Personal Debt Solutions

An IVA or Individual Voluntary Arrangement was introduced in 1986 as an alternative to bankruptcy allowing people the opportunity to avoid the stress, trauma and legal ramifications of declaring themselves bankrupt.

Should you be in a position where legal action is being taken against you or bailiffs are visiting you to collect a debt an IVA will provide you with legal protection and stop these actions. 

Certain factors must be taken into account when deciding if an IVA is a viable way forward for you:

• You must owe £15,000 or more in unsecured debt.
• You must owe this money to three or more lenders.
• You must have a regular income. (This can be from self-employment)

A Debt Management Plan (DMP) is an arrangement between yourself and your creditors which we will arrange and manage on your behalf.  This allows you to pay one monthly payment to your creditors which is affordable and makes a provision for you to pay your priority bills such as your mortgage, rent, council tax, utility bills, etc

We will compose a budget with you which shows your household income and all your household expenditure. 

This will demonstrate to your creditors what you can realistically afford to pay each month.  Once accepted by your creditors we will take over the day to day running of your debts and deal with your creditors on your behalf.  This arrangement can be on going for as long as it is necessary to pay your debts in full.

Advantages of a DMP:

• You pay one monthly payment and this is distributed on a pro-rata basis to your creditors.
• Interest and charges are often frozen, so the debt doesn't increase.
• You only pay what you can afford, based on your incomings and outgoings.
• You will no longer need to negotiate with your creditors alone.

A Debt Relief Order (DRO) is an alternative to bankruptcy which was introduced in April 2009 to allow people with a low level of debt, with no assets and a low income to avoid going bankrupt.

A very strict criteria has been laid down to qualify for a DRO and are as follows:

• You must have unsecured debt of £15,000 or less.
• You must not have assets, including savings, of more than £300 in total.
• You must not have a vehicle of more than £1,000 in value.
• You must not have more than £50 per month disposable income after you have paid your essential costs of living.

Bankruptcy is a severe last resort and should only really be considered if you are in extremely serious financial difficulty and no other debt solution, such as an IVA or debt management is open to you. 

Whilst Bankruptcy will give you legal protection from your creditors and allow you to start afresh it does carry a lot of legal implications which need to be seriously considered.

In effect your estate passes to your Trustee, who administers the estate. It is his/her responsibility to realise any assets to pay your creditors. Like an IVA creditors cannot pursue you for the money owed and must look directly to the estate but the Trustee has an obligation to realise your assets to pay the creditors.

For some people consolidating their debts with a loan is a good way of lowering your monthly payments and allowing you to manage your debt by spreading the payments out over a longer period of time. 

This would be dependent on the level of debt you are currently in and your current credit status. 

If you owe more than £15,000 it is unlikely consolidation would be a good way forward especially if the loan is secured against your property as secured loans are a very expensive way of borrowing.