Debt Solutions

Debt Solutions include Individual Voluntary Arrangement, Debt Management Plan, Debt Relief Order and Bankruptcy.

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Debt Solutions Are as Follows: 

  • Individual Voluntary Arrangement (IFA)
  • Debt Management Plan
  • Debt Relief Order (DRO)
  • Bankruptcy
  • Informal Arrangement

1. Individual Voluntary Arrangement

  • Legally binding agreement between you and your creditors
  • Prevents further legal action against you by creditors
  • Avoids stigma and restrictions of bankruptcy
  • Propose to pay an affordable monthly amount (within guidelines) for up to five years
  • Interest and charges on unsecured debt is frozen
  • You may be able to keep your home
  • You may be able to continue your business
  • Your IVA will be approved by creditors if more than 75% vote for acceptance
  • Upon successful completion of the term of your arrangement, the balance of your debts will be written off

2. Debt Management Plan

  • Informal agreement negotiated with creditors
  • Monthly management fee
  • One reduced monthly payment
  • Longer repayment term
  • Interest and charges may or may not be frozen
  • Not legally binding
  • Suitable for lower levels of debt (<£20,000)
  • Must have disposable income

3. Debt Relief Order

Similar to Bankruptcy but suitable if you:

  • Owe less than £15,000 in total to your creditors
  • Own assets worth less than £300 (excluding a motor vehicle with a value of £1,000)
  • Have less than £50 per month disposable income
  • The DRO will last for 12 months
  • The cost to apply is £90
  • You must not have had a prior DRO within six years

4. Bankruptcy

  • Legal process where bankruptcy order is made
  • Trustee appointed to control your assets and deal with your estate
  • Interest and charges are frozen on unsecured debts- direct payments cease
  • Ownership of your assets passes to the Trustee (including your home)
  • Assets will be sold to raise money to pay to your creditors
  • If you have disposable income per month, you may be required to make payments for up to three years
  • Bankruptcy may impact on your occupation if you are e.g., a company director, accountant, solicitor, etc.
  • Your bankruptcy may be announced in the local paper
  • Bankruptcy will usually last for 12 months
  • The cost to petition for your own bankruptcy is approximately £500

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