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If you’re in debt and don’t know how to get out, speaking to a professional debt adviser can help: there are many ways to deal with debt, and the right debt advice can help you decide on the best plan of action for your circumstances.

Debt advice isn’t a substitute for talking to your lenders. If you’re struggling to stay on top of your repayments, you should contact your lenders, who may agree to an alternative repayment plan or a short repayment holiday, allowing you to get your finances back in order.

But talking to a debt adviser first can help you understand your options before you contact them, so you know exactly what you should be trying to achieve when you do.

How a professional debt adviser can help

Discuss your situation
A good debt adviser can discuss your situation in confidence. It’s their job to help you decide on the best way to deal with your debts.

It may well be that simple debt advice is all it takes. If one of your main problems is that you find it difficult to work out a repayment plan, you’re not alone. Your debt adviser will have plenty of experience in helping people just like you.

Help with budgeting
If you find dealing with your finances too difficult, and feel this is causing you to fall behind on your commitments, then a debt adviser can help you to draw up a budget. A budget plots out all your spending on a month-to-month basis, and can ensure that you put enough aside for all of your essential expenses, leaving you with a set amount that you know is safe to spend (or save).

If it turns out that you simply don’t earn enough income to cover your essential costs, then it may be time to find a specific debt solution that can improve your situation.

Find the right debt solution
If your debt adviser thinks your situation requires it, they will help you decide on the most appropriate debt solution for your situation. There are a range of debt solutions on offer that are designed to help with all kinds of debt problems, like debt management, debt consolidation & IVAs.

Each debt solution has its advantages for people in different situations - but likewise, each has its disadvantages. Your debt adviser can ensure that you fully understand what’s on offer before you make a final decision on a debt solution.

Trying to repay problem debts can be a daunting task. More people than you may think face the dilemma of how they can afford all of their commitments each month - and many people are left wondering how they are ever going to get out of the situation.

That’s why debt help is so important. An expert debt adviser can offer guidance on how to improve your situation - whether it’s simple advice, or a more specific debt solution.

How a debt adviser can help
When you first call a debt adviser, they will discuss your situation in confidence in order to establish the best course of action for your circumstances. It may be that a few words of advice are enough to help; it may be that you simply need a bit of help with budgeting and getting your finances in order; or, if your circumstances are a little more serious, you may benefit from a more specific debt solution.

There are a number of debt solutions available to suit a range of financial circumstances - and choosing the right one could make it much easier for you to repay your debts.

Debt consolidation loan
A debt consolidation loan allows you to ‘consolidate’ several debts into one with a new loan, which can make managing your finances more simple.

You will repay your debt consolidation loan to your new lender in single monthly instalments. It’s often possible to reduce your monthly outgoings by spreading repayments out over a longer period than your original debts - but be aware that this could also mean paying interest for longer, and therefore paying more than if you had chosen a shorter repayment period.

However, you could still save money on interest overall if the APR on your original debt is higher than that on your debt consolidation loan. And even if you don’t save money, some people are happy to pay a little more overall if it means lower and more manageable monthly payments.

Before you take out a debt consolidation loan, you should be sure that you will be able to continue making the payments for the duration of the agreement. It is still a form of debt, and failing to make payments carries the same consequences as with any other debts. You should also be sure you will not be tempted to spend the money you have repaid towards your debts (e.g. on a credit card balance), since this will result in even more debt to pay back.

Debt management plan
A debt management plan is an agreement between you and your creditors for lower monthly payments, based on how much you can afford each month.

While you can arrange a debt management plan by yourself, this requires a lot of negotiation with your creditors. For this reason, some people prefer the convenience of a professional debt management company, who can negotiate with creditors on your behalf.

As well as negotiating for lower monthly payments, it may also be possible to get a freeze on interest and other charges, which can stop your debt from growing.

IVA (Individual Voluntary Arrangement)
An IVA is an alternative to bankruptcy in which you agree to repay a set percentage of your debts to your lenders, based on how much you can afford on a monthly basis, and the remaining debt is written off. It is typically only used for more serious levels of debt.

You will work with an Insolvency Practitioner to put together an IVA proposal, which will then be sent to your creditors. This must be approved by creditors accounting for 75% of your total debt for the IVA to go ahead.

If the proposal is approved, you will begin making regular monthly payments to your Insolvency Practitioner, who will divide the money amongst your creditors. On successful completion of the IVA (usually after five years), your remaining debt will be written off.

If you do decide on an IVA, be aware that if you are a homeowner you may have to release some of the equity in your home in the 54th month (half way through the final year), and you may also be required to contribute the majority of any rise in income while the IVA is in place.

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