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There are a variety of reasons why people could end up in uncontrollable debt but when you have more going out than you have coming in; it's time to find a solution to your debt and there are several main options to choose.

There are a variety of reasons why people could end up in uncontrollable debt but when you have more going out than you have coming in; it's time to find a solution to your debt and there are several main options to choose.

If you simply have too many monthly repayments and you even find the quantity of them hard to keep on to of, you might benefit from a debt consolidation loan. The idea of borrowing even more money might sting but this kind of loan can allow you to reduce your monthly outgoings, spread your payments over a longer time and manage just one monthly repayment. Consolidating your debt won't even affect your credit rating, as long as you keep up with your repayments, you will be seen as a responsible borrower. Depending on who you buy from, there will be interest added to your debt but unfortunately nothing is free and this is the price you will need to pay to manage your debts.

Some people who may not be eligible for a debt consolidation loan may be able to seek advice and assistance on creating a debt management plan. There are thousands of financial advice services who often don't charge for setting up a debt management plan, they will do all the negotiating between you and your creditors and reduce your repayments into a figure you can manage. They may not be able to freeze interest and charges but they can allow you to decide when you pay and how much you can realistically afford. Because a debt management plan is a negotiation of repayments different to an original contract, your credit rating may be affected.

If your debts are too large to be considered for a Debt Management Plan; you may need to seek approval for an Individual Voluntary Agreement (IVA). An IVA involves considering a debtor's capital, income and priority payments. To arrange and approve an IVA requires an insolvency practitioner and the arrangement must be approved by the creditors and can be arranged post-bankruptcy. You may wish to consider an IVA as, unlike bankruptcy, your credit rating is not as damaged, you will be able to continue trading and your property will be excluded from the arrangement.

The final stage of dealing with debt if all else fails is to file for bankruptcy, this can be voluntary or involuntary depending on the size of the debt. Bankruptcy will immediately free you from debt repayments but it does come at a price. You will lose control of your assets as they are shared equally among your creditors, you will be examined in court, and you cannot act as a lawyer, accountant, justice of the peace, Member of Parliament and many other professions. Your credit rating will be drastically affected for years after the annulment and you will have to obtain special permission to obtain credit over the value of 250. Although bankruptcy is a drastic option it does free you from your debt which can release you from stress and anxiety and it's not the end of the world, its only money.

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