Debt Solutions

Debt Management Plans: Most Debt Management Plans require the active involvement of a debt advice company that could negotiate with your creditors on your behalf.
It is important to note that Debt Management Plans don’t reduce the amount of debt – the arrangement reached with your creditors is for a lower payment over an extended period till the entire amount of debt is paid off.
Debt Management Plans are not legally binding but do help to bring down the monthly payments to what you can afford. Then again, the fact that a debt advice company is involved, there are less chances that the concerned parties would violate the terms agreed upon.

Individual Voluntary Arrangement (IVA): An IVA is a legally binding debt solution that helps you reduce the amount of your debt. A licensed Insolvency Practitioner (IP) negotiates with your creditors on your behalf to allow you to make an affordable monthly payment over five years. To be eligible for an IVA, you must owe £12,000 or more in debt and you must have a regular income. There are of course more criteria. The IVA provider would be able to study your financial circumstances to advise whether an IVA is the best option for you and also whether you qualify for it.
Bankruptcy: Bankruptcy is an extreme form of insolvency and should only be considered when you have no possible way out to pay your debts. A first time bankrupt is discharged from his/her debts within one year or less.
Declaring bankruptcy means you would lose all your valuable assets, including your property. Besides, your bankruptcy status may also affect your job prospects to some extent. If you have your own business, it would, in all probability, be closed down and assets sold to pay your creditors.

Debt consolidation: You can take one large loan to pay off your multiple unsecured loans. The advantage is that you just have to make one monthly payment instead of several payments that normally add up to more. The important thing to remember here is that a debt consolidation loan is usually a secured loan which means it requires collateral in the form of some valuable asset such as your home/property.

Debt Relief Order: Similar to bankruptcy but designed for those who have some minimal assets and surplus income. However, you cannot qualify for a Debt Relief Order if you are involved in another formal insolvency solution such as an IVA or bankruptcy. To qualify for a Debt Relief Order you must owe less than £15,000 and have less than £50 of disposable income per month.

County Court Administration Order: This is when you make your payments directly to the court, which then distributes the amount to your creditors on your behalf. You can apply to the court for a County Court Administration Order if you owe no more than £5,000 to at least two creditors and you have had a county court judgment entered against you also known as a CCJ.