Which debt solution do you think you would be best for? Don’t worry about trying to figure it out – just get debt help. A debt advice line will tell you if you’re suitable for bankruptcy, IVA or debt management.
England, Wales and Northern Ireland Debt Advice
Our debt advice line knowledge spreads across England, Wales and Northern Ireland for different solutions to debt problems. There are Scottish debt solutions too but they are different.
The most popular debt solutions in England, Wales and Northern Ireland are bankruptcy, IVA and a debt management plan.
To enter bankruptcy you must apply to your local courts for the papers, you fill these out they will look for an income and expenditure a list of all creditors and a list of all assets. When you return your forms you have to make payment if you are unemployed the cost is £525.00 and if you are in employment then it is £700.00.
You will be appointed an official receiver who will look at your case; it is them who will decide whether or not you will make payments these payments are called an income payment order. Bankruptcy itself last a year however if you have to make an income payment order then this lasts for three years.
Debt Relief Order (DRO)
DRO is a form of bankruptcy though to be suitable your debt has to be below £15,000 and you should have less than £50.00 disposable income a month. You must not be a homeowner, the cost of entering a DRO IS £90.00.
Individual Voluntary Arrangement (IVA)
An IVA is a formal debt solution it guarantees to freeze the interest and charges over a set period of time and at the end of this period of time any remaining debt will be written off. You make one monthly affordable payment towards your debt and once you have entered it your creditors are no longer able to chase you for the debt.
It protects your property as in you will never be asked to sell it. However at the 4 ½ year stage into on IVA they will look at the equity. If there is a releasable amount they will ask you to release it, this is done by either remortgaging or buy a third party buy out. If neither of these is an option then they will extend your IVA from the normal five year period to six years.
To enter an IVA you will need an insolvency practitioner to set up arrange and mange your IVA they will put the proposal forward to the creditors.
Debt Management Plan (DMP)
A debt management plan (DMP) is an informal arrangement thus the interest and charges are not guaranteed to be frozen. A company will arrange it for you they will take one monthly payment and distribute it amongst your creditors.
You will repay it till all the debt is cleared, this depends on your debt level how much you repay each month and whether or not the interest and charges are frozen.
There are certain rules you need to adhere to whilst in a debt solution and it is always advisable to seek independent debt advice. In all debt solutions your credit rating will be affected for six years.
In bankruptcy you will not be able to act as a company director.
You should check your contract of employment o make sure a debt solution will not affect your employment.