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Debt Management – Your Options To Get Out Of Debt In The UK

Debt Management – Your Options To Get Out Of Debt In The UK
Debt Management – Your Options To Get Out Of Debt In The UK

When hit with a crisis, it is easy to throw your hands up in the air and stay in the stage of oblivion rather than facing them. But running away from them is not going to solve them in any way nor are you going to land up in a better place. Same is the case with debts. If your debts are piling up, it can be a much easier option to turn a blind eye. But, ignoring your debts will not make them go away, and in fact, ignoring them will only lead to much bigger issues. If you are living in the UK and have debt-related issues which you can’t seem to resolve, you can overcome them by availing suitable debt management services.

In the UK, there are many financial institutions that offer various debt management services & plans that could help you resolve your finance-related issues & get out of debt. It is apparent that different people will have different financial issues, and so, just one solution will not be suitable for debt settlement. Also, different countries in the UK have different rules & policies regarding debt management, and so, you will have to choose & follow them accordingly. 

1. Debt Help – Many middle-class people keep juggling in between repaying old debts & taking new ones, and at one point they reach a stage where they can no longer manage in between repaying their debts and handling their regular expenses. At such times, you can choose to seek debt assistance help and avail a suitable debt reduction plan. A legal & licensed insolvency practitioner (IP) will communicate in between you and your lenders & will work for an amicable debt settlement for both the parties. These debt reduction plans will come with strict policies, not abiding by which can lead to other legal issues.

2. Individual Voluntary Arrangement (IVA) – In an Individual Voluntary Arrangement (IVA) type of debt management solution, your debts can be repaid to the lender in a more manageable & affordable way. An IVA can be typically availed for a debt amount of up to £50,000 with a maximum tenure of 5 years. The IP will study all your debts, your finances, and talk to the lenders about the issue, and if 75% of the lenders agree to the insolvency plan, your IVA will get approved. With the approval, you will have to pay only a small amount of money that is more affordable to you than the original repayment amount. The repayment amount will be fixed until the IVA tenure, and after the tenure, any remaining debts will be waived off.

3. Debt Relief Order (DRO) - Debt Relief Order (DRO) is the debt insolvency solution like an alternative to IVA, but available to borrowers who have relatively lower income, lesser debt level, and fewer assets. The DRO is available for debtors who have a maximum debt amount of £20,000 and, can be set for a period of around 12 months. At the end of the DRO tenure, if your financial condition hasn’t improved for the better, your pending debts will be waived off.

In addition to these debt management services, there are a few more similar services available in the UK to reduce debt. However, the services are different in various countries. In England, Wales, & Northern Ireland, these debt help solutions are on the same lines, whereas they are different in Scotland. In England, Wales, Northern Ireland, etc., the other services include declaring bankruptcy, debt consolidation help, County Court Administration Order, and other debt management plans. In Scotland, these services are known by other names like the Minimal Asset Process (MAP), Protected Trust Deed (PTD), Debt Arrangement Scheme (DAS), & Sequestration, which is the Scottish version of bankruptcy.

Any debt solution will have its own pros & cons. So, before you get into a final agreement, you will have to consider all the aspects and details about them. You can talk to a financial advisor for details & have a better understanding of it.

APR Disclosure

Representative example: £400 borrowed for 90 days. Total amount repayable is £561.92 in 3 monthly instalments of £187.31. Interest charged is £161.92, interest rate 161.9% (variable). Representative 305.9% APR.