How A Person Should Deal With The Overwhelming Burden Of Debt

In today’s life, maintaining financial stability is quite a challenging task because of the numerous expenses one has to deal with. Often, people come with an acute situation that comes out of the blue, which could be anything such as:

  • Redundancy
  • Medical emergency
  • Urgent Home repair
  • Sudden travel plan

People in such circumstances borrow money when they don’t have enough savings to deal with it. Well, all these scenarios are typical examples when a person requires urgent funds. Many also borrow money to fulfil or accomplish the broad goals of their life. Thus, let us understand the very concept of debt so that you can learn to use it for the better good.

What Is Debt?

Debt is generally an amount of money borrowed to fulfil any urgent financial situation or taken to achieve any specific goal. One can get money from various sources when in need like:

  • Banks
  • Credit cards agencies
  • Online lenders
  • Government organisation
  • Life insurance companies
  • Crowd funding

Every cause has its own set of principle serves a different purpose. Apart from individuals, companies for their business-related needs to take debts as well. The debt that one takes has to clear within a fixed period given by the lender along with interest charges.

Many people think that taking debt is a bad thing that might create trouble for the person later. But, this is not entirely true because borrowing money can help a person in urgent cases. One should know how to effectively use their debt take only that much one is capable of returning the obligation. If a person is under the burden of too much debt, then it can cause a lot of stress in the person.

What Is a Debt Management Plan?

However, there are specific ways to get rid of the debt that one is facing because of the vast number of options available. One such popular method is a debt management plan where there is a mutual agreement between the creditor and the individual.

Debt management plan or also known as DMP, helps the borrower get rid of their past debt by paying them off at a comparatively lower interest rate. Other than that, it can also result in the lower monthly payments, and the amount is again mutually or reducing the monthly payment. One can also opt for debt consolidation loans if the debt management plan is not working.

It is essential to understand that not all type of loans can be reduced with the help of DMP. It mainly consists of several loans, such as:

  • Overdrafts
  • Personal loans
  • Bank or community loans
  • Credit card or payday loans
  • Catalog or home credit

Who Is Responsible For The Debt After Death In The UK?

 Now, it is also possible that a particular person who is paying the debt dies uncertainly. Well, if the debt is still not cleared and the amount is still left, then the creditor will have few options to get their money back.

Assets:  Firstly, the creditor can get their debt back from the money saved by the borrower or assets left. It is also possible that their valuable possessions like any property, car or even estate can be taken.

Guarantor: The responsibility of the debt will be handed over to any closed one of the deceased. If there is a joint loan or a guarantor only then, the debt will be passed to that person.

How do I know if my debt is statute-barred?

Now, there is a thing that every borrower should be aware of or have an idea. There is a fixed time up to which the creditor could file a case against the borrower if there have been no payments. After that time, the creditor cannot file the case, no matter how much debt is still left.  

So, if the debtor has not made the payment recently and there has been no communication made, then that debt becomes statute-barred. As per the rule and regulation of the UK, any particular liability can become statute-barred after six years if there is no connection made between the debtor and creditor along with the missing of payments.

The final verdict

Borrowing a loan not always means taking a liability or a burden under your shoulder. In times, it can be a great financial tool to get out of the problems or fulfil the long-awaited goals. And most important is to take debt as much as you are capable of making the repayment.

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