Debt Jargon Explained

Quite often we see technical jargon in the personal finance universe, but sometimes there are terms that many people are not familiar with. Let’s go through some of the less common terms and explain exactly what they are.

Debt Management

Unlike debt consolidation, debt management is where a credit counseling agency ofers dewbt counseling and negotiates with your creditors to help lower rates or balances on bills. Any unsecured debts (such as credit cards and medical bills) could be negotiated for you, and quite often this will help your debt situation become a lot more manageable.

IVA

An IVA, also known as Individual Voluntary Arrangement, is a legal and government approved method of resolving debt problems. If you struggle with debt but don’t want to go bankrupt, this may be an option for you.

If you can’t make your current debt payments, you can show that you can’t afford your debts and only repay what you can afford while still retaining money for essentials.

IVAs typically last for 5 years but can be completed in a shorter amount of time, particularly if you can make a lump sum payment at some point.

Trust Deed

Buying a house is really complicated, and trust deeds can make them easier to finish up. With a trust deed, the legal title of a property is transferred to a trustee who holds it as security for a loan between the borrower and the lender.

The advantage of a trust deed over a mortgage is that if the borrower defaults on a loan, the trustee has the power to foreclose on the property. This can be done without having to sue in court and can quickly acution the property to the highest bidder.