Exploring Debt Solutions

Sometimes, despite your best made plans, there may be times where money is tight and on occasions this may result in you becoming in debt. Everyday life can certainly be an an expensive business. With ever-rising household bills, rising child care costs and general daily living costs at an all time high, it can be really difficult to stay in budget. Being in debt can be a stressful experience, but there are steps you can take to gain control of your financial situation. 

What to do if you're in debt?

If you are in debt, firstly, it's important to know that there is an abundance of help and advice out there so be sure to reach out to those that can help. National Debtline is an independent debt advice charity that are on hand to answer your questions, offering free impartial debt advice to you. 

Know Your Options

A debt solution is a way to take control of your debts. There are different types and they include bankruptcy, debt relief orders, debt management plans, administration orders and Individual Voluntary Arrangements (IVAs). So what do each of them entail:

Bankruptcy
Bankruptcy is a legal process that cancels or writes off most of your debts. This means you do not have to pay them back. You will not have to deal directly with your creditors, once you are bankrupt.

Debt Relief Order
A debt relief order is a way of cancelling, or 'writing off' your debts. This happens if your finances do not get better after 12 months.

Debt Management Plan

A debt management plan is an agreement to pay back money you owe, based on what you can afford.

Administration Order
An Administration Order is a formal, legally binding agreement between you and your creditors to repay your debts over a period of time

Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement is a legally binding agreement between you and the people you owe money to.

You need the help of an insolvency practitioner (IP) to set up an IVA which involves paying an affordable monthly sum over a fixed period of time.

What is Breathing Space?
Breathing Space is a government scheme where you are protected whilst you seek debt advice and work towards a debt solution. For up to 60 days, the people you owe money to cannot add interest or fees onto your debts, take any enforcement actions or contact you about your debts.

For more information or for advice and help with your debts, visit Gov.uk

*Collaborative post