Information About Debt Solutions
Debt problems usually start because of an unexpected change in circumstances. For instance, divorce, separation, loss of job or an over reliance on credit brought about over time. Whatever the reason for requiring help, advice and support is available from free charities.
There is a difference between unsecured and secured credit. Unsecured credit includes personal loans, credit cards, store cards etc. This credit is not guaranteed against any of your assets (like a house or car).
A secured loan, like a mortgage, is protected against your asset. If you default on a secured loan you could lose your asset and be liable for any costs. However, unsecured credit is different.
Regulated advisors can help with your financial problems by providing advice specific to you.
Free Debt Advice
If you are facing problems due to financial worries then debt advice could be the answer. Often getting a different perspective from professional advisors can make all the difference. It’s best to speak to a charity for telephone, email or face to face support. For local advice, it’s best to speak to your local Citizens Advice Bureau, or one of these charities:
StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000
Help With Money Problems
Debt Advice in England, Wales and Northern Ireland
Debt Management Plan is an informal solution which enables you to repay all of what you owe but over a longer than agreed period of time. In many instances you may be able to get your interest and charges frozen. The informal nature of this solution means either you or your creditors can stop the solution at any stage.
An Individual Voluntary Arrangement (IVA) enables you to repay an affordable amount towards your arrears each month for 5 years. There is strict criteria to be accepted for an IVA. To enter an IVA your debt level should be above £8,000.
Bankruptcy can be the right debt solution for some people. You may have to make a contribution towards your bankruptcy for 3 years from your disposal income. This is why receiving professional advice is important to review your options. You may also qualify for the Debt Relief Order route to bankruptcy.
Financial Support in Scotland
The Debt Arrangement Scheme is a Scottish debt solution which allows you to repay your full arrears, whilst interest and charges are frozen. You must have the means to repay the total amount owed over an appropriate period of time.
A Protected Trust Deed is a formal solution which allows you to repay what you can afford typically over a 48 month period. At the end of the solution any remaining balance is cleared. There is specific criteria to be suitable for a Protected Trust Deed such as having unsecured debt of at least £5,000.
Sequestration / Bankruptcy in Scotland is different to England, Wales and Northern Ireland. There are various routes to make yourself bankrupt including the Minimal Asset Process and Certificate of Sequestration.
What is the correct solution?
The correct solution for you will depend on multiple factors, for instance
– How will the solution affect your credit rating?
– How long do you want to be in the solution?
– Do you want a formal or informal arrangement?
– What impact will it have on your job?
– Could your assets like house or car be at risk from entering an agreement?
– Are you able to contribute anything towards your solution?
A qualified advisor can provide support and tailored solutions based on your financial situation and personal circumstances.
StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000