Five common ways to get your life back after falling into unmanageable debt
By Mr Bankruptcy
3rd May 2023
If you are in debt, there’s a number of ways that may be available to you to help you manage them and to resolve any dispute you are in with creditors.
What debt management solutions are available to you?
The following are some of the most common solutions used to manage personal debt.
- Debt Management Plan (DMP)
An informal agreement between you and your creditors on how you will pay back your debts, such as credit cards, store cards or loans. Once agreed, your debts can be consolidated to a single monthly payment. The provider of the DMP will then distribute the money you’ve paid between your creditors.
2. Individual voluntary arrangement (IVA)
This is a legally binding agreement between you and your creditors that needs to be arranged by an insolvency practitioner. Once in place, you will no longer be charged interest on your debts and creditors will stop chasing you for payment. An IVA is more suitable for debts over £10,000 and will usually last for around five years, after which you won’t need to pay the remaining debt.
3. Bankruptcy
If you owe more than £5000, creditors can issue a bankruptcy petition. You can also make yourself bankrupt, if you owe more than £750, if you can’t pay your debts and what you owe is more than the value of all your possessions. An official receiver will manage your financial affairs, checking whether you’ve made efforts to try and avoid bankruptcy; this may included selling off assets to raise money to pay creditors. Bankruptcy usually last for 12 months and after that period most debts will be written off.
4. Debt Relief Orders (DRO)
A DRO can be used if you owe £30,000 or less, have assets worth £2000 or less, don’t own your own home, have £75 or less each month once you’ve paid your household bills, and you haven’t had a DRO in the previous six years. You will need to complete an application to an Official Receiver and you won’t be required to make payments against debts included in the DRO. After a year your debts will be written off.
5. Full and final settlement
This may be agreed with creditors when you have a lump sum you can pay towards your debts. You may not be able to clear the whole amount owed, but a lump sum payment towards the debt may be enough for an agreement by creditors to write off the rest of the sum owed.
Before moving forward with any form of debt resolution, you must understand the implications of each option and how it would apply to your situation. Its effect on others in your life should also be taken into account.
However, when you face a debt problem that looks insurmountable, it’s good to know that you could have a solution to hand. To learn more about your options, take a look at our comparison of debt solutions or contact us without delay for unbiased, non-judgemental advice.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates today, or ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.