Finding yourself in a position of debt isn’t something you plan for. There are so many different reasons you can end up in debt. From poor financial management to unexpected expenses cropping up, things happen beyond our control that can leave us worse off financially. You may find yourself in an accident and need to pay for medical bills. Your home or car could get damaged in a storm, setting you back. Whatever your circumstances, it’s important not to let that debt spiral out of control. This can make getting out of debt even harder to achieve. So what is debt relief and is it a good idea?
What Is Debt Relief?
When you find yourself in debt, one of the first things you might find yourself asking is: what is debt relief? It is simply the reorganisation of your debt to offer any kind of financial respite. Measures can be introduced that aim to reduce or refinance your debt to make it easier for you to pay back the money. The goal is to help take the financial pressure off you and the form it takes will be different for everyone, depending on your individual circumstances.
Types Of Debt Relief
When looking at what is debt relief, we have to explore the different types of relief that are available to help you out. Choosing the right type of debt relief for your situation can make all the difference when it comes to getting the financial help you need.
Debt Consolidation
This is one form of debt relief that can help you manage your debts better. It means taking out a whole new loan, to pay off all your other loans. This has the benefit of combining all your debts into one single debt, with one single monthly repayment for you to manage. Debt consolidation loans also usually come with a lower interest rate so you will actually save money over the course of the loan as well.
Sometimes, if you have taken out multiple loans they can be hard to keep on track of. Each one comes with a different interest rate and different repayment terms that can lead you to miss repayments and getting further into debt. A debt consolidation loan is a great form of debt relief that can help you manage your finances better.
Debt Agreement
This isn’t something that should be entered into lightly, however, it can provide the debt relief you need. The plan itself is a formal agreement between you and your creditor to help reduce your outstanding debts, so you can take back control of your finances. A debt agreement, also known as a Part IX Debt Agreement, is individually tailored to your circumstances, based on what you can afford to pay back each month.
It’s important to note that a debt agreement is an alternative to bankruptcy, so before choosing a company to help with your debt agreement, you need to do your research and check they have a good reputation. This ensures you are getting the best advice for your circumstances and don’t end up in even more debt in the process. You need to understand what you’re agreeing to and the impact this can have on your situation.
An amazing alternative to debt agreements is Informal Debt Arrangements. These are essentially a form of debt agreement without the strict rules, without the negative implications on your credit rating and without the need to declare your assets. Entering into an informal debt arrangement can enable you to pause, slow down, reduce or even wipe your debt completely. Find out more about this form of debt solution here.
Bankruptcy
This is a place no one wants to end up but can be the only solution depending on how far in debt you find yourself. It does come with consequences that are important to weigh up. Here are some of the different things it can affect:
- Your income, employment or business
- Your ability to travel overseas
- Your name will permanently be on the National Personal Insolvency Index (NPII)
- Your ability to take out future credit
Bankruptcy lasts for three years and one day from the date your file the form, but the consequences can be longer-lasting than this. Understanding what is debt relief is the first step in finding the right kind of relief for your situation. In an ideal situation, you want to find the best way to manage your current debts to get them paid off in due course. This option will be the least damaging to your credit score, yet has the ability to see you back on track financially. Debt consolidation is the first type of debt relief you should consider when you are looking for help.
What Is Debt Relief And Where To Get Help?
Now we have answered what is debt relief, you might be looking at finding the right help. Debt relief can come in many different forms and it is about finding the right solution for you and your needs. The expert team at Debt Consolidation will work with you to deal with all your consolidation needs. We tailor our services to suit your situation and always aim to offer the right solution to help you get back in control of your debts. You can enquire now for an obligation-free consultation.