Alternative Debt Solutions
Bank Loan Debt
Payday Loan Debt
Credit Card Debt
Store Card Debt
Mobile Phone Debt
Council Tax Debt
Debt solutions are categorised into formal and informal with the main difference being that informal repayment plans are not legally binding.
You can also usually alter the terms of the arrangement periodically to suit changing circumstances. This makes these informal solutions a lot more flexible than many alternatives.
The downside of these though is that they do not offer the same protection as formal agreements. This means, potentially, a creditor could still pursue legal action against you through the courts or with bailiffs. Lenders are also under no obligation to freeze interest rates, service charges, or cut the amount you owe.
Understanding the terms of an informal debt solution is key before entering into any repayment plan. You should select an option which is most favourable to you so your financial situation doesn’t deteriorate even further.
Generally though, you can either manage one of these solutions yourself or go through a third-party. We typically recommend the latter option though as managing these plans can become very time-consuming.
With informal repayment solutions, you’ll usually contact your lenders, explain your situation, and ask them to agree lower repayments to eventually resolve the debt. As mentioned though, creditors are under no obligation to accept.
They are a number of ways to repay your debt informally. One of them is called token payments. As the name suggests, you pay a lender a pre-agreed amount of money on a weekly basis. If there are multiple creditors, you get to pay tokens proportional to the amount of debt owed to each one.
For example, the creditor which owes the most debt ends up getting a larger token.
A Debt Management Plan is another informal debt solution. This involves paying a pre-determined amount to the lender monthly. Just like the token payments, you pay out more to the creditor you owe the most. This goes on until the full amount is paid inclusive of interest.
For you to be eligible for a debt management plan, there are certain criteria which should be followed:
You should also be aware that a debt management plan may have several detrimental effects. For example, details of the plan will be added to your credit file. This can make it more difficult to acquire credit in the future.
For the duration of this informal solution, your assets are also not protected from creditors.
Although you can ask creditors to write off debt, they are under no obligation to do so. Furthermore, the chances of them doing this through an informal solution are slim. For debt write-off you may wish to consider a formal solution such as an IVA.
To find out if resolving your debts through an informal solution would be the best option for you, get in touch today. Although we can’t help in setting up an informal debt solution, just complete the quick online application form below and we’ll be happy to assess your circumstances.
We should be able to find an option which could resolve your debts.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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