Which company should i go to?

Laura · Joined: 30 Nov 2006 Posts: 6

Hiya!

My friend has recently got an IVA with you and recommended you to me.

I only have 7k of debt, and just really want to get it sorted. When I did your analyser the report said debt management or debt consolidation are possible.

Please could you put me in the right direction? Who should I contact about this as I see you only do IVAs and have read a lot of them charge high fees etc and can be a bit dodgy? Sad

Thanx

Andrew · Posted: Mon Dec 04, 2006 6:25 pm Post subject: Debt Management or Consolidation

Laura, this is tricky. Debt Consolidation can be a good choice in the right circumstances. For example, if you have a property worth a lot more than your mortgage then extending your mortgage (called re-mortgaging) to cover your debt can be a relatively painless solution: It could cut the amount you pay each month quite significantly.

However, I suspect you may not be in this happy position (simply because the debt figure looks quite low). You could try to consolidate all your outstandings into one debt at a lower interest rate. This might be a worthwhile option if you can still obtain credit and if you are currently paying high rates on your existing debt. However, only do it if you are absolutely sure you won't use new credit for anything other than repaying the debt you have now.

You may be able to make big inroads into your debt by using a technique known as snowballing. Pay the minimun on all your debts except the most expensive one - and pay back as much as possible on that single debt. Once you've dealt with that one, move on to the next debt and so on. Your debts can disappear months earlier than they would otherwise.

Entering a debt management plan should really be considered a short term option - to tide you over a period after which you are confident your income will increase and you will be able to deal with your debts.

There are so many companies in this area that I'd hesitate to make a recommendation. What I would say is that you should ask exactly how much of your payments go to your creditors: this can vary quite widely. Also discover whether the company you use will negotiate interest holidays or rate reductions. This can make a big difference to the effectiveness of the DMP - we've seen examples where people's debts have gnen up - not down, so choose carefully.

Good luck,

Andrew

Laura · Joined: 30 Nov 2006 Posts: 6

Hi, Thank you for ur reply Very Happy

No i dont have a house to remortgage, ive moved back home a while ago so i dont have to pay rent, (parents can be quite useful!).

Reading what you say about Debt management, i dont think that would be the best for me, i'm not really due a wage increase or anything like that. and sounds like it could cause even more stress.

Ive kinda been trying to do the snowball thing, but have got quite confused where i am upto, and how much to pay off for each.

yeah, maybe consolidation would be the best option. Am i right in saying, i get a loan with a lower interest rate and then just pay off alll my credit cards and store cards in one go?

Are their specific banks which are good for this kinda thing?

Andrew · Posted: Tue Dec 05, 2006 12:33 pm Post subject:

If you are looking for a competitive loan, you could do worse than try uswitch. Try here for loans and here for credit cards with 0% balance transfers.

All the best,

Andrew

Laura · Joined: 30 Nov 2006 Posts: 6

oh really, i thought that was just for utilities etc!

Thanks Very Happy