People incur debts due to various financial deficits. This is not an embarrassing situation. To have anything in excess is a part of human nature. However, there is a possible risk of becoming a defaulter. To avoid such circumstances, you may take loans to repay the debt. You can repay the debts with the help of debt consolidation loans. This type of loan helps to merge all your existing debts into one single loan.

Debt consolidation loan has low rate of interest in comparison to other loans that debtors take to repay their debts. However, debtors need to take care, because by consolidating the loans, the duration of debts will increase along with the repayment amount. On the other hand, with this process, you can control your monthly cash flow.

Types of Debt Consolidation Loans:

You will be able to combine your debts with the help of taking unsecured or secured debt consolidation loans. Unsecured debt does not require you to provide any security. You will be able to take unsecured debt consolidation loan quickly in comparison to secured debt consolidation loan. There are various websites offering unsecured loans based on individual circumstances.

Debt consolidation loans in UK are targeted towards people with credit issues, which enable them to combine different loans into a single loan. Debt consolidation loan in UK has very less advantages in comparison to conventional loans. People with poor credit rating will find it easy to get this loan. They are sometimes even offered good rates in comparison to other loans, which normal people can also apply for.

Procedure Of Debt Consolidation In UK:

In UK, you will have to apply for a debt consolidation loan through individual lender or a bank. There are certain organisations that specialize in offering such kinds of loans, whereas others specialise in conventional loans such as auto loans or home loans. Most of the times to apply for consolidation loans, you will have to show income statements, information on various debts, collateral or security and a stable residence proof.

After the approval of the loan, you may consolidate it in many ways, as per your convenience. In certain cases, the lender takes care of the payment process or you may receive a credit or check and will be responsible for debt repayments on your own.

Either way, you will use the money borrowed to clear debts. You will not have to pay the outstanding debts. However, you will have to make a payment of a particular sum needed for the repayment of loans.

Generally, debt consolidation loans are given in the form of secured loans in the United Kingdom. It means, to get a debt consolidation loan in UK, you will have to provide some kind of security or collateral such as valuables or precious items. The purpose of taking the collateral is ensuring repayment of the loans. If you are not able to repay the loan, then the lender has full authority to sell the collateral and recover the money you owe.

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Tags: Accounts, Bank, Banking, Credit, Current Account, IVA, Money Management, Savings

IVA or Individual Voluntary Arrangement is a formal (legal) debt solution or lawful binding arrangements that permit you to pay back all the debts in reasonable monthly payments over a period of five years. It helps you to remain updated with priority payments such as mortgage, living costs without fearing for the legal actions from your creditors.

After deciding to go for IVA, you will have to submit an application letter to licensed IP (Insolvency Practitioner) firm. Next, you have to disclose your monetary situation and attach copies of pay slips, property valuation, creditors’ statements and latest bank statements. Later the company with which you are dealing will contact you to discuss about the situation.

Procedure In Detail:

If the IP firm accepts your IVA application, you will be included in an IVA programme, wherein the company will assign an IP team for you. That IP team then represents you and contacts your creditors to notify them that they are representing you.

Later, the IVA proposal is drafted, which includes every details such as the amount of money that you need to pay. If you have kept your assets as mortgage with creditors, the IP works on to acquire a stay order that will abstain the creditors from auctioning your assets. The IP also prepares Nominees report, which presents a practical and professional opinion whether the prepared IVA presents an authentic offer or not.

After this process, IP team fixes a meeting with your creditors. This meeting is held to cast vote on decision whether to move ahead with the IVA or not. If creditors cannot make it to the meeting, they can send their opinions through fax or mail. If more than 75% of your creditors vote in favour of the IVA, then it implies that your IVA is going to be accepted.

As soon as your IVA is accepted, you can hold all your monthly payments. After this, the creditors cannot contact you over phone or in person. Also, all the interest as well as charges on your debt gets frozen and you can pay the debts in an easy manner as charted out in the IVA, for a period of five years.

However, if you fail to make payments on time it can lead to the termination of IVA, and you may become bankrupt. Moreover, your home is also at risk, if the IVA fails.

Important Notes:

People who wish to apply and benefit from IVA need to possess the following:

1. They need to be bankrupt
2. They need to have insignificant debt
3. They ought to have enough money to make payments,
4. They need to afford making a payment of £ 200 each month for a period of five years
5. Finally, they have to be employed

IVA is different from bankruptcy. You do not have to advertise in newspaper about IVA. However, IVA is a good mode available to you, as you are not only able to pay your debt properly, but it also gives you respite from those constantly harrowing calls of creditors.

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Tags: Accounts, Bank, Banking, Credit, Current Account, IVA, Money Management, Savings