Debt solutions that you didn’t know about
We understand that debt can feel crippling at times and finding a solution can be mind-boggling, but you shouldn’t fear it. There is always a solution to the problem you’re facing. It may not be quick or easy, but you can get yourself back on your feet and financially stable again.
Here are some debt solutions you may not have heard about:
An administration order (AO) is a legally binding agreement between you and your creditors to pay back the money you owe over a certain period of time. This debt solution is approved by the court and your creditors must stick to the terms.
There are some terms to getting an AO including you must have no more than £5000 debt in total and have two or more debts. The court will then look into your financial situation and tell you how much you should pay back each month. You then pay the court, who pays the creditors.
To find out more about an administration order, click here.
Individual Voluntary Agreement
An individual voluntary agreement (IVA) is a legally binding agreement between you and your creditors to pay back your debts within a certain timeframe. It is an agreement you make with your creditors and is a form of insolvency. This solution must be set up by an insolvency practitioner who will be a lawyer or an accountant.
Generally, this type of repayment lasts for five or six years and can be flexible to suit your needs. However, it can be expensive, with fees averaging around £5000.
To find out more about an individual voluntary agreement, click here.
Debt Management Plan
A debt management plan (DMP) is an informal agreement between you and your creditors for paying back non-priority debts such as credit cards or loans. You will pay a set monthly payment which is then divided between your creditors and managed by a DMP provider.
This solution is good if you can afford to pay your priority debts such as mortgage and rent but are struggling to manage your credit cards or loans.
To find out more about debt management plans, click here.
Debt Relief Order
This is a way to deal with your debts if you don’t own your home, don’t have a lot of spare income, and your debts are £20,000 or less. There is a £90 fee to apply for a debt relief order (DRO) and once one is in force, your creditors can’t force you to pay debts and you don’t have to make payments towards most types of debt. Once your DRO is over, your debts will be written off, but you still have to pay for debts that are not eligible for a DRO so you must check.
To find out more about a debt relief order, click here.
If you can’t pay back your debts, even after reducing your spending, bankruptcy may be a solution. As well as applying for this yourself, a creditor can also apply to make you bankrupt. You must owe at least £5000 to declare bankruptcy and once it has ended, most of your debts will have been written off.
Declaring bankruptcy comes with advantages and disadvantages, so it’s important to explore if this is the right debt solution for you.
To find out more about bankruptcy, click here.
If your debt is getting out of control, the FREEZE app can help you find a solution. Answer two simple questions and have a solution within 24-hours. You can also speak to our expert team for free debt advice. Download the app today from the App Store or Google Play.