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Personal finance guide – is personal debt out of control

Personal finance guide – It is understandable why money troubles have worsened. Consumers have become increasingly reliant on credit cards to cover the rising cost of living. Increased fuel costs, higher utility bills and more expensive foods have led to financial problems. We will discuss more in this article under personal finance guide.

Personal finance guide

Why Consumers Struggle with Personal Debt and Money Issues

No budgeting or no personal finance guide. A breakdown of income and expenditure helps those in money trouble calculate how much is left for social spending.
Not prepared to save and over-using credit cards.
Waiting too long to get financial assistance with money issues.

Where to Get Free Personal Finance Guide

It is possible to get personal finance guide from a number of sources in both the public and private sector. Private companies offer advice because they are trying to sell a solution. There are also a number of charities providing free debt advice for those in money trouble.

Debt Solutions to Money issues

Debt Management Plans. A single, affordable monthly payment is made to an intermediary and this is sent to creditors on a pro rata basis. A Debt Management Plan can result in interest and charges being frozen.
Individual Voluntary Arrangements. An IVA is a legally binding arrangement where any outstanding money is written-off once 60 monthly payments have been made.
Consolidation Loans. This provides an opportunity to consolidate all sources of high APR finance under one roof and reduce monthly payments.
Personal bankruptcy. Allows a debtor to fully write-off almost all liabilities. It isn’t a suitable solution for those that own their own property. The announcement is made public and it does mean that certain forms of employment are no longer possible. Most bankrupts are discharged after just 12 months, although some will face a Bankruptcy Restriction Order (BRO) for certain bankruptcy offences.
Full and final settlements. This involves making a lump sum payment to a creditor in return for the remainder being written-off. Make sure that this is agreed to in writing before making any payment.

Financial problems can be overcome through a combination of careful budgeting, financial assistance, proper personal finance guide and choosing the right debt solution. Most people face money issues at some point in their life, but it is possible to become debt free.

Personal finance guide - is personal debt out of control

How to Start a Debt Management Plan with Personal Financial Goals

Owing money to a number of companies creates a major headache for anyone. Debtors are not just harassed by one creditor for payment, they all keep calling. A Debt Management Plan or personal financial goals eradicates this problem as it is all taken care of by your appointed debt advisor.

What is a Debt Management Plan?

A Debt Management Plan is an informal arrangement whereby one pays an agreed monthly sum to a debt management company. After taking their 15% fee, the remainder is divided amongst creditors on a pro rata basis. The debt management fee will vary depending upon which company is used.

Minimum Criteria for a Debt Management Plan or Personal Financial Goals

A minimum of 3 creditors.
After taking into account all expenses, a debtor must be in a position to be able to contribute a minimum of £100 towards the arrangement.

Gather Income & Expenditure Figures

In order to assist the debt advisor it is essential that a breakdown of income and expenditure figures are put together.

Name and address of the creditor
Type of agreement – unsecured loan, credit card, store card or overdraft
Amount of debt outstanding
How much can be afforded by the debtor each month

Personal Financial Goals

If struggling to find enough money to proceed with a Debt Management Plan it can be useful to identify ways to save money. Making a few lifestyle alterations will help with this, especially as the current lifestyle is the source of the debt problems. If reducing outgoings isn’t an option, try to earn extra income by doing some additional work.

Call the Debt Advisory Company

All the necessary information has been gathered and can be presented to the new debt advisor. They will be able to advise whether proceeding with a Debt Management Plan is feasible. Should this debt solution be right for you, they will send out a full information pack.

Completing the Information Pack

It is now necessary to provide more detailed information to the debt advisor.

Full name and address details, including a signed declaration that one wishes to proceed.
A breakdown of income and expenditures.
More complete information on creditors, including the names and addresses, original loan amount, how much has been paid, how much is outstanding and current monthly amount.

Sending Offer Letters to Creditors

Once the above information has been provided, the debt advisor will put together a full breakdown of everything along with an offer letter for each creditor. Creditors will need to sign and agree to the plan before it can be proceeded with.

Getting Creditor Approval

Provided that creditors are willing to proceed all that remains to be done is to set up the standing order. This should have been provided with the information pack so that the plan can be proceeded with as quickly as possible.

The Debt Management Plan or personal financial goals is now complete and the stress of dealing directly with creditors has now ended. All of the payments and associated administration are taken care of by the appointed debt advisor. If in a position to increase monthly payments to reduce debt faster, this can be arranged at any time.

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