The following is a contributed post.
The specter of debt looms large in thousands of households across the UK, and it can ruin lives if decisive action is not taken. However, debt comes with a great deal of embarrassment and shame – particularly when people simply can't afford to repay it. This problem has become increasingly apparent in recent years due to the economic downturn.
Leading financial institutions and high street banks have stopped lending to millions of hard-working people. So, when unexpected expenses arise, people fell like they have no option other than to approach payday loan companies for short-term loans. Unfortunately, astronomical interest rates and the facility for deferment mean these loans can quickly spiral out of control. Desperate, and with nowhere else to turn, many people approach other short-term loan providers for help, and the cycle of debt begins.
Thankfully, a reputable payday loan debt management service can act on your behalf in an attempt to bring this kind of debt under control. A debt help specialist will work towards devising a debt management plan that suits the debtor's personal circumstances.
What is a Debt Management Plan?
A debt management plan is usually an informal agreement brokered on behalf of the debtor. A debt specialist will liaise with creditors and negotiate a new schedule of repayments based on the client's ability to pay. As most lenders will want to see at least a percentage of their money returned, this course of action is often agreed without any need for legal proceedings. However, where debts are simply too large, or the debtor has recently suffered a dramatic loss of income, a debt specialist might suggest other solutions.
What Happens When a Debt Management Plan Can't Be Agreed?
Where an informal agreement is impossible, there are a number of legal provisions that can be taken advantage of, and a debt help specialist will be able to suggest which is the best course of action for the circumstances. An Individual Voluntary Agreement will allow people to pay what they can afford over a period of two to three years, and a Debt Relief Order could write off the majority of the debt immediately. Of course, the last resort is bankruptcy, but debt advisors will only suggest this path when all other efforts at repaying debt have been exhausted.
What are the Benefits of Seeking Payday Loan Debt Advice?
1. One of the main issues reported by people in debt is that demands, letters and repayment requests come from all directions. Debt relief specialists will often be able to pay debts on behalf of their clients, and that means consumers pay only one payment to one organization.
2. Where debt specialists agree repayment plans on your behalf, letters and phone calls demanding payment should stop. In situations where they continue, reputable debt relief agencies will address them on behalf of bewildered debtors.
3. A debt management company will become a permanent intermediary between the debtor and the creditor, and that means ordinary people living with the burden of debt will no longer have to communicate directly with the organisations they owe money to.
4. Payday loan debt in particular can grow alarmingly quickly because of huge interest rates and the phenomenon of compound interest. However, debt specialists can persuade lenders to freeze interest and put a cap on rising levels of debt.
5. Debt specialists negotiate with creditors on the principle of the debtor's ability to make payments, and that can create a manageable and sustainable way of working towards a brighter future – completely free from debt!
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