What is a debt solution?

4 May2021

A debt solution is basically any kind of formal or informal procedure that can help make your debts more manageable. These can range from debt consolidation loans to bankruptcy. They can suit a range of needs, such as:

I can't afford my monthly payments

If you can't keep up with your monthly unsecured debt repayments - but you would be able to afford them if they were a bit smaller - debt management may be the debt solution for you.

Your lenders don't have to agree to a debt management plan. If they do, however, you will be able to make smaller payments you can manage over a longer period of time. Your lenders may even agree to freeze interest and charges on your debts.

Want to find out more about debt management plans? Click here .

I'm finding it hard to keep track of all my repayments each month

If, financially, you are still in a good position to clear your entire debt - but you have too many payments to keep track of comfortably each month - debt consolidation may be suitable.

With debt consolidation loans, you can cover your entire debt with one large loan. This means that all your original debts are simply paid off. You can then focus on repaying the consolidation loan. You may be able to pay this off over a longer or shorter period - thus making the monthly repayments smaller or larger.

Replacing several smaller debts with one large one means that you still have the same amount to repay - but you only have one debt, one lender and one interest rate to think about, rather than several.

Click here to read more about debt consolidation loans .

I don't think I'll ever be able to repay what I owe

If you simply can't see a way to repay your unsecured debts in any realistic timeframe, you may wish to consider anIVA (Individual Voluntary Arrangement) - or a Trust Deed if you are a Scottish resident (click here for more about Trust Deeds).

If you start an IVA, you will only pay as much as you can afford each month. Your interest and charges will be frozen and you will be protected against legal action from your unsecured lenders. In most cases, any included unsecured debt remaining will be written off after five years, as long as you've fulfilled your side of the agreement.

Click here for more about IVAs .

Things to think about

One of these debt solutions could be the best way for you to tackle your debts. There are drawbacks, however. For example, all debt solutions (except debt consolidation loans) will have a negative impact on your credit rating for a certain amount of time. Paying debt back over a longer period of time (if interest and charges aren't frozen) may mean you pay more overall. In IVAs and Trust Deeds, homeowners may be expected to release some equity in their homes.

Despite these drawbacks, a debt solution may still be right for you. Bear in mind that if you did nothing about your unsecured debt problems, you could still end up facing some of the problems listed above.

If you want to find out which debt solution could be right for you, fill in our Solution Finder .

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Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

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Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.
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Tags: debt, debt solutions, debt consolidation, debt management, bankruptcy, IVA, Individual Voluntary Arrangement, credit rating, trust deeds, debt help

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