Debt Solutions Overview

There are a number of ways you can take control of your debt. The best solution for you will depend on your personal circumstances.

You can read more about individual debt management options here or to get personalised advice, speak to one of our advisors using the live chat button.

Administration Order

An administration order is an agreement between you and the court to pay back your debts over an agreed period of time. Administration orders aren't issued very often as the qualifying criteria is quite specific and most people find that a Debt Relief Order (DRO) is better suited and more affordable for them.

To qualify for an administration order, you must have two or more debts that do not total more than £5000 and you must have at least one unpaid County Court Judgement (CCJ) or High Court Judgement.

Administration orders are only available for residents of England, Wales and Northern Ireland.

Bankruptcy

Bankruptcy is a debt solution that writes off the entirety of your debts if you cannot afford to pay them with a one-time administration fee of £680. It's a legal process that can give you a fresh start if you have no hope of paying your debts back.

Bankruptcy may be suitable for you if you are insolvent - meaning that you cannot pay your creditors when your bills are due or that your total debts are greater than the value of your assets. Bankruptcy can have serious implications on your personal, financial and professional life and so should be considered carefully.

Bankruptcy is available for residents of England, Wales and Northern Ireland. For residents of Scotland, Sequestration is a similar solution.

Debt Arrangement Scheme (DAS)

A debt arrangement scheme is a government-run arrangement that allows you to repay all of your debts through a debt payment program (DPP). A DPP allows you to pay off your debts in full over a reasonable time period through affordable monthly payments. Your monthly payment amount is based on your income and expenditure and will be an amount that you can afford.

A DAS is suitable for anyone struggling to make their contractual payments each month (the repayment amount originally agreed with their creditors) but who still have some money left over after they have paid for their essential living expenses such as household costs, travel and clothing.

A DAS is only available to residents of Scotland. For those living in England, Wales or Northern Ireland, a Debt Management Plan is a similar solution.

Debt Consolidation Loan

Consolidating debt is the process of taking out new credit in the form of a debt consolidation loan to pay off existing credit. People do this to reduce the interest rate on their current debt, reduce how much they pay each month and reduce the number of creditors they owe money to. Credit card debt consolidation can also be done by transferring the balance to lower interest cards.

While consolidating debt often sounds like a good option, it could make your situation worse if you're still unable to afford your monthly repayments or if you choose a loan with a high interest rate. If your credit rating is poor, consolidation loans may not be an option at all.

Speak to our debt advisors for more information using the live chat button.

Debt Management Plan (DMP)

A debt management plan is an informal agreement between you and your creditors which allows you to repay your debts in reduced payments that are more affordable for you. Your financial situation will be assessed to establish what your single monthly payment will be.

A DMP is suitable for anyone struggling to make their contractual payments each month (the repayment amount originally agreed with their creditors) but who still have some money left over after they have paid for their essential living expenses such as household costs, travel and clothing.

A DMP is only available for residents of England, Wales and Northern Ireland. For residents of Scotland, a Debt Arrangement Scheme is a similar solution.

Debt Relief Order (DRO)

A DRO freezes your debt repayments and interest for twelve months and if your financial situation has not improved at the end of this period, then all the debts included in the arrangement will be written off. A DRO is a more affordable solution than bankruptcy but applicants need to meet certain criteria in order to be eligible to apply.

A DRO may be suitable for you if you have a relatively low level of debt (<£30,000 in England and Wales, <£20,000 in Northern Ireland), minimal assets and little to no disposable income. A DRO may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply.

DROs are not available to residents of Scotland. For Scottish residents, the minimal assets process (MAP) is a similar solution.

Individual Voluntary Arrangement (IVA)

An IVA is a formal alternative for those wishing to avoid bankruptcy and is suitable for anyone with unmanageable debt. An IVA allows you to pay your debts in one affordable monthly payment, usually over five or six years. At the end of your IVA any unsecured debt left is written off.

An IVA may be a suitable solution if you can afford to pay something towards your debts but not the full amount your creditors want. An IVA may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply.

An IVA is only available for residents of England, Wales or Northern Ireland. In Scotland, a Trust Deed is a similar solution.

Making Arrangements with Creditors

If you’re behind with your monthly payments or you just need some breathing space to take control of your finances, you can arrange debt payment plans directly with your creditors.

You'll need to work out how much you can afford to pay towards your debts by putting together an accurate budget first. The budget should be based on your monthly income, household spending and debts. Once you know what you can afford, you can approach your creditors to put a debt repayment plan in place.

Speak to our debt advisors for more information using the live chat button.

Minimal Assets Process

The minimal assets process is a way for people on a low income with minimal assets to apply for sequestration. The MAP will write off the debt that you'd struggle to repay within a reasonable time. At £50, the MAP is a more affordable solution than sequestration but applicants need to meet certain criteria in order to be eligible to apply.

The MAP may be suitable for you if you have a relatively low level of debt (<£25,000), minimal assets and little to no disposable income. The MAP may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply.

The MAP is only available for residents of Scotland. For residents of England, Wales or Northern Ireland, a Debt Relief Order is a similar solution.

Protected Trust Deed

A trust deed is a formal alternative for those wishing to avoid sequestration and is suitable for anyone with unmanageable debt. A trust deed allows you to pay your debts in one affordable monthly payment, usually over four years. At the end of your trust deed any unsecured debt left is written off. A trust deed can become 'protected' if the majority of your creditors agree to it.

A trust deed may be a suitable solution if you can afford to pay something towards your debts but not the full amount your creditors want. A trust deed may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply.

Trust deeds are only available for residents of Scotland. In England, Wales and Northern Ireland an Individual Voluntary Arrangement is a similar solution.

Releasing Equity

Equity release is only available to people who are at retirement age.

Equity release can be used to help you manage your debt or to repay a mortgage. It involves releasing money that’s tied up in your house if you own your home. The money can be released as a lump sum or you can set up access to a flexible borrowing facility.

The amount of money you’d be able to release will depend on your age and the value of your home. Your health may be taken into consideration too. For new retirement mortgages or interest only lifetime mortgages, affordability will also be considered.

Speak to our debt advisors for more information using the live chat button.

Re-mortgaging

A re-mortgage is when you replace your existing mortgage with a new one to improve your financial situation.

Re-mortgaging can mean changing products with your existing lender or switching to another mortgage lender completely. If you're considering re-mortgaging in order to deal with your debts, you should seek out debt advice first.

A mortgage lender will base your application on a number of things including the value of your house, how much you want to borrow and your credit file. If you’re in arrears with your mortgage or any other debts, your credit rating will have been affected and it’s unlikely that you’ll get a good mortgage offer.

Speak to our debt advisors for more information using the live chat button.

Selling Assets

In certain circumstances it makes financial sense to release any money locked away as an asset to help you reduce or clear debts.

If you have assets that you’re willing to sell, such as a home, car, watch or other valuable items, you could consider selling them to release the money and use it to help you while you’re struggling.

Speak to our debt advisors for more information using the live chat button.

Settlement Offers

If you have a lump sum of money from selling an asset, receiving inheritance or as a gift from family or friends, you can use this to pay back your creditors by arranging a 'full and final settlement' to your debts.

If you have enough money, you might be able to repay all of the money you owe and become debt free. But if the lump sum you have is less than the amount you owe to your debts you can make ‘full and final settlement’ offers. This means offering the lump sum you have in return for your creditors agreeing to ‘write off’ the rest of the debt. It's important to note that partially settled debts will affect your credit rating.

Speak to our debt advisors for more information using the live chat button.

Sequestration

Sequestration is a debt solution that writes off the entirety of your debts, if you cannot afford to pay them, with a one-time administration fee of £150. It's a legal process that can give you a fresh start if you have no hope of paying your debts back.

Sequestration may be suitable for you if you are insolvent - meaning that you cannot pay your creditors when your bills are due or that your total debts are greater than the value of your assets. Sequestration can have serious implications on your personal, financial and professional life and so should be considered carefully.

Sequestration is only available to residents of Scotland. For residents of England, Wales or Northern Ireland, Bankruptcy is a similar solution.

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