Consumers In Debt 'Have A Range Of Options'

Many of us have felt the pinch over recent years and have seen our finances stretched almost to breaking point. For some, things were much worse and now they are struggling to pay off debts that can rise to the tens of thousands on credit cards, personal loans, finance and even mortgages.

Consumers struggling to meet recent increases in mortgage repayments as well as rising energy and food bills should consider debt consolidation, according to an industry expert. The consumer education manager at Experian claimed that such a move could help prevent finances from spiralling "out of control".

He said: "People should regularly evaluate their finances. I would recommend regular evaluation, monthly or quarterly. Debt consolidation is one of a range of options. I would encourage people to always speak to their lenders if they are struggling to make payments and if they feel the situation is getting out of control."

One way to alleviate your debts problems is to get an Individual Voluntary Arrangement (IVA). This is a formal legal contract with your creditors where they write off a significant amount of your debt and you pay a smaller monthly fee for a set period, usually five years. The IVA is dealt with by a third party impartial company and so you do not have to deal personally with your creditors. All interest charges, late fees and over limit fees are stopped and it means you get more money in your pocket every month.

An alternative is to get a Debt Management Plan (DMP). This is very similar in that a third party company deals with your creditors and in the same way you pay them and they share the money out between your debts. However, there is no guarantee that interest charges, late fees and over limit fees will be stopped and you have to pay off the whole of the debt.

Recent research by a well known credit reporting company found that only a quarter of consumers are aware of the amount they need to repay on their loans; while one in ten respondents were clueless on the total debt they have currently accumulated. Meanwhile, just a fifth admits to planning finances once every six months or less.

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