Get out of debt

Want to live debt free?

According to Credit Action, the average household owes £8,590 – not including mortgages.

Many households have found themselves struggling financially as the cost of living rockets and wages remain the same.

If you find the pressure building, there are solutions available that make managing your debts less stressful.

Finding a solution to get out of debt depends on your financial situation. At Baines & Ernst, our advisors can talk you through the options.

Three steps to getting out of debt

There are three initial steps you can take to help you on the path to debt-free future:

1) Break the silence

If you’re in debt, it’s easy to feel isolated. You must remember that there are thousands of people sharing the same experience as you – so you’re not alone. Breaking the silence is an important part of overcoming debt. Talking to someone you trust about your financial problems could alleviate pressure – giving you the confidence to face these issues. They might even have some practical advice on how they have managed debt. If you don’t feel comfortable talking to someone you know, our advisors will be more than happy to listen and provide information on how to deal with your money worries. We’ve helped over 140,000 manage debt; we’re here to help you too.

2) Get a true picture of your debts

It’s a daunting task but in order to find the best solution for your situation, you must have a clear understanding of your debts.

Generally people have two types of debt – secured and unsecured.

Secured debts are your priority bills such as mortgages / rent, hire purchase loans, household bills (gas, electric, water, food, council tax), TV license, student loans etc.

Unsecured debt basically means any type of debt that is not secured against your property or assets, so this will include debts such as personal loans, store cards, credit cards, bank overdrafts and catalogue accounts. Once you have listed what you owe, add them up to calculate your unsecured debt total. It’s these types of debts that can be included in debt solutions such as DMPs and IVAs.

Our expert team will use this information, plus details on your total income to help you find the most suitable debt solution for your situation.

Although secured debts cannot be included in a debt solution, we could help you save money on your bills, please call us on 0800 096 1331 for more details.

3) Make a ‘get out of debt’ action plan

Clearing debt is possible if you have a plan and stick to it.

• If you have debts of over £2000, a Debt Management Plan is an effective form of debt consolidation because you only pay one amount every month which is then distributed between your creditors. At Baines & Ernst, we could negotiate more affordable repayment rates with your creditors. In 84% of confirmed cases we are able to freeze interest and charges – making it easier for you to repay your creditors and work towards a future free from debt.

• If you have debts of £15,000 or more and difficulty meeting repayments, you could qualify for an IVA. This is a legally binding agreement which offers protection to you and your creditors. Interest rates and charges will be frozen, repayment rates are based around what you can realistically afford, and any remaining debts included in the IVA that still exist at the end of the agreement (normally 60 months†) will be written off. IVAs are subject to creditor agreement, which is not always guaranteed*.

In extreme circumstances a Debt Relief Order or Bankruptcy could be the best solution. We recommend you seek professional advice to ensure this type of action is the best option for you.

For impartial debt advice, speak to Baines & Ernst, 0800 096 1331.

*For an IVA to be approved and interest and charges to be frozen it needs to be accepted by 75% of the creditors (by value). †Homeowners may be required to re-mortgage after 4 years and release available equity to pay off some or all of the debt.