Clear Unsecured Personal Debt, subject to creditors approval.
Personal debt problems? Call 0800 074 6918
We receive a lot of calls and emails from the public asking; "What is the best method to clear personal debt?".
Money Advice Direct can help you with a wide range of issues and concerns ranging from personal debt advice to advice and help if you are refused a loan. Our national debt helpline is contactable on FREEPHONE 0800 0746918 which means if you have personal debts our advisers can provide debt help without the need for further worry. In more serious situations the service can provide IVA advice and Debt Help to help you clear personal debt and manage debt problems in the UK.
Clear Personal debt options available in the UK:-
Individual Voluntary Arrangements (IVA) to clear personal debt over £15,000, subject to creditor's approval.
An IVA is a formal alternative for individuals wishing to avoid bankruptcy.
The IVA was established by the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA compromises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged. An IVA is ideal if you have been refused loans to clear personal debt.
An IVA is a contractual arrangement with creditors and can be as flexible as an individual's own personal circumstances; they can therefore be based on capital, income, third party payments or a combination of these. An IVA is ideal alternative to personal bankruptcy to clear debt.
Creditors take a decision at a creditors' meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in personal bankruptcy. A vote is taken - by value. More than 75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved. If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.
Debt management plans to clear personal debt over £2000, subject to creditor's approval.
Please don't panic if you have been refused credit or loans in the UK you can still clear personal debt with a debt management plan. If you have enough money left over after paying your priority creditors and essential expenses, you may be able to arrange a debt management plan.
The advantages and disadvantages of using a Debt Management Plan to clear personal debt are that:
- You make only one payment under personal debt management. The monthly amount is divided fairly between all your creditors
- You don’t have to contact your creditors yourself, under debt management, this is done for you.
- Debt management is a strong alternative if refused a loan in the UK.
- Please note that although the consumer may become debt free (subject to terms and conditions) at the end of the DMP period, if a default notice has been issued the effect is likely to remain on the consumer's credit profile for a lengthy time.
- Please note that in terms of a DMP if interest and charges continue to apply then there will be an increase in the total amount of debt to be repaid and that due to lower monthly payments it is very likely that the debt will be repaid over a longer period of time.
- Please note that although a lower monthly payment can be negotiated with a DMP this will usually lead to an increase in the size of the sum to be repaid and that a consumer's credit rating may be impaired.
Trust Deeds to clear personal debt in Scotland over £8,000, subject to creditor's approval.
The Protected Trust Deed (PTD) is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.
Provided certain conditions are met, the Trust Deed may be registered as “protected”, thereby preventing creditors from petitioning for the debtor’s sequestration.
The main advantage of entering into a trust deed are that it takes the personal pressure off as all correspondence and the Trustee will handle all of the communications from a persons creditors.
Bankruptcy to clear personal debt over £750, , subject to creditor's approval.
Bankruptcy is an option that often has to be considered when an individual cannot clear their personal debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order. If you have been refused loans to clear debt then bankruptcy may be the only option.
Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.
Please note that if you are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the Individual Voluntary Arrangement procedure (IVA).
All telephone calls to the The UK Insolvency Helpline by individuals and households are free of charge. To contact an advisor call 0800 074 6918. Alternatively complete an online enquiry form and an advisor will call you back at the time that you specify.
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IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]