Many Thanks to Savvy Barefoot Investor for publishing my guest post on the 3 Debt Solutions to Avoid Bankruptcy. In it, I outline three key ways that you could avoid bankruptcy which include:
1: Debt Management Plans: A debt management plan means that you are repaying a lower amount to your debt. Although you can avoid bankruptcy with this type of plan, it is worth noting that it will take you longer to become debt free as you are paying a smaller amount on a monthly basis.
2: Debt Consolidation Loans: Consolidating your debt with a debt consolidation loan can allow you to reduce your monthly unsecured debt repayments into one single lower monthly payment. However, always ensure that you can afford this new loan payment and that you do not continue to spend on the credit cards or store cards that you consolidated.
3: Take it back to basics… Professional debt advice is available and there if you need expert help. But one of the simplest ways to get your finances in check and avoid bankruptcy is to create a budget. Understanding your personal finances is the key to being in control of your own debt.
The good news is that getting the right kind of debt advice can really help you with your finances. The debt solutions on offer can help you tackle your finances head on, all whilst avoiding bankruptcy. Following on from the original article, there are another couple of debt solutions which could help you to avoid bankruptcy:
4: IVAs: IVAs were originally designed as a debt solution which allows you to avoid bankruptcy. It is a legally binding agreement between you and your unsecured creditors where you agree to repay back a certain percentage of your debt over an average period of 60 months. Once you have completed the IVA, any unpaid debt ill be written off as long as you have complied with the terms of the IVA.
An IVA is a debt solution which requires a financial commitment. You must agree to repay a set amount over the full term and, in return, there is a certain amount of debt relief. You shouldn’t worry about having to sell your home although you may have to release some of the equity.
5: Trust Deeds: IVA is only available for residents of England, Wales or Northern Ireland. If you are a Scottish resident and want to take advantage of similar benefits of an IVA, then a Trust Deed could be for you. Like an IVA, a Trust Deed allows a certain amount of debt write off on the basis that you stick to the terms of a Trust Deed and make monthly payments for a typical term of 36 months.