Financial Resource

There are many reasons for people getting into serious debt, including illness, job loss and divorce and it is a predicament that an increasing number of people have found themselves in lately.  For the vast majority of those who get into debt, they understandably do not know how to begin to change the situation, which is when they look for help and advice.

Debt free services appear to be offered by a great many organisations.  If you search for help on the internet, the advice offered by one website often seems to contradict that offered by another.  This can be extremely confusing unless you have a good general understanding of how the debt industry works.  By reading this article you should gain an understanding of what route is likely to be best for you in terms of finding the most appropriate debt free service for your situation.

If you search the internet you may well come across many offers to lend you money to pay off your debts.  It would take too long to go into all the ins and outs of consolidation loans here, but borrowing money is seldom the best thing to do when you are in debt, so the safest advice is to ignore this option.

If the majority of your debts are of the unsecured type, then there are some well proven options that are probably suitable for your situation.  Unsecured debts include money owed on credit cards, personal loans, money borrowed from banks and other general bills.  The particular route out of debt that you eventually take will depend on the severity of your situation.

Debt management plans are very common and are used by thousands of people each year to deal with large amounts of unsecured debt.  This system is also referred to as debt consolidation because it involves consolidating all your debts into one plan with only one payment.

Under a payment plan of this sort, a debt management company sets up new arrangements with all your creditors, so that you have less money to find each month.  You then make a fixed payment to the debt company every month until the date at which you become debt free again.  As well as having the effect of stopping the daily calls by creditors, a plan of this sort is clearly very simple to organise and keep track of.

To set up a debt management plan you must have an income and be able to afford a reasonable amount for the monthly payment.  If your situation is such that you cannot stretch to that, then debt settlement could be the solution for you.  This is a radical technique that ends up with a lot of your debts actually being written off.  It is only by seriously reducing the core amount that you owe that a really serious debt situation can be turned around like this.

For UK residents, there is a debt free service called an IVA, which is in effect the UK answer to debt settlement.  Debt settlement as such is not offered in the UK because of the existence of the IVA, which is a formal scheme that also gets a large part of your debt written off.

In the US, debt settlement is now very widely used to solve serious debt problems.  Experienced negotiators deal with your creditors over a period that can be from a few weeks to three years, to arrive at the best deal possible for you.  Throughout the period of the settlement program your creditors receive no payment, though you will put money away every month.  This new fund builds up and is used to make payments whenever a settlement is reached.

Now that you understand the main options available, you probably already have an idea which route is likely to be best for you.  The final thing you need to know, if you have not already picked this up, is that all debt companies cannot be taken at face value, as there are unfortunately some that will simply advise you to sign up for a plan designed to address their need for money rather than your need to become debt free.

This does not need to be a great concern as it is easy to avoid such companies by using recommended companies and applying to several different ones so that you are able to then judge which is most likely to be the right one for you.

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