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Increase
your borrowings to pay your creditors. |
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Not
normally the best option. If you are borrowing to the hilt now, adding
more credit will only make it worse.
However, in certain cases and particularly where you have a large
amount of equity in your property, it may be advantageous to take
out a secured loan with which to pay off your creditors. We will advise
you as to whether this is the best solution for you. |
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Go
bankrupt. |
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This
may seem like an extreme option but it is a course of action you may
want to consider. There are certain circumstances when bankruptcy
is the best option. We can discuss the implications of bankruptcy
with you and advise you if we feel it is in your best interest. |
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Enter
into an informal agreement with your creditors. |
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You can approach your creditors yourself and try and negotiate a deal
with them.
They will usually listen and will often agree to reduce your payments
for a limited time. But remember that an informal arrangement
is exactly what it states and it can be cancelled by any one of your
creditors, at any time. And remember too, that creditors will not
continue with reduced payments indefinitely. |
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Approach
a Debt Management Company. |
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You
are probably aware that there are many debt management companies
advertising to negotiate an informal debt management plan
for you.
BUT BE CAREFUL and remember that is just what it is - an informal
arrangement.
Consider too, these points:
- It
is quite common for creditors to initially agree a reduced payment
but then change their mind, perhaps because of a change of personnel
or company policy. There are no guarantees with an informal arrangement.
-
The time over which you pay back can be very long indeed as you
will normally have to pay back the full amount.
-
Interest is often added at the end.
- You
will have a poor credit rating for the whole period of time you
are paying.
- Many
creditors will not even enter into informal arrangements with
some debt management companies because they rightly feel the management
fees (sometimes as high as 20%) could be directly going to pay
off the debt.
- Because
the creditors are not bound by the agreement, any one of them
can still pursue with court action.
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