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Bad Credit and Debt.

Post the financial markets meltdown and the recent recession, gaining access to any form of lending can be a challenge. Not only have the number of providers reduced but their appetite has also been tempered with marginal or poor customers who have an adverse credit history being spurned.

The easy credit days of the nineties and naughties have long passed. Gaining access to credit these days mean managing your personal standing such that your credit score is as high as possible at the time when you most need a loan.

But it isn`t just access to loans that can be difficult - gaining a new credit card or opening a bank account can also be a problem if you have not been able to manage your previous debts effectively. Most people will be challenged by debt at some time in their lives. The advantage of recent times is that there is a much wider appreciation of debt and the damage it can do to lives and relationships.

This means that there are new ways to help get debt under control at an early stage or to restart even after a serious problem. Debt management plans are simple in essence but can be difficult to set up. The key is early and open communication with your lenders.

Lots of people have been affected by the recession and had their incomes reduce. But if you contact your lenders before you have a problem in making repayments then they will be more sympathetic to adjusting the monthly instalment either on a temporary or permanent basis to one that you can afford. Such arrangements can be changed if you do not keep up with the new reduced payments but it is worth making the effort.

If your debts are more serious, say over £15,000, then you have the opportunity of a more formal and structured debt management plan called an Individual Voluntary Arrangement (IVA). IVA`s require at least 75% of your lenders (by the amount of money you owe not by the number of lenders) to agree to a reduced payment for a fixed period up to five years. At the end of the five years and provided you have made the repayments, any remaining debt will be written off and you will start with a clean sheet.

An IVA must be arranged by a licensed Insolvency Practitioner and the agreements are registered with a court, but not published. This means that you need not tell anyone about your plans or difficulties. Should you be unable to keep to the terms of the IVA then you may have to consider declaring yourself bankrupt. This must be considered as the final step since the consequences are severe on you and your future finances.

Seek help on debt issues early. Free advice can be obtained from any Consumer Advice Bureau.


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