7 Ways You Can Clear Debt Now

Debt affects millions of people across the U.K. If you are one of them, take a few minutes to read the following article to discover some of the ways you can clear debt and look forward to a fresh start.

1. Budget

Having a budget, and most importantly sticking to it, is vital if you are to clear debt effectively. This involves sitting down and looking in detail at your income and expenditure, and identifying ways in which you can save money. Start by looking at how much money you owe and then put in place a plan to save enough money each month to pay it off.

2. Free Up Capital

The longer you leave debt, the more interest you are likely to incur, so paying it off as early as possible makes sense in the long run. If possible, free up as much capital as you can and pay off your creditors. This can be achieved, in many cases, by downsizing.

3. Downsize

Downsizing is a great way to free up equity and reduce the burden of large monthly payments. For example, moving house could help you to reduce your mortgage bills significantly, whilst also trimming utility bills.

The same goes for your car. If you car is expensive to run, then selling it could free up some vital money to clear debt.

4. Make Cut Backs

Most of us are having to make cut backs at the moment, but for those who are looking to clear debt, this is all the more apparent. Doing the weekly shop at a budget supermarket, for example, is just one of the ways you can make cost savings, without having to change your lifestyle. Most people will identify several areas they can cut back on, for example limiting the amount they spend on clothes or nights out.

5. Consolidate Loans

Consolidating loans and credit agreements into one manageable monthly repayment is an attractive option for many people looking to clear debt. Bear in mind, however, that the companies who provide this service make a profit, so you will end up paying an additional charge, on top of your loan repayments.

Taking the time to organise your own finances could be better in the long run, as not only will it save you money, but it will also help you to avoid falling into the same trap in the future.

6. IVAs

Independent Voluntary Agreements are similar to consolidating your loans, in that they involve contracting a debt management company to negotiate with creditors on your behalf. Often, this will result in reduced debt repayments.

7. Challenge Credit Agreements

Under the terms of the Consumer Credit Act (1974) credit agreements such as loans and hire purchase agreements must meet up to a series of criteria, in order to be considered legally binding. If this is not the case, then you may have a case to challenge the credit agreements and see the debt wiped off.

There are many companies who can help and advise you on whether or not your credit agreements are unfair, and therefore unenforceable. This is one of the most popular avenues which are explored by those who are looking to clear debt.

Now you know more about how you can clear debt, and how to get help, is now the right time to sort out your finances?