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With stricter lending conditions and banks reluctant to let us borrow money, many people are in desperate need of some debt advice that can alleviate their debt management issues.
Professional solutions
Professional debt solutions such as Individual Voluntary Arrangements
(IVAs), Debt Management Plans (DMPs) and Trust Deeds do not involve
borrowing more money and do not require you to pass a credit check.
This means that you no longer have to go further into the red each
month and can get out of debt
for good. All of these allow people who are struggling to maintain the
payments on their unsecured balances (personal loans, catalogues, store
cards and credit card debts etc) to regain control of their finances
whilst still repaying all, or a proportion, of the amount that they
owe.
Informal professional solutions (like a Debt Management Plan DMP)
work by gathering all unsecured balances into one single monthly
payment which is paid to the debt help provider thereby simplifying finances, as only one payment needs to be made each month.
The provider then distributes this payment between creditors on a pro
rata basis, so the more that a creditor is owed the more of the monthly
payment they will receive. Reputable providers will also negotiate to try and have
interest and charges reduced or frozen, which reduces the total amount
owed.
A DMP is classed as an informal
arrangement as there are no contracts involved so you have the ability
to use this solution as-and-when-required. There is also flexibility
with payments on a DMP, as the amount you pay is dependent on your
affordability you only pay how much you can realistically afford once
priority payments like your mortgage/rent, council tax, food, travel
etc have been accounted for.
More formal debt solutions, such as an IVA
or Trust Deed, also enable multiple unsecured balances to be repaid but
involve a contract. The agreement protects you from creditors changing
their payment demands or from the terms of the agreement being changed.
The insolvency practitioner can provide support and IVA advice
or guidance throughout the term of your IVA or Trust Deed. IVAs and
Trust Deeds are repaid over fixed periods of time. With an IVA this is
generally within a five year period, whereas with a Trust Deed it is
typically over three years.
One of the most appealing benefits of a more formal solution is that
they allow a proportion of the debt to be written off after the term
has been satisfied this means that any remaining unsecured debt is
written off and you can walk away debt free.
Professional debt solutions like those listed above can be used by
overstretched individuals to prevent bankruptcy and are generally
offered following some impartial advice from a reputable debt help
organisation.

Source: Daily Express (Your Money)