In response to the numerous enquiries we have received from individuals who are struggling with debt, and need some good advice. We have decided to list (what we feel) are the best ways to combat debt, depending on your situation. For your convenience the list is in a hierarchical order (less serious first).

• Review your finances

One of the simplest and most effective ways to manage debt is by reviewing your current financial situation with the intention of pinpointing where it is, that you’re going wrong. Our advice would be to keep a log of your spending habits and to make a note of each purchase and withdrawal that you make.

A lot of the time people are unaware as to how much money they actually spend until they conduct an exercise of this type. It is then important to analyse your log and make changes to your spending routine wherever possible, in order to save. It is almost guaranteed that you will find someway of saving, usually through the elimination of unnecessary purchases.

• An informal Debt Management plan

Depending on your level of debt, debt management can be a very effective remedy. There are two ways to go about conducting a plan, you can use a professional company to put the plan together on your behalf or you can do it yourself. In either event, your creditors will be contacted and a proposed payment structure will be presented to them.

If they agree to the plan, you will only need to pay back what you can realistically afford. However, a DM plan is not legally binding and your creditors can reject your proposal at any time should they decide. More than often, your creditors will allow the plan to run for a pre-determined amount of time and review the process at a later date.

• The Individual Voluntary Arrangement or IVA

If your financial conditions are more serious and the terms of a debt management plan are unrealistic or ineffective, you could consider an IVA. IVA’s differ from debt management in a number of ways, notably they are legally binding for both yourself and your creditors (if its agreed).

The IVA is similar to debt management in that you make a proposal to your creditors, however, unlike debt management your creditors will agree to write off a percentage of each pound of debt owed. You are also required to cohere to the terms of the IVA for a fixed amount of time (usually 5 years); failure to cohere to the terms can result in unwelcome consequences, namely Bankruptcy.

• Personal Bankruptcy

The very mention of the word strikes fear into the heart of those struggling with debt, however on some occasions Bankruptcy can actually be the best option (circumstances permitting of course).

It is important to realise that their are many drawbacks associated to Bankruptcy, which include the possibility of loosing your home, social stigma (publicity) and the inability to attain further credit. Generally speaking, Bankruptcy is only considered as a last alternative, in severe situations.

• Summary

Regardless as to how you view you debts, it is always practical to seek professional advice. You should never suffer in silence, (which is very common among people in debt), as there is always help available. If you are unsure as to how to combat debt, you can contact any of the available debt charities, that will be more than happy to offer advice and support, or of course, you can contact us.