Two ways to repay unsecured debt

Perhaps you have unsecured debt and you are looking for a way to pay it off at a rate you can afford? Unsecured debts include credit cards, unsecured loans and overdrafts. If you would like to repay those debts and have a fresh start – it may be within your reach. If you’re struggling to keep up with your payments, there are a number of debt solutions that could allow you to do just that.

To get some debt advice tailored to your personal situation, visit Debt Advice Now, where you can learn about affordable ways to pay off unsecured debts that you can’t repay as you agreed to. Or, read on for further details about two well-known debt solutions: IVAs and debt management plans.

Individual Voluntary Arrangement (IVA)

A formal agreement to repay what you can afford for five years.
Repay all unsecured debt within five years (in most cases).
Have part of your unsecured debt written off (on successful completion of IVA).
Agree to release some equity in your home (in most cases).
Commit to making regular payments for the full term of the IVA.

If enough of your lenders agree to it, an IVA can allow you to repay as much of your unsecured debt as you can within five years – and have the remainder written off. You must commit to pay what you can into the IVA every month – and it would be recorded on your credit file for six years.

Debt management plan

Make one monthly payment, calculated to be affordable.
Repay all your unsecured debt over a longer period.
Repay what you can afford every month, for as long as it takes to repay all your unsecured debt.
Potentially have interest and charges on your debt frozen.
Commit to making regular payments for the full term of the debt management plan.

A debt management plan will allow you to repay all your unsecured debt over a longer period, if your lenders agree to it. You must commit to making regular payments and the fact that you’re making lower payments would be recorded on your credit file for six years. Spreading the repayments over a longer period also means you may pay more interest overall.
For more information about these two debt solutions, as well as other ways out of debt, visit Debt Advice Now.