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UK Debt Management Solution: What You Need To Know

Apr 26, 2008
Bad credit consolidation is something that everyone seems to go through at some point. Thousands of people in the United Kingdom have gone into debt due to their inability to stay on top of their bills. Some people fail to pay their student loans in a timely fashion, while others cannot keep up with their mortgage payments.

The most common reason for bad credit consolidation, though, is the damage done by credit cards. Most bad credit that takes place is a direct result of people not being able to manage their credit cards effectively and within budget.

If you have ever encountered the demise of finances due to credit problems, you know that it is a slippery slope. It begins by missing one or two payments. Even if you are a day late on your payment, a late fee charge appears. In addition to this fee, there are always troublesome interest rates that accumulate as the unpaid balance lingers.

Once credit probelems start then your ability to manage your debt diminishes fast and you have a much larger problem on your hands than you anticipated. A lot of people will do anything to stop the damage and often resort to an easy fix. This often means using another credit card. But it doesn't take long to realise that using one credit card to pay another is not a sound financial strategy.

After this cycle goes on for a while, a credit rating becomes awful, making it nearly impossible to get a loan for a car or house approved. Collection agencies may begin making harassing calls, intent on getting you to pay your debts regardless if you have the money or not!

At this point some people just toss up their hands and file for bankruptcy. But while this offers some short term relief, when you look at the bigger picture it isn't always the best option. Setting up an IVA, Individual Voluntary Agreement, where you agree to pay your debts off in a timely manner is a better choice for many people as it isn't the blight on your credit rating that bankruptcy is.

Another benefit to an IVA or bad credit consolidation is that your combined debt (the final product of the process) is much easier to manage. Your interest rate is lower and fixed, while you end with just one payment each month.

Of course, you will still have debt, but it will be much more manageable. Remember that this can be a very important step towards fixing your financial situation.
About the Author
Finding a way to break out of the debt management cycle is important for your sanity and financial prospects. You can find UK debt solutions help here: debt101.co.uk
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