Make this year the year you become financial and debt free. Impossible!!! Not if you follow these few simple steps. How easy can it be - well I have done it and you can too no matter what your situation. First of all face the fact you have a problem! Next look at how to change it once and for all. It's all so easy to get into debt anyone can do that - take a step further and get out of debt. All you have to do is to want to badly enough and you will do it. Let's try the first step -
1. Draw up a Budget. The best way to keeping your finances under control is to find out where and when you are spending the money. This will show you where you can trim that spending and free up some cash towards your debts.
2. Sort out your financial position. Debts are overwhelming - To get a clear picture, make a list of your assets, (all you own) and put them against your liabilities (everything you owe) It will soon be obvious where you can cut back.
3. Prioritize your debts. List all you owe by interest rates rather than by the amounts. High-interest loans go to the top of the list. Pay the debts at the top of the list off first. Pay the expensive loans first and keep up the required payments on the rest.
4. Pay more than the minimum. The minimum just covers the interest so it makes no impact on the principal - try to pay something over the minimum each time.
5. Use your savings if necessary. It's not commonsense to have money in the bank when you have huge debts - nice though it is - put as much as you safely can on to the debt repayments.
6. Talk to the lenders. They are in business to receive payments and faced with the prospect of losing a debt altogether most will accept a comprise. Tell the creditors you are having a problem with repayments and you will find they will be open to either extending the time or revising your repayments. What ever you do don't stop the payments this will put them offside.
7. Consolidate your debts. This involves combining high-interest debts into one lower-interest loan - in most cases this means putting them into your mortgage. Consolidating high interest personal loans and credit cards can be a sensible strategy as it will reduce your interest payments considerably. Remembering this will extend the term of the debt and you will pay more interest long term.
8. Cut up the cards. Now this is a hard one! If you must have a card limit it to just one or better still make it a debit card which draws cash from your own back account.
9. Protect your income. This one seems strange particularly when you have debts and that doesn't leave a lot left over for insurance - however this is a must in this situation.
10.Seek professional help. Pressure on family finances and families itself take their toll so getting professional help from a financial counselor can but help.
I followed all the above steps and now have after 2 years have almost got to the end of the long hard road back to being free of debt. Do you know how good that feels? Where did I go for help? Check out my favorite ebook superstore cbdeluxe - found a wealth of advice and information that was of great assistance to me. I did it - so can you.
You can find more on my blog at http://gr8riches.com/gr8blog
Common questions regarding IVA's (Individual Voluntary Arrangement's)
An IVA is a legally binding arrangement supervised by a Licensed Insolvency Practitioner, the purpose of which is to enable an individual, sole trader or Partner ("the Debtor") to reach a compromise with his creditors and avoid the consequences of bankruptcy. The compromise should offer a larger repayment towards the creditor's debt than could otherwise be expected were the Debtor to be made bankrupt. This is often facilitated by the Debtor making contributions to the arrangement from his income over a designated period or from a third party contribution or other source that would not ordinarily be available to a Trustee in Bankruptcy
Who Can Benefit From an IVA
An IVA is available to all individuals, Sole Traders and Partners who are experiencing creditor pressure and it is used particularly by those who own their own property and wish to avoid the possibility of losing it in the event they were made bankrupt. It is also often used by sole traders and Partners who have suffered problems with their business but wish to secure its survival as they believe it will be profitable in the future which will enable them to make a greater repayment to creditors than could otherwise be expected were they made bankrupt and the business consequently cease trading.
The Procedure in Brief
In theory it is envisaged that the Debtor drafts proposals for presentation to his creditors prior to instructing a Nominee, (who must be a Licensed Insolvency Practitioner), to review them before submission to court and then to the creditors. In practice the Nominee draws up the proposal upon the information provided by the Debtor and submits these to court with his comments on the merits of the proposals with a view to obtaining an Interim Order. An Interim Order is an order made by court precluding creditors from taking any action against the Debtor whilst a meeting of creditors is called and held to decide whether the proposals are acceptable to them or not. Following the granting of the Interim Order the Nominee will circulate to creditors the following information:- *The Nominee's comments on the debtor's proposals *The Proposals *Notice of the date and location of the meeting of creditors to vote on the proposals *A Statement of Affairs this effectively being a list of the assets and liabilities of the Debtor *A schedule advising creditors of the requisite majority required to approve the IVA *A complete list of creditors *A guide to the fees charged by the Supervisor following approval of the IVA A form of proxy for voting purposes The creditors meeting is held not earlier than following 14 clear days notice after the above has been circulated to creditors. The purpose of the meeting of creditors is to agree or reject the Debtor's proposals with or without modifications which can be requested by creditors at the meeting. Acceptance of the proposals requires 75% in value of those creditors who vote either in person or by proxy at the meeting.
Please note that the 75% relates only to those who actually vote and assuming the creditors receive notice of the proposals, all will be bound by the terms of the arrangement whether they voted or not. Upon approval of the IVA, a Supervisor is appointed (usually the Nominee) to ensure the proposals are adhered to and to distribute the dividends to creditors. Assuming the debtor complies with the terms of the arrangement, upon completion of the IVA he will be fully discharged from all liabilities included within it.
Key Components for a Successful IVA *The IVA must offer a higher return to creditors than could otherwise be expected were the Debtor to be made bankrupt. * An honest declaration of your assets and/or anticipated future earnings should be made. Material or false declarations are likely to result in the subsequent failure of the IVA. Advantages of an IVA
Individual, Sole Trader or Partner *Enables a Sole Trader or Partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual. *No restrictions as regards personal credit although in practice can prove difficult to obtain. *The proposals are drawn up by the Debtor and are entirely flexible to accommodate personal circumstances. An example of this may be to exclude the Debtor's property from the IVA assuming the Debtor can adequately satisfy creditors that the outcome would be better for them by agreeing to this than could otherwise be expected if a bankruptcy order was made. *The Debtor does not suffer the restrictions imposed by bankruptcy, such as not being able to act as a director of a limited company etc.
Creditors *The costs of administering an IVA are considerably lower than in bankruptcy, enabling a higher return to creditors. *IVA's operate as an insolvency procedure and creditors can as a consequence of this, still reclaim tax and VAT relief as a bad debt. Disadvantages of an IVA
*Where contributions from income are being made, IVA's are generally expected to be for a period longer than that in bankruptcy, i.e. 5 years as opposed to 3 years. The 5-year period is often required by creditors as a bargain for allowing the Debtor to avoid the consequences of bankruptcy. *If the Debtor fails to comply with the terms of the arrangement his home and assets can still be at risk if they have not been specifically excluded from the proposals. *If the IVA fails as a consequence of the Debtor not meeting his obligations under it, it likely that the Debtor will be made bankrupt at this time. *There will be no opportunity for a Trustee in Bankruptcy to investigate the actions of the Debtor or possibility of hidden assets.
Both Sharon Iremonger & Mccannio are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Sharon Iremonger has sinced written about articles on various topics from Credit Cards, Anger Control and Finances. Sharon has spent more than 20 years in sales and marketing positions and now does marketing for online ventures.Sharon can be contacted at her website