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Living on a debt solution

Getting support with your problem debt from the right places

Posted 13 July 2015

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Getting help and advice for your debt problems is easy, if you know where to look.

Being in debt can be scary, frustrating and an utter mine field of information, much of which can be contradictory, complicated and unreliable. This can make taking the first steps towards getting out of a tricky debt situation all the harder. After all, you don’t want to spend the time, or the emotional effort it takes to explain your situation, only to find out that the advisor doesn’t have the expertise to help you! You’ll have to start all over again with someone else, only this time with a little less confidence in what you’re being told and a whole lot more frustration to add to your already heavy burden.  

Why is it so important to get sound advice? 

It’s important because the debt solution that best fits your situation will depend on many different factors, including how much you owe, what type of debt it is, how long it’ll take you to pay it back. Plus, there are lots of conditions attached to many of the solutions, which may mean that they are not suitable for you. So, it’s always best to speak to an expert first, just to make sure you fully understand your options and are aware of what each solution means for you now, and in the future.  

Thankfully these days, there are plenty of places you can go to if you’re looking for impartial, accurate and, more importantly free, advice about what debt solutions could be available to you.

A good place to start is the Money Advice Service or the Citizens Advice Bureau which are both publicly funded. You can be pretty certain that any advice you receive from these will be accurate and impartial.  In some cases they may provide you with help directly, in other cases they may refer you to another organisation to provide you with detailed debt advice. 

Alternatively there are a number of charities that specialise in debt advice.  Some are well known national organisations such as Christians Against Poverty and National Debtline but there may be smaller, local organisations in your area too.  Generally charities stand to gain nothing from advising you. They’re not selling you anything, so have no reason to promote one solution as being more suitable than any other, which means you’ll get truly impartial advice.

All of the places mentioned so far will offer free advice, but if they help you with a debt solution, there may be a charge. For example, a Debt Relief Order will attract a charge of £90, regardless of who you go to for help with it. But, if you find you don’t even have the money needed to pay for the debt solution, charities may be able to help pay this fee for you. 

And then there are places like the Debt Advisory Centre that are not charities, and not publicly funded, but still offer initial free, impartial advice, as well as the same paid-for solutions offered by the others places mentioned. However, they also offer some other solutions that do attract fees, management fees for example, for helping you apply for and manage a debt solution. The fee pays for the day to day management of your debt solution, they’ll also deal with all the correspondence and phone calls, so you don’t have to worry about it anymore.

Dealing with it yourself

Of course, if you’re happy to deal with creditors yourself, negotiating an informal reduced payment on a debt management plan (DMP) for example, is something you could try. However, it’s worth bearing in mind that, as with all DMPs, including those arranged by a debt management company, any agreement made will not be legally binding in any way and there’ll be no guarantee of the interest and charges being frozen. You can of course ask, but the lenders are entitled to say yes or no.

You can also apply for bankruptcy yourself too. All the details of the bankruptcy process and the forms you need can be found on the government’s website. You will need to fill out the forms, find the fee and locate your nearest bankruptcy court. The Debt Advisory Centre offer a free service where they’ll help you fill out your documentation and guide you through the bankruptcy process.

However, other formal solutions, such as Individual Voluntary Agreements and Trust Deeds must be applied for by qualified Insolvency Practitioners. They’re professionals with the experience and qualifications to oversee insolvency cases. So even if you wanted to, you’d not be able to arrange these yourself.  

The Solutions

So, now all that’s left, is to tell you the different debt solutions there are available. We’re not going to go into detail about each one here because there’s much more comprehensive information on the pages we’ve linked to below.   

Debt Solutions available in England, Ireland & Wales:

Debt Management plan

IVAs

Debt Consolidation

Debt Relief Order (DRO)

Debt Solutions available in Scotland

Bankruptcy

Debt Arrangement Scheme (DAS)

Debt Consolidation

Minimal Asset Process (MAP)

Trust Deed

Sequestration

 

We hope this has shown you that advice is available, from all kinds of places. Now you just need to decide whose advice you’d like to take. 

by Shelley Bowers

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.