Know your Guarantor and your Company
Guarantor loans in the United Kingdom help people with bad credit backgrounds to be able to get to loan once again. Through the help of a guarantor, you can be able to still get a loan as long as your guarantor is credible enough to be called one. To get a guarantor, he or she must also possess the requirements that you need to have. When it comes to age, guarantors must be over the age of 21 to be able to become a guarantor. Usually, 21 years old is the age they are looking for.
Also, they should have a good credit history so that they will be allowed to be one. When your guarantor does not have a good credit background or is most likely the same as your own loan history, chances are it might not be able to push through. Aside from that your guarantor must be a homeowner in the United Kingdom because the guarantor loan is in that country. There are also checks that your guarantor needs to undergo but no need to worry because these checks are usually done in ordinary loans as well. These checks include the provision of their bank statements, proof of valid identification, and also their bank details.
When it comes to who is eligible to become your own guarantor, almost everyone could be except one. Your guarantor must not be financially related to you, and such an example would be your spouse. That is the only requirement so you could have any of your friends, distant or close relative, a member of the family, a close friend, or even someone in your office workplace could be your guarantor. When you have already completed all these primary steps that you need to know in order to be able to apply for a guarantor loan, there are several following steps that you still need to know.
Of course, you should choose your guarantor Loan Company. A lot of guarantor loan companies have started to emerge in the United Kingdom. However, you need to be extra careful because some might just add to your bad credit experiences and will only get you to trouble by paying a larger amount more than you need to. You should also take note of the interest rates that you will be paying because this would be very important. You need to know what these companies’ rates are and also, you should be fully aware of the hidden charges that might come up once you start with your loan.
Throughout your whole loan period, you need to exactly know whether there are unknown and unwanted charges that you need to be able to discuss with your company because you really need to be extra careful. Choose only the best loan company service that you can trust and especially, you also need to choose a guarantor who will be able to help you get a loan again and would also be willing to help you in this kind.
Should you go for an Individual Voluntary Arrangement/ Scottish Trust Deed?
If you are a resident of the United Kingdom, you would definitely have heard of the terms Individual Voluntary Arrangement and Scottish Trust Deed in reference of debt management solutions. Both these instruments for helping the debtor in repaying his debts with a peaceful frame of mind and for helping the creditors to recover their money as compared to declaring him bankrupt are similar in the basic structure and features as well as the solution they provide. The only difference between the two is that an Individual Voluntary Arrangement or IVA is available for residents of England, Wales and Ireland while a Trust Deed is exclusively available for the residents of Scotland. Click here to visit debt advisory Scotland trust deed page.
Although an IVA and Trust Deed are very poplar debt management instruments, it is important to gain an exhaustive knowledge about their features, pros and cons before opting for either of the two. This is important because many a times entering into an IVA or Trust Deed might seem like an attractive way to fend off creditors in the short run, but these instruments do impose a number of obligations on the debtors which may be difficult to fulfil in the long run.
Eligibility criteria of IVA & Trust Deed
An IVA as well as a Trust Deed are available only for unsecured loans i.e. loans against which the debtor has not given any asset as security. Moreover, there are many different kinds of debt management instruments available in the market, out of which IVA and Trust Deed are the instruments which are advised only when the amount of debt is very high. For both the instruments, one should have a minimum of 5,000 Pounds of debt before being eligible for an IVA or Trust Deed.
You would also need to hire the services of a licensed Insolvency Practitioner if you want to enter into an IVA or Trust Deed. Both these instruments involve a lot of legal paperwork since they are legally binding agreements and therefore require an expert for the execution of the entire procedure.
Advantages of IVA/ Trust Deed
There are a number of IVA plans as well as Trust Deed pros which you must take into consideration while deciding on the most suitable debt management solution. Some such pros are as follows:
- After entering into an IVA or Trust Deed, a monthly instalment is fixed based on an understanding between the debtor and his creditors. This amount is what can be afforded by the debtor without selling off his assets. The total time period for repayment is also determined on the basis of the amount of instalment.
- The creditors are generally willing to write off some part of the debt. Up to 25% of the debt amount is easily written off and some creditors may also be persuaded to write off a larger amount as well. Therefore, the overall debt burden is reduced.
- The interest charges are frozen as soon as an IVA or Trust Deed are signed. This prevents the debt amount from scaling up due to additional interest charges. Instead, the debtor will only have to pay the total amount which has been accrued till the date of signing of the IVA or Trust Deed.
- The part of dealing with your creditors is also taken up by the Insolvency Practitioner or the debt help company that you go to for execution of the IVA or Trust Deed. This means that you are potentially free of harassing calls from creditors.
- As compared to being declared bankrupt, an IVA or Trust Deed is a much more feasible and less disruptive solution to your debt problem.
Disadvantages of IVA / Trust Deed
Entering into an IVA or Trust Deed comes with many advantages. However, it will be prudent to get a complete picture on the obligations that come with these legal instruments too:
- Credit rating of the debtor is definitely affected when he enters into an IVA or Trust Deed. The effect remains for up to a period of 6 years from the day when he completely pays off the debt.
- All assets and liabilities have to be declared so that the Insolvency Practitioner can correctly estimate the monthly instalment payment.
- There are restrictions on extravagant expenditures. The same are monitored closely by the debt help company as well as the creditors.
- The debtor has to strictly follow the terms of the IVA or Trust Deed, failing which his assets may be compromised.