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