Options

OPTIONS

Your situation is unique to you and therefore the correct solution will be dependent on various factors such as debt level, employment status and affordability. There is a very useful guide, written by the Insolvency Service called “In Debt – Dealing With Your Creditors” which covers in great detail the best way to deal with creditors if you are experiencing problems with debt. You can access this document by clicking HERE. At In Control, we operate a ‘best advice’ policy meaning that our debt advisors will only ever offer a solution providing there are measurable benefits of which a fee is generally charged for our service. Where we are unable to provide the best solution in-house, you may be referred to a suitable provider who we have referral agreements in place & who may pay us a fee for the referral. More details can be found in our terms and conditions Here are the big 4 debt solutions and information on their benefits, disadvantages and qualifying criteria.

DEBT MANAGEMENT PLANS

Benefits;

Flexible way to pay your creditors – if your circumstances change, so can your DMP

Can pay monthly, weekly, fortnightly – whenever suits you.

Interest and contact can be stopped/reduced

Wide-ranging acceptance criteria

Disadvantages:

Creditors are not obliged to freeze interest

Can affect your credit rating

Reducing the amount you pay can increase the term and you might end up paying more.

Acceptance Criteria

£1000+ of unsecured debt

UK postcodes

Minimum £50 disposable income

IVA

Benefits;

Structured period normally over 5 years

No contact with creditors

Legally binding on creditors

Retain professional status – ie Accountants, IFA’s

Disadvantages:

Also legally binding on you and is therefore not as flexible as DMP

The term of an IVA can be up to 6 years and fees are applicable.

Acceptance criteria is limited and can include restrictions on expenditure.

You will normally have to use equity from property as part of the IVA

Failure to pay can result in bankruptcy proceedings

IVA’s are not guaranteed to be accepted by creditors and must be agreed by 75% (of total debt value) of creditors.

Acceptance Criteria

£15,000k unsecured debt

Normally start from £250 per month

BANKRUPTCY

Benefits:

Frees you from overwhelming debt you have no way of repaying

Disadvantages;

Must declare bankruptcy if you wish to gain credit in excess of £250

Lose all valuable assets

Serious credit rating consequences

Public information

Lose professional status (doctors/accountants etc)

DEBT RELIEF ORDER (DRO)

Benefits

Cheaper than bankruptcy

Normally lasts for 1 year

Creditors can take no further action whilst the DRO is in place

You will be free of the debts listed in the order after the DRO

Disadvantages

It is a form of insolvency

Registered on credit rating

You will find it difficult to get credit for 6 years

You cannot set up a ltd company or work as a Director without Court permission

Acceptance Criteria

You cannot have a DRO if;

You have debts more than £15,000

have assets/savings more than £300

have a vehicle worth more than £1000

have more than £50 disposable income each month.