Most Important IVA Facts- Debt Management

Debt management is no child’s play. One needs to have full knowledge of all the tools in the arsenal before committing to a course of action. To pay off a debt, an IVA is a popular option. It is also a significant financial commitment. Before applying for an IVA, it is very important to know the following facts.

Fact 1

IVA payments last for 5-6 years and they’re based on the debtor’s disposable income

Fact 2

An IVA is only available if you are living in England, Wales.

Fact 3

Your IVA may not be accepted as the creditors you include in your IVA are not obliged to accept your proposal.

Fact 4

The unpaid debt included in the IVA arrangement is only written off after your payments are complete.

Fact 5

Only unsecured debts which are included in an IVA will be discharged after the arrangement is completed.

Fact 6

Secured debt like Mortgage are not included in the IVA arrangement and the payment towards these must be maintained. You must also maintain payments towards your other priority debts such as rent, fines, child support payments and utility bills.

Fact 7

An IVA will negatively affect your credit rating. A record of the Arrangement will remain on your credit file for 6 years from the date the Arrangement starts.

Fact 8

Your details like your name, birth date and address will be included in a public insolvency register which is publicly accessible via the internet. As such anyone could discover that you have started the Arrangement if they search for you on the register. These details will be taken off the register once your IVA is complete.

Fact 9

During your IVA you will be required to live within a restricted living expenses budget.

Fact 10

An IVA is not the only debt solution which might be suitable to resolve your debt problem.

 

Get more info on IVA debts and debt management plans on our blog. It’s never too late to start planning!

Dreading Debt Collector Calls? Here are Few Tips

No matter if you are an introvert or an extrovert, a call from a debt collection agency can put the best of us on our back foot. That is never good news for anyone in financial trouble.

Considering all these factors, we can conclude that a call from a debt collector can be intimidating to say the least. The following tips will help you stay in control and calmly handle a debt collector so you avoid saying something that could create more problems. Keep this list close to your phone or memorized so you’re ready when you get a call from a debt collector:

  • Never engage in casual conversation with a debt collector. You may give the debt collector information that could be used against you.
  • Don’t answer any questions that you don’t want to answer, and never share personal or financial information.
  • Ask the debt collector to send you a written accounting of exactly how much you owe. Ask that the accounting itemize the original amount of the debt plus all interest, fees, and collection costs.
  • If you think that the amount the debt collector says you owe is incorrect, or if you do not agree that you owe any money, dispute it. Put your dispute in writing and send it to the debt collector no later than 30 days after the collector contacts you for the first time.
  • Don’t expect to win this argument on the phone.
  • If you don’t have the money, just say so, and tell the debt collector not to call you again. Your debt won’t go away, but the debt collector should stop bothering you.
  • If you agree that you owe a debt, but you can’t afford to pay it in a lump sum, try negotiating an affordable payment plan. Don’t conclude this process on the phone, get the terms of any agreement you reach in writing before you make your first payment.
  • Don’t ever agree to pay more than you can afford!
  • If a debt collector threatens you, is verbally abusive, uses profane language, or calls you repeatedly during one day or day after day, take notes. The debt collector is violating federal law with these actions. Write down each violation, including the date and time it happens, the name of the debt collector or debt collection agency, and the specific debt you are contacted about. If things get really bad, share your information with a consumer law attorney: You may have grounds for a lawsuit.

While the last suggestion may be a bit outside the realm of possibility, never take anything for granted. Keep a thorough record of everything. For more financially sound advice, visit our blog.

Famous Myths About Credit Card Debt Relief- Debunked!

Credit card debt is no joke. It is the easiest type of debt to rake up, with very few warning signs. One must be extra careful when spending money via credit. It can take ages to pay off.  There are many rampant myths being about credit card debt. Let’s debunk them!

  • “Too good to be true” is not just a linguistic expression, it also applies to the companies that claim to vanish your debt for peanuts. Don’t fall for the siren songs and read the fine print before entering into contracts. There is no completely painless way of debt resettlement.
  • Debt settlement offer is not made to just anyone. It is usually only for customers afflicted with job loss, a divorce, medical problems or some other major life incident. Don’t rely on debt settlement if you don’t fall in these categories.
  • Debt settlement methods do not always come with a price tag. There are many free self-help and expert help methods like snowball/debt dash, asking your lender for relief, rolling debt into a single lower-interest loan — that are available to anyone with the slightest bit of resourcefulness.
  • Debt settlement company is never in control of your money. Not since October 2010, when the FTC blocked debt settlement companies that market their services from collecting advance fees.
  • Debt settlement might harm your credit score just as much as declaring bankruptcy.
  • A debt-settlement program is not cheap. The debt-settlement companies earn their share on a percentage of your total debt or on the amount forgiven. They also charge fees for late payment, added interest and income tax implications. The trick is to find a company that charges according to your budget and won’t trick you!
  • Unsettles debts do not stay on the record forever. Debt Collection has a statute of limitations.
  • Debt settlement or bankruptcy are never the only options. Forbearance and counseling are also two important factors to consider.
  • A few debts do not qualify for settlement such as student loans, taxes owed, child support, alimony.

Any secured debts on a house, a car, a boat, or a collateralize personal loan can’t be easily settled, unless the security is repossessed, or demonstrated to be worthless. Therefore, have care before raking up credit card debt.

Meeting Credit Counselors- All You Need to Prepare!

Debt and financial difficulty can visit anyone if one is not prudent about spending. Debt can be extremely difficult to pay off for a few people especially without an IVA plan at hand. Living on a strict budget is not enough to resolve your financial problems and you might get even deeper in debt. Getting
help is the easiest way around it. If you don’t have any family or friends well-versed in these matters, an IVA credit counselor is your best bet. Meeting with a, IVA credit counselor to negotiate concessions from your creditor may help. However, do your homework before meeting the counselor and get the following information together for a more fruitful discussion:

  • A list of all your debts including the amount of your current monthly payments, the interest rate on each debt, whether a certain debt is secured or unsecured, and whether you have fallen behind on a debt (and by how much).
  • Debt-related paperwork including loan agreements, credit card statements, and any threatening notices you may have received recently from creditors.
  • A realistic budget.
  • A list of your demands each of the creditors including a temporary or permanent reduction in your interest rate, interest-only payments for a while, or a temporary or permanent reduction in the amount of your monthly payments.
  • Any restrictions or time frames for the IVA plan.
  • A list of what you are willing to give up to get what you want. For example:
    • You’ll stop using your credit card until your debt is paid off.
    • You’ll allow the creditor to put a lien on an asset you own.
    • You’ll pay more on your debt than what you offered at the start of your negotiations (if you’re certain you can afford it) or after you’ve made a certain number of reduced payments.

This information will help you and your credit counselor in putting together the best course of action for you. Need more info? Check out our blog for all debt and IVA related 101!

Promise Yourself – Get out of Debt

January might be almost ending, but it’s not too late to make the best of 2020 yet. We know that most New Year’s resolutions involve improving health or getting rid of a bad habit. But why not concentrate on the elephant in the room that hinders all your other resolutions. Get out of debt and improve your financial condition. These debt resolutions on your list will help you with that endeavor.

Reduce your debt

Rather than trying to pay off all your debt (especially if you have a large amount), focus on a few key steps, putting together a get out of debt plan. Have your plan created no later than February and aim to pay off 10-20 percent of your total debt by the end of the year. A good debt management planning company like Solution2Debts can help you out.

Stop Overspending

Recognize your own toxic financial habits. Then, you must consciously decide to keep your spending in check – even if that means leaving your credit card at home. After making good credit decisions for a few weeks, you’ll find that good spending habits start to come naturally.

Improve your credit score.

Your credit score influences a lot of financial future decisions like loans, education, and purchases. It also affects the interest rate you pay. Improving your credit score improves your ability to get good credit card and loan terms.

Don’t max out credit cards.

This is a big financial risk in itself you continuously practice this. You should always keep some available credit not only to protect your credit score, but also to leave room for an emergency.

Pay less interest.

Negotiate for lower interest rates on paying your balance off sooner. Transferring balances to a zero percent interest rate balance transfer credit card can also temporarily reduce your interest payments.

Don’t pay late fees.

Late fees are another unnecessary expense which can be easily circumvented with just a payment schedule and a notification app. There might also be a spike in your interest rate after a 60-day delinquency and a drop in your credit score due to late payments. These negative results can be avoided by paying your credit card bills on time.

Live within your means.

This goal requires pretty big changes. Set a budget and stick to it. Do not keep room for leeway in the budget. Tracking your spending to figure out where your money is going. Don’t dip into savings or use credit cards for everyday necessities.

Top Ways to Get Out of Debt

It’s astounding how easy and often it is to get into meaningless, massive debt. It is even more frustrating how difficult it is to get back out. To pay off a debt, a debt plan or even an IVA are viable techniques. But, there are other ways to not accumulate as much debt. Everyone who pays off their debt does it a different way. Here are some strategies you can combine to get out of debt.

No More Debt Creation

With this strategy, the debt can’t get any worse. Reduce your shopping temptations by cutting up your credit cards or even freezing your credit.

Go Snowballing

This is called the snowball method if you pick the smallest debt and move to bigger debts. You can make more noticeable progress by this method as you make a big payment to just one of your accounts and make the minimum on all your other accounts. Then do the same for another debt, and another until they’re all paid off. The opposite of this is avalanche method, where you take on the biggest debt first.

Ask for a Lower Interest Rate

Often, customers with good payment history can negotiate lower rates. If you use a balance transfer to get a lower rate, try to pay off the balance before the promotional rate expires.

Look for Ways to Pay off More Debt

The more you put toward your debt, the faster you can pay your debt off for good. You may also be able to come up with money for debt by selling assets or generating income from a side hustle.

Cash out a Life Insurance Policy

To settle your debts, you can put you whole or partial life insurance policy towards it. You should be aware that some withdrawals can have tax consequences as well. You can also borrow from your insurance policy is also an option, but may affect the death benefit your beneficiaries will receive.

Settle With Your Creditors

When you settle your debts, you ask the creditor to accept a one-time, lump-sum payment to satisfy the debt. Creditors who agree to a settlement offer also agree to cancel the rest of the debt if you are in default or at risk of defaulting.

Go Through Credit Counseling

Debt management plans through credit counseling agencies typically last four to six years. This is basically the snowball method of paying off your debt, except the credit counseling agency is managing your payment. Solution2Debt is a great example of a credit and IVA debt management planning counseling firm, why not contact the representative now?

Manage Debt of Any Size

Keeping up with a debt management plan is not everyone’s cup of tea. Everyone has to actively manage their debt for positive results. When you have a large amount of debt, strategies like Iva or debt management plan are necessary. But there are some other steps you have to take as well.

Make a List

Make a list of the following:

  • Debts
  • The creditors
  • Total amount of the debt
  • Monthly payments
  • Due date

Update your list every few months as the amount of your debt changes.

Pay Your Bills Timely

Late payments make it harder to pay off your debt. You’ll have to pay a late fee for every payment you miss. If you miss payments, your interest rate and finance charges will increase. Send your payment as soon possible.

Create a Calendar

On your calendar, write each bill’s payment amount next to the due date and fill in the date of each paycheck. This will help you stay on target and manage your cash inflow and outflow better. In addition, set a reminder or an alert several days before your payment is due.

Pay the Minimum Amount

If you can’t afford to pay anything more, at least make the minimum payment. When you miss payments, it gets harder to catch up and eventually your accounts could go into default.

Prioritize the Debts

Pay off the debt with the highest interest rate. Usually, it’s a credit card debt. Use your debt list to prioritize and rank your debts.

Plan an Emergency Fund

Work toward creating a small emergency fund – $1,000 is a good place to start. Once you have that, make it double or however much you can spare. The goal is to build up a reserve of five to six months of living expenses. A little money in the emergency fund every month can go a long way.

Budget the Monthly Expenses

Keeping a budget helps ensure you have enough money to cover your monthly expenses. Plan in advance for not enough money as well as any extra money you have left after expenses are covered. This will help you in personal debt management.

Recognize the Signs That You Need Help

If you find it hard to pay your debt and other bills month after month despite efforts, you may need to get help from a debt relief company or seek help through Debtors Anonymous, a debt-help group. Solution2Debt is here for your debt management needs as well. Contact us now!

All About IVA Debt Management

What is an IVA?

For those in debt, paying off and credit increase are two of the most important priorities. IVA, IVA debt management, or Debt Relief Orders might be words familiar to the finance gurus, but a lay person is usually caught unawares. An individual voluntary agreement (IVA) is an agreement between you and your creditors to help you pay off your debts at an affordable rate.

How does an IVA work?

An IVA is an agreement between you and the people you owe money to. The debtors can be corporations or banks. An IVA is a legally binding agreement. An IVA is usually the only option for debts worth more than 20 grand. There are a certain repayment conditions that come into effect if you have an IVA. For example, if you have an IVA and stick to the agreement you’ll get protection from further legal action by your creditors. This also means that some of your debt will be written off.

How to get an Individual Voluntary Arrangement (IVA)?

Usually, one uses an insolvency practitioner to get an IVA.

The next step is the insolvency practitioner working out the payment details. This means the details of what you can afford to repay and how long the IVA lasts. Information about your financial situation as well as assets, debts, income and creditors will be required by the insolvency practitioner. Be sure to get quotes from a few organizations and pick the one most suitable to you. Only a few organizations like Solution2Debt will customize their plan to suit your needs, so pick wisely.

Creditors and the IVA?

For your IVA to be approved, at least 75% of the value of creditors who vote at the meeting of creditors need to vote in favor of your IVA proposal. However, as long as your IVA proposal contains your best offer, most creditors will look favorably on your proposal. Modifications are changes your creditors can ask to be made to your IVA proposal. You can have ample time to think about these modifications. If you agree to the modifications, your IVA will be approved on the day of the meeting of creditors.

Your responsibilities

Your IVA can be cancelled by the insolvency practitioner if you do not keep up your repayments. The insolvency practitioner can make you bankrupt. You may still be able to keep your business running, if you have one. But it’s better not to risk anything.

Is an IVA right for me?

Our expert debt advice can tell you if an IVA is suitable for you. Contact us here.

Credit Card Balance Not Going Down? Here are 4 Reasons Why!

credit-card-debt

Debt management can be extremely tricky if you don’t have any know-how of the financial details. But there is a philosophy behind it for every lay-person. You pay off a debt, you get better credit score and your debt balance goes down. But often this does not correlate with the reality. You may be faithfully making your monthly payments on your credit cards and other debts each month, but it seems like your balances aren’t budging. This can make you feel like giving up. Let’s understand why your balance isn’t going down and help you change your payments so that your account actually goes down.

High Interest Repayment

Each of monthly debt payments covers certain amounts of interest and principle respectively. If more of interest is getting repaid, balance will only go down a small amount each month. Check the billing statement to see how much interest was repaid. There are two ways to combat this problem. First, you can increase your payment amount so that more money goes toward reducing your balance. Getting a lower interest rate is another option, but not one that’s as easy to execute.

Fee Repayment

Fees affect your debt payoff in a similar way to interest. Eliminate fees by first understanding what fees you’re being charged. Then you can avoid the actions that trigger fees. Fees can be late fees or exceeding credit limit fees. You may be able to get your annual fee waived by request. Transaction fees can be avoided by simply avoiding transactions.

More Debt Creation

To see more progress with your payments, you have to stop creating new debt. That means, no more credit card purchases. Move any recurring subscription payments to your debit card so these payments come from your checking account and don’t offset your credit card payments.

Minimum Repayments

To make more significant progress on your debt, you need to pay more than the minimum. Pick one debt to pay off quickly and pay a lump sum towards it while paying just the minimum on all your other debts. Then, apply the same payment strategy to the next debt and the next until they’re all repaid.

These are all reasons and strategies that will help you understand your debt financials and increase your credit score. Head on to Solution2Debt for more sound financial advice because we truly care!

Pros and Cons of Debt Management Plans

pros-cons-debt-management-plan

So, you’ve accrued some debt. That’s okay. It happens to the best of us. What will make you shine is how you react to the situation and how you remedy it. The first and best step of action is clarifying the scenario and listing down every piece of information you know. Then, you can move on to the debt management plan. Different companies outline different plans with varying rates and duration, but the gist remains same. The main goal is to reduce debt quickly and build up credit score.

Meeting with a credit counselor will help you budget your income and expenses as well as get advice on your debt. Be honest with the counselor about your amount of debt, creditors, assets, income, and monthly expenditures.  If a debt management plan makes sense, the credit counselor will negotiate with your creditors. While the counselor usually doesn’t try to reduce what you owe, he or she may be able to lower your interest rates, waive fees, or reduce your monthly payments by extending how long you’ll be making them. Debt management plans typically require you to make payments for three to five years. You’ll likely have to agree to stop using or close your credit cards, and you won’t be able to get new credit while your plan is in place.

Consider these pointers for deciding if the debt management plan is for you or not.

Pros

  • You’ll be less stressed. Besides potentially saving you money on interest and making your payments more affordable, there’s just one payment to remember each month. You’ll get relief from collection calls and letters and know there’s an end-point to your financial instability.
  • There will be an evolution of built-in discipline. Since you can’t use credit, it should be easier to stay on track.
  • The debt management plan decreases the vulnerability to your credit score. As long as you make your payments on the debt management plan on time, your credit score may not even show the slightest impact.
  • Making timely payments will definitely counteract the damage from your debt loss and closing accounts to satisfy the debt management plan.

Cons

  • Financial illiteracy can cost you. Thus, you need to be extra-vigilant while signing any documents. The debt management is a new, informed phase of your life. So, there is no time to relax by giving the reins to someone else. Since there is an intermediary involved, some things can get lost in translation. Verify every concessions and payment. And make sure your credit counselor is making all the promised payments on time.
  • Unless you can get a really good counselor like Solution2Debt, there is no guarantee of lower interest rates. Your credit counselor may not get your interest rate reduced and thus, you may have to pay more than your fair share.

There might be circumstances where you have to miss payments. These missed payments are damaging not only to your credit score but also to your personal sanity. A missed payment could derail the entire plan. Creditors are also less willing to discuss relations with clients guilty of missed payments.