What is Debt Management?
Affordable debt repayments. Plus all interest and charges are requested to be frozen.
Debt Management is a debt plan used to manage your unsecured debts into one affordable monthly payment. Debt Management involves negotiations with your creditors to often reduce your monthly payments into a more manageable payment.
The key advantage is having one affordable monthly repayment to make which is paid to your creditors on your behalf. All communication between your creditors and yourselves will be handled, taking away the hassle of dealing with creditors. Once your primary living expenses have been included in your financial statement, you only pay what you can afford. This way, you can still pay those important bills and they look after the rest for you.
How can My Debt Help UK help?
My Debt Help UK connects you to a partner company which is a specialist IVA provider. As part of their processes, they will discuss all possible options with you, to enable you to make an informed decision on the option that is best for you. If you decide that Debt Management is your preferred solution, and you wish to pursue it further, you will be signposted to a specialist Debt Management provider.
The Key Facts of Debt Management
Happier creditors. One affordable monthly repayment..
A Debt Management plan is an informal arrangement meaning there are no contracts to tie you in. You can withdraw at any time, but so can your creditors.
Am I eligible?
- Struggling with repayments on debts such as credit cards and loans?
- Your unsecured debt is greater than £2,000
- You can afford to pay more than £80 per month towards your debts
Key Facts about Debt Management
- You only pay what you can afford
- Your credit rating could be affected. If you are already struggling with your repayments then your credit rating is likely to be poor.
- Creditors are not obliged to agree to a Debt Management Plan nor freeze interest and charges. This can lead to an increase in the total sum repaid and can extend your repayment period. Before entering a plan, please ensure you have an estimate for the total repayment period and length of time for the plan subject to your creditors accepting the arrangements
- A Debt Management Plan is informal meaning both you and/or your creditors can withdraw from it at any time
- Failure to keep up your repayments once a repayment plan is set may result in arrangements with your creditors to be broken. If you feel you are struggling with your arranged payment you will need to contact your debt management provider and they shall review your repayment plan and see what options are available to yourself.
Still not sure?
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What is Bankruptcy?
It can be one of the quickest ways to give yourself a fresh start.
Bankruptcy is a long-established solution available to any person facing serious debt problems in the UK (apart from Scotland) today. Many people who have no or very little disposable income to pay to creditors are turning towards Bankruptcy to solve their debt problems.
Our partner company’s assessment team will discuss with you whether you qualify for Bankruptcy and how it will affect you. Bankruptcy is often seen as a final resort to resolving debt problems. If all the other debt solutions aren't suitable then bankruptcy could be your only solution. In that case you will be provided with details of organisations that can help you with this.
What happens when you become Bankrupt?
- In the long term - Most if not all your unsecured debts will be written off leaving you with debts that could not be included in the bankruptcy (such as secured debts, non-provable debts, student loans and some benefit overpayments) or none at all.
- The short term - Stops Debt and bill collectors harassing you for money from debts included in the bankruptcy.
- Your Job - Most of those with livelihoods would not be affected by being protected by Bankruptcy. However, this is not always the case. Before commencing this process, it is always best to consult a professional over this or speak to your employer’s HR Department.
Bankruptcy
What problems can arise from declaring bankruptcy?
Declaring yourself bankrupt is often seen as a last resort because it is more invasive and there are restrictions attached to it. The restrictions will be imposed usually for 12 months from the date of the bankruptcy order. Normally after 12 months you will be discharged although in certain circumstances the period can be longer.
The steps to Bankruptcy
- You need to fill in an online application via the Insolvency Service website at www.gov.uk. This needs to include details of your debts and your income and expenditure.
- You will be required to pay a fee of £680 before your application can be considered. This can be paid in instalments. In certain circumstances, you may be able to get some help with this
- Your bankruptcy application will be considered by an adjudicator who will if appropriate make the bankruptcy order. Shortly after the order is made, you will receive a copy of it. You may be interviewed about your situation by the Official Receiver (“The OR”).
- You are usually discharged from bankruptcy within 1 year. The Official Receiver will be looking to see if you have any assets in Bankruptcy, for example a property, that can be sold to raise money towards paying your creditors. If you have a monthly disposable income, after considering your essential living costs for you and your family, you could be required to make payments under an Income Payments Agreement/Order, which will last for 3 years.
- Depending upon the circumstances, an outside Trustee may be appointed. This will be an Insolvency Practitioner.
Key Facts about Bankruptcy
- You will not be able to act as a company director
- You will not be able to manage another business without telling you business associates that you have been made bankrupt
- You will not be able to obtain credit greater than £500 without explaining that you have been made bankrupt
- Your employment may be affected, particularly if you have professional qualifications or hold a managerial position. If in doubt, check your contract of employment or consult your HR department
- If you have a business, particularly one that has overheads (e.g rent etc) it will most likely be closed by the OR/Trustee
- Once you have been made bankrupt, you will find your credit rating will be seriously affected and your ability to obtain future credit will be difficult and potentially more expensive
- You are legally obliged to cooperate with the OR/Trustee. If you are considered by to be guilty of any misconduct either before, or during, the period of Bankruptcy, the restrictions can be extended and, in some cases, discharge can be suspended
- If you own your home and there is equity in it, the OR/Trustee has the power to sell it to realise the equity
- The OR/Trustee has a duty to investigate (and potentially overturn) prior transactions e.g assets disposals, and payments made, particularly those involving connected parties
Need more information?
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What is a DRO (Debt Relief Order)?
It can be one of the quickest ways to give yourself a fresh start.
A Debt Relief Order (DRO) is a personal insolvency process. It provides you with legal protection from your creditors and your debts are written-off after one year.
DROs are one way to deal with your debts if you owe less than £30,000, don’t have much spare income and don’t own your home.
If you qualify for a DRO:
- other than the application fee (£90) you won’t have to pay anything
- your creditors can’t recover their money without the court’s permission
- you’re usually freed (‘discharged’) from your debts after 12 months
Our partner company’s assessment team will discuss with you whether you qualify for DRO and how it will affect you. DRO is available to people meeting certain criteria, so eligibility will depend upon your overall circumstances. If you are eligible, and DRO is your preferred option, then our partner company will refer you to an authorised intermediary for further assistance.
Qualifying criteria for a DRO
To qualify for a DRO you must meet all the criteria below:
- You have debts no more than £30,000
- You’ve no more than £75 a month spare income
- You’ve no more than £2,000 worth of assets
- You’ve lived or worked in England and Wales within the last 3 years
- You haven’t applied for a DRO within the last 6 years
How Do I Get One?
You must apply via an intermediary authorised by the Insolvency Service. The intermediary will consider your overall financial position (level of debts, income and assets) and advise whether you qualify. If you do, following payment of the fee, an online application is submitted. If accepted, the order will be made.
DROs can be revoked if:
- your finances improve
- you don’t co-operate with the official receiver - eg you don’t give them the information they ask for
- your income, assets or debts exceed the specified limits
If you get new debt after your DRO is approved you could
- get a bankruptcy order
- be prosecuted if you don’t tell new creditors about your DRO
Still not sure?
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All my lenders were contacted on my behalf
...and the majority agreed to accept a shorter repayment term & lower payment
Check if you qualify
I also had all my debts consolidated
so my card, loans and arrears are paid by 1-single monthly payment
I was paying £654 / mth towards my debt
8-weeks later I am paying an affordable £125
*This does not include day-day running costs like rent & food Check if you qualify
All recovery action from my lenders ended
...plus all interest & charges were stopped
I completed my lower payment plan as agreed & paid back £7,500
...and had £16,500 legally written-off
Check if you qualify
Like 78,000 other people last year I benefited from
- Consolidated debt
- 1-single lower payment
- Shorter payment term
- Recovery Action Stopped
- Interest frozen
- No more late charges
- Debt legally written-off
See the help available for your level of debt...
Check if you qualify
IVA CONs / IVA Disadvantages
1. Possible Release of Home Equity
If you have any equity in your property or any other significant valuable assets, you may be required to release some or all of this as part of the IVA agreement. However, sometimes the creditors agree to an extra year of IVA payments if an equity release from your property is not possible, making the IVA 6 years in total instead of 5.
2. Minimum Level of Debt
Usually you will only be able to undertake an IVA if your total unsecured debt is more than £6,000. In addition, you will usually need to be able to afford a monthly payment of at least £80.
3. No Unsecured Borrowing During the Arrangement
While you are in an IVA, you will not be able to use your store or credit cards. These must be cut up. However, it may be possible to change an existing mortgage or take a new one while you are in an IVA. In addition, you may be approved to borrow up to £500 if this is agreed with the insolvency practitioner. You will be able to use prepaid cards.
4. Stick to a regimented regime for 5 years
Failure to maintain control of your finances and keep up your IVA payments will mean that you may be bankrupted. However you may be able to take payment holidays and you may be able to miss payments for extreme circumstances, but this will extend the period of you IVA.
5. Damaged Credit Rating
Your credit rating will be effected and you will be unable to borrow for the duration of the IVA. You will also have a period after your IVA where it may be hard to get credit. This period varies but a credit rating can be repaired over time.
6. Longer than Bankruptcy
An IVA will usually last for 5 years compared to bankruptcy which will usually only last 1 year unless you have a payment order and this will last three years.
7. You will pay back more than you will in bankruptcy
In an IVA you will pay back as much as you can afford over the 5 years (e.g. 20%-50%) as opposed to bankruptcy where you will pay back a minimum amount (which could be as little as 0%).
8. You must include all creditors
All creditors must be included and you cannot make separate arrangements with each one (which can be done in a DMP).
9. Professional Status
Some jobs do not allow the employee to become bankrupt or be in an IVA. It is important to check the terms and conditions of employment to be sure of this.
10. Insolvency register
IVA is a form of insolvency as is bankruptcy, so your name can be searched in the insolvency register which is available on the internet. However, someone would have to have a reason to do this; the information is not advertised in any way. See: https://www.gov.uk/search-bankruptcy-insolvency-register