is not an straightforward issue, and ought to be approached carefully. You are more than likely to receive recommendation on clearing your debts from all manner of sources, but which is the method you must strive out for the most effective? The most issue with several money debt reduction plans is that they fail to take a personal’s or a family’s explicit circumstances into account.

For the most half, these debt reduction plans take a broad view of debt problems, and that’s not the key at all. It is when you start to consider individual circumstances that you are ready to really get to the root of the problem and start to make some development with a debt reduction plans of your own.

Before you begin, you may would like to choose on a practical goal that you’ll achieve wiselyand steadily. Reducing your debts by means of debt reduction plans needs motivation and patience, and you wish to make certain that these will be maintained.

Focus on what you are in a position to realistically afford rather than everything in sight that you want. Begin putting your debt reduction plans along by working out an correct and clear overview of your income when taxes have been deducted, together with reasonable expenditures and any repayments you are currently making towards paying your debts off. Once this is complete, you can get to figure on wanting into how you’ll be able to scale back your costs.

Scrutinize maybe reducing repayments or ways that you’ll be able to scale back interest charges on your current debts, operating to avoid any penalties due to late payments and attempting to seek out ways of reducing your living expenses. Once you have debt reduction plans and have a clear understanding of your outgoing prices and are ready to see where you’ll cut back them, then your journey towards turning debt-free has actually begun.

Quickly getting out of debt

Do you want to get rid of debt in double quick time?

Getting out of debt is very challenging for many people. Many people are conflicted with getting out of debt as quickly as possible, but they do not know which options are right for them at the moment. There are plenty of companies that advertise their services advertising perfect solutions to debt, but you won’t know until you use their service? It is very important that you find the most effective method that works with your current financial situation. Here are some tips that might help you in your financial situation to get you out of debt faster.

Build a financial portfolio of your current balances.

If you want to reduce your debts quickly, you must find a way to lower all of our current balances in a short period of time. You need to build a portfolio of current balances to get a plan together. Once you get current and organized, you can reduce debts in an orderly fashion.

Reduce balances quickly.

Many people are unaware their credit card balances get charged interest daily, but the total amount of interest doesn’t show up until the end of the month. What does this mean? This means you can use small amounts of cash out of your paychecks to pay debts during the month, and that will reduce balances faster. This method of clearing debt will decrease the interest rates you’re charged monthly. Divide monthly payments by four, and pay the same amount you have on the same day every week. Your current balances will quickly decrease when you apply this method.

Less is more.

Would you agree to put $ 1.00 down weekly out of your current paychecks towards your new goal to get out of debt faster? Single dollars are pittances, but think about it – that one or two dollars can seriously reduce your debts over time. You are already making payments weekly, so all you have to do now is add the dollar amount to your new total. For instance, you might have a monthly payment of $ 250.00. Divide this amount by four and you will pay the new amount weekly. Add that dollar amount to weekly payments and round the number to the nearest number e.g. $ 50.00. Using this technique will decrease your interest rate you are paying overall, and you are reducing your debts consistently.

Think in terms of a domino effect concerning resolving your debts.

You just paid off one credit card, and add that amount or a portion of it to paying off another debt. This will increase the amount you are currently paying and the next balance will be paid off in less time than your first debt payments.

Patience is always a virtue.

Your debts will not go away overnight; you must have patience to achieve your goals. If you are serious about getting rid of debt faster, you have to keep a few things in mind. It took you a while to get into debt, and it will take awhile to get out.

What is Debt Settlement and is it Right For You?

If you’re seeking an alternative to bankruptcy due to excessive debt that you can’t pay, you may be considering debt settlement. Settling your debt is when you negotiate with your creditors to lower the amount you owe. While there are a number of debt settlement companies that exist to help you get rid of your debt – you may be better off doing it on your own. There are many risks associated with using debt settlement companies, including outrageous fees for their services.
Why Do Creditors Agree to Settle?
Many creditors would rather accept less than what you owe than send you collection notice after collection notice in an attempt to recover what you owe them if you have fallen behind on your payments. A debt settlement is when a creditor accepts 20-75% of what you owe in a one-time payment and then forgives the rest of the debt owed. They will then report to credit bureaus that the amount owed has been “settled”. The history of delinquent payments and charge-offs that may have occurred on the settled account prior to the pay-off date will remain on your credit report.
Creditors are not likely to agree to settlement options if consumers are up to date with their payments. Many won’t talk to you about settlements unless you are three to six months behind on payments – and have been unresponsive to debt collection attempts. This means you’ll spend three to six months screening your calls and not paying anything toward the debts you hope to settle on. During those three to six months, you would put as much money aside as possible to use to pay the company off when they agree to settle…. IF they agree to settle! There are no guarantees that a creditor will agree to settle, and you do take the chance that after not paying them for three to six months, possibly lowering your credit score even more, the creditor will refuse to settle.
Debt Settlement Companies
A number of companies exist nationwide to help consumers settle with their creditors. As the economy continues to weaken, even more debt settlement companies are popping up in hopes of getting business from the large percentage of Americans who are struggling under excessive debt.
The problem with debt settlement companies is that they often charge excessive fees for their services, and you probably won’t know up front how much you’ll actually pay for the service. Some companies charge 15-20% of your total debt, plus an initial sign-up fee and ongoing monthly service charges. Some companies charge a monthly service fee instead of a percentage of your debt.
The companies are supposed to be able to help you negotiate with your creditors. Many people who have worked with debt settlement companies have reported that they weren’t able to get all creditors to negotiate the amount owed. You’re required to set up an escrow account when you use most debt settlement companies, and this is where your service fees, sign up fee, and/or monthly fee, as well as the monthly amount you are paying the debt settlement company to pay your creditors with, is deposited each month. It’s also where the debt settlement company withdraws their fees. Some consumers have reported over a two year period that they made their monthly required payments under the debt settlement plan to the company, and the only payments to come out of that escrow account were those made to the debt settlement company. Meanwhile, the consumers continue to get phone calls and debt collection notices from creditors looking for their money – because nothing has been settled during this time.
Some creditors will escalate the accounts if they realize you are working with a debt settlement company – which means they may send your account to a collections agency sooner than they would have otherwise, or attempt to sue you. If a creditor takes legal action, most debt settlement companies will drop your account because they don’t have the ability to represent you in court or give legal advice.
Should You Attempt to Settle Your Debts?
Debt settlement is only a good option for people who are heading toward a bankruptcy but don’t qualify for filing Chapter 7. In a Chapter 7 bankruptcy, most unsecured debts are written off but you may sell your home or other property). If you qualify for a Chapter 7, chances are you don’t have the cashflow available to make a debt settlement option work for you, since it requires paying a percentage of your debts back to “settle” them and close the accounts.
If you are able to scrape together enough money to pay your debts through a debt-management program, where you are working to pay off all of your debt under lower interest rates – then by all means choose that option over debt settlement. It’s better for your credit score.
If you’ve been pretty good about keeping up with your debts, you’d have to allow your accounts to go three to six months late before a creditor would consider you for debt settlement. If your credit score is reasonable now, you would completely damage it by going with a debt settlement.

Debt Solutions – your 12 Ways Out From Debts (part 2)

Being in debt is no fun, especially if you are struggling to make ends meet. Because debt is a complex issue but there may be more than one solution. This article will outlines 12 common methods use by most of debtors to get rid of their debts. Among these 12 debt solutions, there may be one or more options which you can use to solve your financial problem.

2 of the 12 methods: Self Repayment Plan and Debt Settlement had been discussed in part 1, let looks at the other 2 methods in this part 2: Debt Consolidation and Debt Consolidation Loan. Debt Consolidation Debt consolidation is a debt reduction process that allows you to combine your assorted unsecured debts into one payment. Instead of sending out payments on six or seven banks and store credit cards, for instance, you would make one payment to the debt consolidation company and that company would then disperse the funds for you.

In the process of debt consolidation, the debt consolidation company will also help you to negotiate with your creditors to reduce your debt amount, sometimes by as much as 30% to 60%. In most cases interest rates are reduced. Late fees and hidden taxes are also waived at times. The revised consolidated debt amount is divided into easy monthly installments that make your repayment plans much easier.

Although both debt settlement (the method discuss in part 1) and debt consolidation involve the negotiation to reduce your debt amount, the difference between debt settlement and debt consolidation is in the debt settlement, you need to pay off your debt with a lump sum amount which agree between you and your creditor whereas in debt consolidation, the consolidated debt amount is pay in monthly installment basic.

With consolidate all your debts, your will have a clearer picture on what debts you are currently bearing and what are the total repayment for each month. The easy one monthly payment to the debt consolidation company will help you to manage your debts and avoid unwanted late & miss payments. Debt Consolidation Loan

The debt consolidation loan will help you to combine all your outstanding debts into one loan account. For example you may have the existing loan of $8,000 with interest of 15% and credit card balance of $3,500 with interest rates of 12%. These debt balances could be consolidated into one loan of $11,500 with lower interest rate of 8%.

You may consider a debt consolidation loan if you find difficult to meet your monthly repayment. You could get a lower interest rate on debt consolidation loan with affordable monthly payment and the repayment period be extended.

Most of debt consolidation loans will require you to put up your home or other assets as collateral. If you can’t make the payments or if your payments are late, you could lose your home or assets which are pledged as the collateral. Hence, you should review your affordability on the repayment amount of the new loan. If the repayment is out of your repayment capability, you may consider a long loan term, of course the longer of loan term, the more interest will be spent for the loan, but it will bring down the repayment level to your comfort level. In Summary

Consolidate your debts into a single payment will ease you in your debt management while enjoying a few advantages to save up your money from your negotiation outcome with your creditors. Combine all your debts into single loan account with a lower interest rate could give you a more affordable and repayable debt elimination plan.

See you on part 3 for more debt solutions.

Cornie Herring is the Author from http://www.studykiosk.com/CreditBasics. “StudyKiosk-Credit Basics” is an informational website on credit basics, debt consolidation and bankruptcy.

How to Eliminate $682 Per Month in Debt

We are going to go through this step-by-step with a hypothetical scenario. Joe Smith will be our hypothetical debt-ridden participant. We will show Joe step-bystep how to eliminate his debt so just imagine you are in Joe’s shoes and applythe same techniques.

Joe’s efficient budgeting has saved him an extra $50 per month. He has these debts at these monthly payments:

Debt 1 – $800 @ $90 per month

Debt 2 – $1,200 @ $110 per month

Debt 3 – $5,300 @ $202 per month

Debt 4 – $10,000 @ $280 per month

STEP 1

Joe will pay the minimum balances on all his debts except the smallest (Debt 1).He will use all of his extra money ($50 per month) to payoff his smallest debt first(regardless of interest rates). Thus, Joe will be paying $140 per month on Debt 1($90 original payment + $50 additional from budgeting). Joe will continue payingthe minimum payments on Debts 2, 3 and 4.

• This technique is recommended because Joe can quickly payoff thesmallest debt of $800. Once he does, Joe will feel GREAT because hehas accomplished his first step to debt freedom. This will give Joe theconfidence and drive to continue paying off all his debt.

• Though not recommended, Joe may be disciplined enough to take on alarger debt balance first which carries a larger interest rate. Joe could goahead and do this, but he needs to be careful not to become discouragedand quit.

• If Joe had two debts with similar balances, then he should pay off the onewith the highest interest rate first.

STEP 2

Joe has paid off Debt 1. He should now use the monthly amount he was payingon Debt 1 and begin eliminating Debt 2 of $1,200 (which is actually lowerbecause he has continued paying the minimum payment). Here’s how it works:

• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus theminimum payment of $110 for Debt 2.

• Joe will be paying a total of $250 per month on Debt 2 until it is paid in full.

• He will continue paying the minimum payments on Debts 3 and 4.

STEP 3

Joe has paid off Debt 2. He should now use the monthly amount he was payingon Debts 1 and 2 and begin eliminating Debt 3 of $5,300 (which is actually lowerbecause he has continued paying the minimum payment). Here’s how it works:

• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus $110from Debt 2, plus the minimum payment of $202 for Debt 3.

• Joe will be paying a total of $452 per month on Debt 3 until it is paid in full.

• Joe will continue paying the minimum payment on Debt 4.

STEP 4

Joe has paid off Debt 3. He should now use the monthly amount he was payingon Debts 1, 2 and 3 to begin eliminating Debt 4 of $10,000 (which is now lowerbecause he has continued paying the minimum payment). Here’s how it works:

• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus $110from Debt 2, plus $202 from Debt 3, plus the minimum payment of $280for Debt 4.

• Joe will be paying a total of $732 per month on Debt 4 until it is paid in full.

STEP 5

JOE IS DEBT FREE! He has paid off $17,300 in debt and now has an extra$732 per month including:

• $50 effective budgeting

• $90 Debt 1

• $110 Debt 2

• $202 Debt 3

• $280 Debt 4

So what should Joe do with the extra $732 per month, blow it? No way. Now itis time for Joe to become a millionaire. Visit PeskyDebt dot net to learn how to turn the extra $732 per month into $2,594,263.39 over time.

Get Out of Debt: A Real Solution to Credit Card Debt Problems

Do you cringe every time the phone rings or constantly have to look at the caller id before answering? Do you dread picking up and opening your mail? If these are two things that have become less then a pleasant experience in your life, it is more then likely due to excessive calls from delinquent bill collectors. However, ignoring the persistent telephone calls and collection notices will not make the problem disappear and will only cause and increase your debt load and lower credit score rating. Fortunately there is a solution. It’s not a “get out of debt” free card since there is no such thing, but it does bring debt resolution and peace of mind back into ones life. If you are looking to get out of debt, a debt settlement program provided by a trusted debt settlement company such as American Debt Solution is a great option to consider.
A debt settlement program can help an individual clear up bad debt and regain a sense of control over their finances. When a consumer becomes delinquent on a high interest bearing credit card debt it can quickly evolve into the snowball affect where late fees and other penalties continue to pile up to the point where the consumer can quickly begin to feel overwhelmed. It can often feel like they have reached a point of no return. This is when the support of a good debt settlement program can step in and shine the light to lead the way to debt recovery.
A debt settlement program can work with the creditors and work out a credit card debt settlement that works for you. Through a debt settlement company, you can have your credit card debt settled at a fraction of what is owed, and get out of debt. Often times this can reduce the debt up to half of the balance. The difference between debt settlement and other debt relief options is that debt settlement actually allows you to payoff your unsecured debts at a reduced principal balance. This allows you to get out of debt much faster then a credit counseling program that would only provide reduced interest rates. Typically with a debt settlement program you are able to get out of debt and eliminate your enrolled accounts within 12-36 months. This is considered a viable and great alternative to filing for a Chapter 7 Bankruptcy. A Chapter 7 Bankruptcy will remain on your credit report for usually 10 years!
A good debt settlement program includes the consumer in the settlement process and sets up a debt relief program fit specifically for their needs. They will give you all possible viable options to help you make an informed decision on things such as which debts to include in your debt settlement program and help you factor a realistic amount you can afford to pay a month and time frame.
Many times debt settlement companies will dispute any inaccurate information on your credit report on your behalf. What this means to a consumer who is already battling credit issues is that with resolution of these false or inaccurate claims, your credit report begins to look better over time. A debt settlement company also documents each payoff to ensure it is properly noted on your credit report as well as for future references should an inaccuracy later appear. Many times, after settlement occurs the creditor will attempt to collect the balance of the account that was agreed to be forgiven. They do this in an attempt to require that you provide proof of the payment, and that the payment occurred within the allotted timeframe specified in the settlement letter offering. Working with a debt settlement company ensures that you are protected and that all payments to creditors are documented properly in the case this happens. If you can’t document the settlement properly the creditor will come after you for the outstanding balance on the account. This can be tricky and it can be a good idea to leave debt settlement to the professionals for this reason alone.
Another great benefit of using a debt settlement company is they can work to end those calls that make you cringe and eliminate the endless warnings you receive in your mailbox daily. It’s tough for a debt settlement to stop an original creditor from calling you to attempt to collect the debt that is owed, however, they can send any third party collection company a “cease and desist” letter that prohibits the collection company from contacting you and informs them that you wish to work with the original creditor only. That benefit for many is almost as great as the end result from using a good debt settlement company, being debt free.
When looking to get out of debt, taking action is the first step to becoming proactive and freeing yourself from the burden. Often times pride can keep a person away from making that first step in contacting a great debt settlement company such as American Debt Solution. However, please remember you are not the only one who is having a financial hardship these days and they are there to help, not ever judge. Imagine the pride you will feel when you are free from your financial burdens. Take that first step today for a free debt examination and consultation. Let the professionals do the work and “Begin Living Debt-Free Today!”

In Debt? What are Your Options?

In the UK, there are four main options for dealing with debt:

Debt consolidation – borrowing more money but reducing your monthly payment;

Debt management plan – reducing your monthly payments without borrowing more money;

Individual voluntary arrangement – a formal legal procedure which offers a write-off of debt after a prescribed period of time, generally, five years;

Bankruptcy – a formal legal procedure, which offers a write-off of debt after a prescribed time period of, generally, one year.

It is important to stress that there is no ‘right’ way to deal with a debt problem. Each option has its own set of advantages and disadvantages. And just as important, identifying the best option is as much to do with personal and family implications as with the financial issues.

Debt consolidation: How it works

Debt consolidation involves borrowing more money to repay your existing debts. The selling point is that the payments on the new loan will be less than you currently pay on your existing debts. This allows you to bring your income and expenditure back into balance, so solving your debt problem.

The problem with debt consolidation is that the reduction in monthly payments often comes at a heavy price.

Paying back your debt through a new loan over a longer period may sound good but take careful note of the figures. While the reduced monthly payment will help your budget, the calculation of how much you will have to pay back in total will be an unwelcome shock.

Also unwelcome if you are a homeowner may be the news that your consolidation loan is secured against your house – in effect, you are taking on a new mortgage (which is why these loans are often only advertised to homeowners). Fall behind on the consolidation loan payments and you risk losing your home.

Debt consolidation: things to be wary of

Watch out for debt consolidation companies who heavily sell additional insurances to accompany the loan. You may need protection against unemployment, sickness, or critical illness, but you will almost certainly get it cheaper if you buy it separately rather than bundled in.

If you fully understand the implications of what you are doing and are able to access new borrowing at a low rate of interest, debt consolidation can be an effective approach to a debt problem. But more often than not, it leads to worsening debt and sometimes even potential homelessness. If you are considering debt consolidation you must be aware of the downsides.

Debt consolidation is big business. And that means that some of the companies who offer loans are far more concerned with maximizing their profits than in ensuring that a consolidation loan is the right option for you. Watch out particularly for debt advice or debt management companies who suggest an additional loan without full consideration of other options.

A few years ago, debt consolidation loans were only available to those with flawless credit ratings. If you had current or previous arrears on your debt payments it was unlikely that you could access more borrowing. However, there is now a wide-range of companies that specialise in lending to borrowers who are ‘credit impaired’ or ‘sub-prime’.

Of course, these companies do not do this out of the goodness of their hearts. The number of borrowers with current or past payment problems means that there is a large market for this borrowing with interest rates that are higher (sometimes much higher) than you might expect.

Remember that high interest debt consolidation loans – which are secured on your property – are a win-win for the lender. If you repay, then they benefit from the higher interest charges; if you default, they can repossess your home and get their money back early.

Debt consolidation loans can be a good option if:

You have the self-control to see debt consolidation as a ‘once and for all’ solution.

You use the reduction in outgoings to bring your budget back under control, pay back any future credit card spending in full each month without fail, and start saving for future unexpected or irregular costs;

You are prepared to shop around to identify the best value debt consolidation loan;

Debt consolidation loans can be unhelpful if:

You use some, or all of the debt consolidation loan for reasons other than repaying debt. If you need to borrow £10,000 to repay debt, then don’t be tempted to borrow £12,000 to also pay for an impulse holiday;

You don’t shop around and end up paying a high rate of interest on the debt consolidation loan;

You don’t realize the implications of taking on a secured debt against your home.

Debt consolidation loans can be disastrous if:

You continue to accumulate debt after taking on the consolidation loan.

You cannot repay a secured debt consolidation loan and lose your home.

Advantages of debt consolidation:

You can reduce the total amount you pay each month on debt repayment.

Maintains your credit rating.

Disadvantages of debt consolidation:

Normally greatly increases how long it takes to repay your debts.

Often only advertised to homeowners.

Debt management plan

How it works

Any bank, finance company or credit card lender owed arrears by a consumer has the option to seek a judgment in the county court to reclaim their money. However, where you are not trying to avoid payment but are in genuine financial difficulty, the court is likely to order repayments based on your ability to pay.

The court accepts that you must first pay your ‘priority’ debts – these are debts where non payment would lead to the loss of your home (mortgage or rent payments); loss of an essential utility (gas, electricity, telephone, or water payments); loss of an essential item (cars or other hire purchase items); or could theoretically lead to imprisonment (magistrate court fines or council tax payments).

The court further accepts that you need to make other payments to maintain you and your family – so reasonable amounts for housekeeping, travel, clothing, and other similar items are taken into account.

What remains after this exercise is a guide to the amount of money left to repay your bank, credit card and other ‘non priority’ credit debts. The court will make a repayment order based on the figure but also take account of monies owed on other credit agreements. In addition, the court will freeze the interest charges so that the debt no longer increases.

The negotiation of reduced debt payments simulates the approach taken by the court. It involves producing a detailed income/expenditure schedule, showing how much ‘spare’ money is available after priority payments have been made and proposing a fair distribution of this money. At the same time, a request is also made for further interest charges to be frozen.

Arranging a debt management plan is something that you can do reasonably easily yourself, particularly if you use the self-help booklets available from National Debtline or your local Citizens Advice Bureau. However, it is also (unfortunately) true that the banks and card companies will sometimes respond more positively if a debt advice agency writes on your behalf.

Fee charging debt advice agenciesDebt advice agencies offer a similar debt advice service to the Citizens Advice Bureau but will also administer your reduced payments negotiated under a debt management plan. Your local CAB will often arrange for you to make reduced payments, but you will be responsible for making these payments.

The fee charging companies will also arrange that you pay your money over to them and they will pass it on. However, this additional facility comes at a price – the fee charging companies typically keep up to 15% of your regular payment as their fee and the whole of your first month’s payment may also be swallowed up in administration costs.

Of course, paying somebody else to administer your payments means it takes longer to repay your debts. There is therefore little point in paying for a debt management company unless you think their service is worth it.

Advantages of debt management plans

Allows you to bring income and expenditure back into line without taking on more borrowing;

You can follow this option by yourself or with the help of a no fee charging debt advice agency.

Disadvantages of debt management plans

There is no guarantee that your creditors will accept the reduced payments and/or freeze future interest payments;

The time taken to repay your debt will increase. The time will further increase if you pay your debts through a fee-charging debt management company;

Your credit reference file will show details of the Debt Management Plan. This will affect your ability to get credit in the future.

Debt management plans can be a good option if your financial problems are caused by a temporary reduction in income and the situation will improve in the near future.

Debt management plans can be unhelpful if:

Your ability to pay your debts will not improve within 12 months.

Debt management plans can be disastrous if:

The fees taken by commercial debt management companies and the refusal of banks and credit card companies to freeze interest means that your debt steadily increases.

Individual Voluntary Arrangements

At best, an IVA can be an excellent solution for somebody faced with an overwhelming debt problem. At worst it provides a moneymaking opportunity for the increasing number of companies that advertise IVAs. You must make sure that this is a suitable option for you and that the company operating the IVA fully understand and represent your financial situation.

How It Works

A specialist insolvency adviser, called an Insolvency Practitioner, draws up a proposal for you to repay a specified amount in full repayment of your debt. The payment can be made in a lump sum or over a period of time – often up to five years. The companies owed money agree to write off any debt still outstanding once you have made the agreed payment. The amount paid under the IVA is normally calculated with reference to the amount that would be collected if you were to be made bankrupt.

There is normally no up-front fee to pay in using an Insolvency Practitioner – the costs of the IVA are written into the arrangement. But you should be aware that the costs can be high (we are talking thousands of pounds for even a simple IVA). It is vital that you understand how the costs will affect how much you will pay and the proportion of your payments that will be paid to your Insolvency Practitioner rather than to repay your debt.

Advantages of IVAs:

Allow you to repay your debt at an affordable rate over a reduced period of time. Alternatively, the IVA may be proposed on the basis that your family or friends are prepared to help meet your debts;

Offers the advantages of bankruptcy but without some of the restrictions and disadvantages.

Disadvantages of IVAs:

The costs of setting up an IVA can be surprisingly (some would say outrageously) high;

You may have to pay an upfront fee;

Defaulting on the payment arrangement can lead to bankruptcy;

The regulation of Insolvency Practitioners is fragmented and many consumer groups report situations where Insolvency Practitioners seem more interested in the fees that they earn rather than the success of the IVA;

Your credit reference file will contain details of your payment default.

IVAs can be a good option if:

You face a large debt problem and a debt management plan will involve payments over a greatly extended period;

You are faced with bankruptcy but wish to avoid the associated restrictions and disadvantages;

You identify an Insolvency Practitioner who you can trust to propose a realistic, workable, and, if appropriate, sustainable arrangement which works to the benefit of both you and the companies to whom you owe money.

IVAs can be unhelpful if you don’t shop around to find an Insolvency Practitioner who understands your problems and who you feel you can trust.

IVAs can be disastrous if you agree to make regular payments that you know you won’t be able to sustain.

BankruptcyBankruptcy is a formal legal process that draws a line under your debts. It involves the sale of any items of value that belong to you (but some items, such as your basic household goods will not be taken). It may also require that you make regular payments from your income if you can afford this after you have paid your essential domestic and work costs.

Bankruptcy is not an easy way out of paying your debts but it is an option to consider if you face overwhelming debt pressure and can see no possibility of being able to meet your liabilities. It is generally a more attractive option for those with few or no assets.

How bankruptcy works

Bankruptcy can be started by the person who owes money or by the firms who are waiting for missed payments. Banks and other finance companies will generally only make someone bankrupt if they think if it is financially worthwhile. However, this does not stop them threatening bankruptcy even where they know that they will not follow through. If you are being threatened with bankruptcy, you should get advice urgently (your local Citizens Advice Bureau or other free independent advice agency is a good starting point).

Once bankrupt, you are under the control of the bankruptcy trustee. They will arrange to sell items of value belonging to you (including your house if you are a homeowner and the sale value is more than your mortgage debt) and will want to discuss what regular payments you can make. The trustee has the power to examine the way you conducted your finances prior to bankruptcy, particularly if you gave away or sold assets. You are required to cooperate with the trustee.

A recent change in the law means that those experiencing bankruptcy for the first time can normally expect to be discharged after a maximum period of one year. You are then released from your debts (although you may be required to make regular payments for up to three years). You are expected to learn from your experience. People who go bankrupt again get a much tougher time.

Advantages of bankruptcy:

Limits the period over which you repay your debt;

Provides legal protection in respect of your debts;

Disadvantages of bankruptcy:

You are subject to the control of the court;

You face the loss of assets other than those necessary to satisfy your domestic needs, your tools of the trade, and vehicles you need in the course of your employment (which does not include travel to and from work);

Gas, electricity, and telephone contracts will need to be put in to the name of another adult who lives with you. If there is no other adult, you will have to change to a prepayment system or lose the service;

You cannot hold certain public offices while you have not been discharged from bankruptcy, nor can you continue as a director of a limited company;

Your access to credit will be severely restricted until you are discharged; thereafter you will pay higher rates of interest until you have re-established your credit rating;

Some debts will not be included within the bankruptcy. These include mortgage and other secured debts, magistrate court fines, debts payable after personal injury claims, and debts to the student loans company;

Any determination by the court that you have acted dishonestly or recklessly can lead to restrictions on your discharge from bankruptcy;

You will normally lose the use of your bank account and will be forced to open a ‘basic’ account with no overdraft and limited other facilities;

You should assume that your employer, friends, and neighbors will find out about your bankruptcy. Your bankruptcy will be publicized in the local Press and is available to anyone who wants to request information about you;

You will have to pay £475 to petition for bankruptcy.

Bankruptcy can be a good option if:

You face a substantial debt problem, few assets, and limited ability to pay your debts;

Bankruptcy can be unhelpful if:

You are attracted by the advantages without fully considering the downsides of the bankruptcy procedure and aftermath;

Bankruptcy can be disastrous if:

You have assets which will be seized by the bankruptcy trustee;

Your employment, business or personal relationships will be detrimentally affected.

Bill Bailey is a freelance financial journalist. More financial advice at http://www.schnafflehound.com/finance

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