The Covid-19 pandemic has had a toll on everyone’s life. It has shaken everyone’s finances and many are now struggling with their medical bills. Owing to the recession, people have lost their jobs and now they’re unable to pay off their medical bills.
If your medical bills are still pending and you’re worried because of the debt now hanging on your head, you’ve come to the right place. The following are the best debt plans to manage your medical bills:
An Individual Voluntary Arrangement (IVA)
An individual voluntary arrangement, commonly referred to as IVA, is a legal, binding contract between you and your creditor. As you know, the biggest concern for most people when repaying the debt is the aggressive debt collections by their creditors. An IVA is the only thing that can save you from such practices.
It’s a formal debt solution that will not help you pay off your debt peacefully but will also buy you a considerable amount of time. It is set up by a qualified person, usually an insolvency practitioner. Either it could be your attorney or accountant.
Not to mention, s/he will charge you a fee for it. However, the fee for IVA is not fixed. It depends on the amount of money you owe. In case of any issue from your creditor, the insolvency practitioner will deal with him on your behalf. It will continue throughout the life of the IVA.
If you’re paying the amount in a lump sum, the IVA won’t last more than a year. On the other hand, if you’re making monthly debt payments, the IVA may last for four to five years. The payment would be made to the insolvency practitioner and not to your creditor. The insolvency practitioner will then pay your creditor himself.
The Debt Avalanche
The second debt plan for today is the debt avalanche method. It’s a very effective debt plan for people who wish to adopt a disciplined approach in life. Not to forget, it works exceptionally well for people with multiple pending bills and debts hanging on their heads.
In the debt avalanche method, you make minimum debt payments for all your debts. The amount you’re left with then funds the debt with the highest interest rate. This way, none of your debts are left behind and all are paid on a priority basis.
The only tricky part of the debt avalanche method is that it requires a lot of motivation to stay connected to it. Many people lose their motivation halfway through it and it is something that takes them back to square one. Thus, you must keep an eye on your long-term goal when moving with the debt avalanche method.
Furthermore, the debt avalanche method requires you to have a prominent amount of money in your bank account. Also, you need to have money coming in every month to make all these debt payments. In the case of not having enough money, the debt avalanche method would fail.
Lastly, please research thoroughly before you make a decision. I wish you good luck!