How to clear debt

27 April 2009

Deciding on how to clear your debts can be daunting, especially if you`re in debt to more than one lender. However, with the right advice, clearing debt can be easier than you may think.

Clear debt on your own

There are many things you can do on your own to clear debt and help improve your financial situation.

Plan your finances

At the heart of a healthy bank balance is a well-planned budget. Many people who get into trouble with debt have not planned their spending for the month, meaning that they often find themselves short of funds towards the end of the month.

By planning your finances properly, you can be sure that you have put enough money aside for your essential costs (including your debts).

Contact your lenders

Many people are worried that their lenders will be unsympathetic when it comes to missed payments and arrears, but this should not be the case. In many cases, your lenders may agree to a temporary freeze or reduction in your monthly payments if that would allow you to get your finances under control.

However, this is only a short-term solution - you will still be expected to make up the difference later on, and if a repayment holiday is unlikely to make a difference to your overall financial situation, then a specific debt solution may be more appropriate.

Use savings

Although it may sound like a strange idea, using your savings to clear debt can save you a lot of money. The reason for this is simple: the interest on your debt will almost certainly grow much more quickly than the interest on your savings.

Once you have cleared your debt, you can start saving again, safe in the knowledge that you are not losing any more money on debt interest.

Help with clearing your debt

If you are unable to manage your debt alone, then it`s worth getting debt advice from a professional adviser. By discussing your situation and your needs in confidence, they can help you decide on the best course of action for tackling your debts.

There are a range of debt solutions available that can help people in various financial situations clear their debts. For more information, call our expert debt advisers on 0800 074 8639.

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