When trying to cope with unmanageable debts, it can often seem a difficult task to find the right solution. We present common legal solutions used for debt management in the UK in everyday language. This should help you understand a little more of the options available in different situations before getting debt management advice for you particular situation.
IVAs
An Individual Voluntary Arrangement (IVAs) should ideally mean a more affordable monthly payment, in an arrangement agreed with creditors typically lasting at least 5 years. It is used for debts totalling 15,000 or above, owed to 3 or more creditors. After it's finalised, creditors stop adding new interest, charges, any new court action or payment demands by letter or telephone. IVAs are not announced in local papers and for some people (but not all) prevent them losing their home. If you comply with the terms of the IVA, when it expires outstanding debts covered by it are written off.
If you decide on an IVA, you are typically represented by a licensed Insolvency Practitioner (IP). It is a type of legal agreement; therefore expert debt management advice is invaluable to discover if it really is the best option.
Debt Management Plans
An option for debt management for debts with a minimum total of 5,000 owed to 2 or more creditors. You would draw up a plan with a third party who agrees to negotiate with creditors. Typically, your monthly payments are taken by the third party for allocation amongst creditors. You would need at least 100 monthly 'disposable income' to follow this option (100 after mortgage/rent, food, travel costs/petrol, childcare, gas/electricity, etc).
To ensure that it would be an optimal solution for you, do contact an impartial debt advisor for individual guidance.
Trust Deeds
This option applies in Scotland. You and an Insolvency Practitioner (IP) agree on a proposal, which the IP presents to creditors, typically payments agreed over 3 years. All creditors must agree unless it is a 'Protected Trust Deed', which means creditors agree to stop further interest/ charges, new court action and letters or phone calls for payment. Contact a specialised debt advisor to see whether it would be the best fit for your individual circumstances.
Bankruptcy
A declaration of bankruptcy means you must take part in a strict review of your finances with an appointed Trustee. Together you assess everyday living costs and determine any assets including your property. The Trustee takes control of selling any assets not legally required for everyday living and apportions the money from any such sales to your creditors. Until you are officially discharged from your bankruptcy, you can't be a company director or undertake some specific trading activities. You must also tell any future creditors about the bankrupt until you are discharged. Of all the options, it's the least private in nature.
Bankruptcy is essentially a number of legal steps which provide a solution to unmanageable debt. Expert debt advice therefore simply cannot be recommended strongly enough here to ensure it is the correct solution for you.
From our brief overview, we hope to have provided you with information on the common legal solutions. It is of course, not possible to provide individually applicable advice here, which is why we recommend getting professional high quality impartial advice in every case, particularly to safeguard against some of the untrue claims made by inferior debt solutions companies.
IVAs
An Individual Voluntary Arrangement (IVAs) should ideally mean a more affordable monthly payment, in an arrangement agreed with creditors typically lasting at least 5 years. It is used for debts totalling 15,000 or above, owed to 3 or more creditors. After it's finalised, creditors stop adding new interest, charges, any new court action or payment demands by letter or telephone. IVAs are not announced in local papers and for some people (but not all) prevent them losing their home. If you comply with the terms of the IVA, when it expires outstanding debts covered by it are written off.
If you decide on an IVA, you are typically represented by a licensed Insolvency Practitioner (IP). It is a type of legal agreement; therefore expert debt management advice is invaluable to discover if it really is the best option.
Debt Management Plans
An option for debt management for debts with a minimum total of 5,000 owed to 2 or more creditors. You would draw up a plan with a third party who agrees to negotiate with creditors. Typically, your monthly payments are taken by the third party for allocation amongst creditors. You would need at least 100 monthly 'disposable income' to follow this option (100 after mortgage/rent, food, travel costs/petrol, childcare, gas/electricity, etc).
To ensure that it would be an optimal solution for you, do contact an impartial debt advisor for individual guidance.
Trust Deeds
This option applies in Scotland. You and an Insolvency Practitioner (IP) agree on a proposal, which the IP presents to creditors, typically payments agreed over 3 years. All creditors must agree unless it is a 'Protected Trust Deed', which means creditors agree to stop further interest/ charges, new court action and letters or phone calls for payment. Contact a specialised debt advisor to see whether it would be the best fit for your individual circumstances.
Bankruptcy
A declaration of bankruptcy means you must take part in a strict review of your finances with an appointed Trustee. Together you assess everyday living costs and determine any assets including your property. The Trustee takes control of selling any assets not legally required for everyday living and apportions the money from any such sales to your creditors. Until you are officially discharged from your bankruptcy, you can't be a company director or undertake some specific trading activities. You must also tell any future creditors about the bankrupt until you are discharged. Of all the options, it's the least private in nature.
Bankruptcy is essentially a number of legal steps which provide a solution to unmanageable debt. Expert debt advice therefore simply cannot be recommended strongly enough here to ensure it is the correct solution for you.
From our brief overview, we hope to have provided you with information on the common legal solutions. It is of course, not possible to provide individually applicable advice here, which is why we recommend getting professional high quality impartial advice in every case, particularly to safeguard against some of the untrue claims made by inferior debt solutions companies.
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