It can seem impossible to get a fair result when you are battling a financial issue alone. But never fear! The AOL Money Fixer is here to help.
I owe about £15,000 on credit cards and one personal loan, and I am really struggling to keep up with the repayments since my working hours were cut about six months ago.
I have just about managed to keep up to date until now, but my savings have now run out and so I think things will really start to unravel over the next few months.
I have been talking to a debt adviser who has recommended an Individual Voluntary Arrangement (IVA).
However, I am nervous about the impact this will have on my future and am keen to consider other options first. Can you help?
M Harris, Bedford
Dear Mr Harris,
First things first. There is no need to pay for debt advice - a number of organisations such as StepChange and Citizens Advice offer free advice, and that means all your money can go towards clearing your debts rather than lining an adviser's pocket.
Clearly, if your aim is to prevent this issue having an impact on your life in the future, bankruptcy is best avoided.
You could, however, take out a debt management plan, which is an agreement between you and your creditors that involves you clearing the full amount you owe in regular monthly payments that you can afford after covering essentials such as mortgage repayments, council tax bills and day-to-day living costs.
Signing up to one will put a stop to any scary letters or phone calls from your creditors and set you on the path to getting out of debt altogether – at a manageable rate.
If, however, paying back the full £15,000 or so is unrealistic on your current wage, an IVA could be worth considering.
IVAs typically last for five years and are legally binding contracts that were introduced as an alternative to bankruptcy and are generally recommended for those who owe at least £12,000.
They involve the lenders you owe money to waiving a percentage of your debts in return for you making fixed monthly payments until the agreed percentage is repaid.
Obviously, the main advantage is being able to escape a percentage of your debts. The downside, however, is that an IVA will have a bigger impact on your credit score than a debt management plan.
Even after the five-year term has come to an end, you may well find it hard to borrow again as a result.
My advice would be to contact one of the debt charities mentioned above and see what they think will work best for you.
Whatever your financial problem, write to firstname.lastname@example.org and The AOL Money Fixer will get on the case.