Debt Solutions

Debt Solutions Are As Follows:  

• Individual Voluntary Arrangement
• Debt Management Plan
• Debt Relief Order
• Bankruptcy
• Informal Arrangement

1. Individual Voluntary Arrangement

• Legally binding agreement between you and your creditors
• Prevents further legal action against you by creditors
• Avoids stigma and restrictions of bankruptcy
• Propose to pay an affordable monthly amount (within guidelines) for up to 5 years
• Interest & charges on unsecured debt is frozen
• You may be able to keep your home
• You may be able to continue your business
• Your IVA will be approved by creditors if more than 75% vote for acceptance
• Upon successful completion of the term of your arrangement the balance of your debts will be written off

2. Debt Management Plan

• Informal agreement negotiated with creditors
• Monthly management fee
• One reduced monthly payment
• Longer repayment term<
• Interest/charges may/may not be frozen
• Not legally binding
• Suitable for lower levels of debt (<£20,000)
• Must have disposable income

3. Debt Relief Order

Similar to Bankruptcy but suitable if you:

• Owe less than £15,000 in total to your creditors
• Own assets worth less than £300 (excluding a motor vehicle to a value of £1,000)
• Have less than £50 per month disposable income
• The DRO will last for 12 months
• The cost to apply is £90
• You must not have had a prior DRO within 6 years

4. Bankruptcy

• Legal process where bankruptcy order is made
• Trustee appointed to control your assets and deal with your estate
• Interest & charges are frozen on unsecured debts- direct payments cease
• Ownership of your assets passes to the Trustee (including your home)
• Assets will be sold to raise money to pay to your creditors
• If you have disposable income per month you may be required to make payments for up to 3 years
• Bankruptcy may impact on your occupation if you are e.g a company director, accountant, solicitor etc
• Your bankruptcy may be announced in the local paper
• Bankruptcy will usually last for 12 months
• The cost to petition for your own bankruptcy is approximately £500