Debt Free – Get Out of Debt and Stay There

Now that the good times are over and you are stuck with a pile of bills you are struggling to pay it can look pretty discouraging. However, with the right help you can be debt free within 5 years and as long as you do not go out and add new debt you can stay debt free. The vast numbers of people that have found themselves in the same shape that you are in has prompted a major growth in the number of options available to those in debt that really want to work their way out of debt rather than file a bankruptcy.

Where to start

Depending on how much you owe, you may be able to take advantage of one of the free debt managment services or the ones that are almost free. If you are truly interested in becoming debt free then you should seek debt management help from the Citizens Advice Bureau. Originally established to provide a wealth of financial information, in recent years they have spent more time helping people get out of debt than anything else.

What they can do for you is to contact all of your creditors and talk to them about reducing your debt. Usually they can get your debts reduced by as much as 50% and occasionally as much as 75% depending on the creditor. At the same time they will look at your monthly income, your living expenses and how much you have left over. They will then work with you to create one affordable monthly payment that will then be split among your creditors. With this program your debt will be paid off in 5 years.

If you owe more than £15,000 you might be better off going with an IVA. This is similar to a debt management program with the exception that if 75% of your creditors agree to the program the other 20% are bound by law to agree to the terms. Here to your debt can be reduced by as much as 75% and your interest is stopped. Once again the goal is that your debt will be paid off in 5 years or 6 if you live in Scotland.

Borrowing More to Pay Less

This sounds a bit like an oxymoron after all how can borrowing more help you to pay less? By now you have no doubt seen the different adverts offering debt free loans or debt consolidation loans that are designed to help you get out of debt. If you are careful and look for the right creditor, it is possible to take out a loan big enough to pay off everything you owe with the exception of your mortgage. This way you are once again left with one easy payment and in time you will be debt free.

If you have a house in which you have equity you can use it as collateral to secure a debt consolidation mortgage and pay off your bills. The advantage here is that you have up to 30 years to pay the loan off and the payments are low. The disadvantage is that if you default on the payments, you put your house at risk.

You may also be able to qualify for an unsecured debt consolidation loan to pay off your credit cards. You need to be careful here and make sure that you will actually be saving money both in your monthly payments and your final payoff. Generally this type of loan will have your debts paid off in no more than 15 years. Choose the program that is right for you and you can be debt free in just a few short years without having to file bankruptcy to get there.