Debt Solutions

An IVA or Individual Voluntary Arrangement allows you to avoid the trauma of declaring bankruptcy. An IVA is a legally binding agreement which protects you against any further action from your creditors. Once you've committed to an IVA, you could become debt-free in sixty months.
With an IVA you agree with your creditors to paying only what you can afford in a single payment each month over the period of five years. Your creditors agree to write off your debt which you're not able to repay and they will leave you alone.

I'm a homeowner - what will happen with my home?
All of our IVA's are agreed under a document called "The IVA protocol." The IVA protocoI is an industry agreement between IVA providers and lenders. This agreement means that you will never be required to sell your home in a Debt Free Direct IVA. We will help you prepare a list of your income and outgoings which will make sure that all payments to secured creditors (such as your mortgage or car HP) are taken into account in calculating what you can pay your unsecured creditors. If you have equity in your home you may be required to release it to your creditors. This is usually achieved by increasing the level of your mortgage towards the end of your IVA. If this is not possible you are likely to be required to extend your IVA payments by up to an extra 12 months.

• All creditors are bound by the agreement & so creditors cannot hassle you
• Whilst in an IVA your home is protected from legal action & unsecured creditors cannot force you to sell it.
• One monthly affordable payment
• Interest payments are frozen
• Payments are calculated to be affordable; whilst in an IVA your home is protected from legal action and unsecured creditors cannot force you to sell it.

Disadvantages

• Cannot obtain credit whilst in an IVA
• Your credit rating is affected.
• Default can result in Bankruptcy
• Creditors may not accept the proposal.
• If the IVA fails, your creditors will be able to pursue you for the full outstanding balance & no credit will be given in relation to any payments.
• If you have equity in your home you may be required to release it to your creditors. This is usually achieved by increasing the level of your mortgage towards the end of your IVA. If this is not possible you are likely to be required to extend your IVA payments by up to an extra 12 months.

Bankruptcy is an option open to UK individuals and households who are insolvent (in other words, if cannot pay off their debts). You can file for bankruptcy voluntarily, or it can be asked for by a creditor if you owe more than £750.
Of all the solutions to debt problems, bankruptcy counts as the most drastic, with the longest lasting consequences. The main alternative to bankruptcy for many people is an IVA and we will work hard to show you all of your possible options. However, there are circumstances when bankruptcy can be the only choice.
In particular, you may need to consider it seriously if;

• there is no chance of being able to set up an alternative such as an IVA
• you have no assets and no available income
• you have retired, or you have no future need for credit.

Advantages

• If you are declared bankrupt, you are no longer liable for any outstanding debts documented in the bankruptcy proceedings. This can give you peace of mind and alleviate stress.
• Your assets will be shared out between creditors and you can make a "fresh start".

Disadvantages

• You may have to sell your home and other assets such as cars worth more than £500
• You won't be able to get credit during the period of bankruptcy
• Your credit rating is affected & the bankruptcy order will remain on your credit reference file for six years.
• Your name may appear in the local newspaper under the bankruptcy notices section.
• A bankrupt cannot have certain careers or be a director of a company

A debt management plan (DMP) is an informal agreement through which your creditors are asked to accept lower payments from you and to make other concessions too, such as freezing interest. You maintain a single monthly payment to your debt management provider who will distribute your payments between your creditors.
A debt management plan is suitable for people who can offer payment to their creditors but are unable to meet the full contractual payments being requested.

Advantages

• Monthly payment is affordable.
• Although not guaranteed, interest and charges may be frozen by creditors.
• Debt management provider will help with creditor hassle.
• Put you back in control of your finances so you know where your money is going each month

Disadvantages

• Your credit rating will be affected & if you don't complete the plan your financial position could worsen.
• The plan is an informal agreement so does not give legal protection from creditors.
• If interest is not frozen your debt level could increase.
• Extend your payments over a longer term in some cases

A Protected Trust Deed (PTD) is an alternative to bankruptcy/sequestration for people living in Scotland. It is similar to the IVA in England and gives you many of the same benefits.
A Protected Trust Deed allows you to become debt free after a fixed period of three years. You benefit from new monthly payments that are based on what you can afford - and these new affordable payments replace all of your current monthly repayments. Any debts you still have at the end of the PTD period are written off.
Advantages

• Usually lasts for 36 months.
• Monthly payments are set to what you can afford.
• Interest is frozen and your creditors cannot impose more charges or take further legal action.

Disadvantages

• Your credit rating is affected & credit is likely to be more expensive for you in future.
• No more borrowing during the PTD period.
• Default can result in bankruptcy proceedings

A County Court Administration Order is an order made by the court under which you must make payments from your income directly to the court. The court then distributes these monies between the people you owe money to.

You can apply to the court for an order if you owe no more than £5,000 to at least two creditors and you have had a court judgement entered against you (e.g. CCJ).

Advantages

• Creditors who are listed on the order cannot take further action without the consent of the court.
• The court will distribute payments for you.
• Interest and charges will be stopped and if your circumstances worsen you can apply to the court to make reduced payments.

Disadvantages

• Creditors can object and be left out of the order.
• Your credit rating is affected.
• If you don't keep up with repayments the order can be withdrawn and creditors can pursue you again.
• If the court makes an attachment of earnings order to collect payments, your employer will know about your money troubles.

For further information about debt relief orders you should contact your local court office.

A Debt Relief Order is an order granted by an official receiver to help insolvent individuals become free of debt after just one year.

You can apply online through an approved intermediary if you meet the following criteria,

• owe less than £15,000
• do not have an interest in any property
• unable to meet debt payments and have a monthly surplus income less than £50
• assets do not exceed £300 (including any pension contributions made)
• vehicle worth less than £1,000

Advantages

• Debts written off after one year
• Creditors cannot take further action without courts permission
• Fee of £90 less than the cost of petitioning for bankruptcy

Disadvantages

• Not eligible if a homeowner even if there is no equity
• As with bankruptcy your employment could be affected
• Certain debts will not be written off (e.g. student loans, fines)
• Your credit rating is affected.