Debt Help

What debt help is available to you

Please note that Money Advice Direct Debt Advice Service is not a Government service and is in no way connected the Government of the UK. Please beware of organisations masquerading that they have official government status.

Please watch out for statements by debt management firms such as:

'Government backed UK debt help and advice'
'Take advantage of government legislation'
'Government backed scheme'
'Write off debt with a little known government legislation'

These statements breach of OFT debt management guidance because they mislead by implication or omission as they:

• Imply that the business has official government status
• Imply that the business is in some way connected to the government.

 

Parliament and Government both play a part in forming the debt help laws of the United Kingdom. They are separate institutions that work closely together. The UK Government fund and assist various debt help services in the UK such as advice and law centres based in towns and villages over the UK. Over the last few years the Government has been funding various debt services and debt advice agencies that help and advise people with serious debts problems.

Options to help debt problems

Debt management plans

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.

A debt management plan is an arrangement with your creditors to pay back the debt by regular instalments. Instead of you speaking to your creditors yourself to arrange the plan, a Debt Management Company (DMC) does it for you. Usually you have to pay for this service although there are some DMCs who will do this for free.

Administration Orders

If you have enough money left over after paying your priority creditors and essential expenses, you may be able to apply to the county court to have all your non priority debts put together into one affordable monthly payment. This is called an Administration Order.

You can apply for an Administration Order if your total debts are less than £5,000 and you have a county court judgment (CCJ) against you. The court decides what a fair amount depending on your income is. The court can agree that you only pay part of the total debt. This is called a composition order.

Individual Voluntary Arrangements (IVAs)

If you have enough money left over after paying your priority creditors and essential expenses, you may be able to arrange an Individual Voluntary Arrangement (IVA).

An IVA is a legal agreement with creditors (usually non priority creditors) to repay your debts. This could either be in part or in full. The arrangement is negotiated, written up and checked regularly by an independent solicitor or accountant called an Insolvency Practitioner. Not all the creditors have to agree to an IVA as long as the creditors to whom you owe 75% of your debt agree

Consolidation Loan

If you have enough money left over after paying your priority creditors and your essential expenses, you could think about taking out a loan to pay off your non priority debts. This is called a consolidation loan. You can use a consolidation loan to pay off things like credit card debts and loans.

It’s usually not a good idea to borrow more money to repay your existing debts as this can make things worse and cost more in the long run. Many creditors ask for the new loan to be secured against your home. This means you could lose your home if you don't keep up the payments.

Asking to write off your debt

In exceptional circumstances, your creditors may agree to write off your debt or stop action altogether. This is most likely to happen if you have a low income and your situation is particularly difficult and unlikely to get better. For example, you may have long term serious health problems or be very elderly.

You will usually need to show proof of your situation, for example, medical evidence, before creditors will agree. If creditors do agree, ask them to put this in writing.

Bankruptcy

If you have no money left over in your budget, or you have so little that it will take many years for you to repay your debts, you may want to look at bankruptcy as an option.

Going bankrupt can take the pressure of creditors away from you. You are allowed to keep certain things, like household goods and a reasonable amount to live on. When the bankruptcy order is over, you can make a fresh start and the money you owe is usually written off. In many cases, this can be after only one year. Creditors have to stop most types of court action to get their money back following a bankruptcy order (but in some cases the bailiffs may still be able to take your belongings away).

Negotiating with creditors

You are allowed to negotiate with your creditors and most creditors will consider any reasonable request or offer of repayment that you make. Sometimes, you need to contact creditors several times before they will agree to what you are asking.

What you ask your creditors for will depend on:

• What debts you have
• Whether you have money left over to offer
• Whether you have belongings worth selling to pay some or all of the debt off
• Whether or not your situation is likely to get better.

If you would like to know how to clear debt and be debt free (subject to terms and conditions) please call 0800 074 6918 or complete the short enquiry form on our website home page. Please note that if you have UK debts and want to clear your debt please contact us anytime.

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