Debt Management Plans
If you find yourself being unable to keep up with your debt repayments then a Debt Management Plan (DMP) can be a good solution. A DMP can particularly be appropriate in cases where your financial problems are temporary, for example, due to a short period of unemployment. With a debt management plan you make an informal agreement to restructure your debt under more favourable terms. There are many specialist debt management companies operating in the UK who will negotiate and manage the arrangement on your behalf.
Bankruptcy
Often seen as a last resort Bankruptcy is in many cases actually the most appropriate solution to financial problems. Becoming bankrupt is a way of clearing overwhelming debts while at the same time ensuring that your assets are shared out fairly between your creditors. Subject to a few restrictions Bankruptcy is an option for anyone who finds that they can no longer keep up with their debt repayments. Bankruptcy lasts for a period of 12 months after which you will be debt free.
Debt Relief Orders
Debt Relief Orders were introduced by the government as recently as April 2009. They were brought in as a means for someone to apply for Bankruptcy without having to go through the full Court Bankruptcy procedure. Although very restricted in who can apply, debt relief orders have the benefit of being a much cheaper option than full Bankruptcy.
Individual Voluntary Arrangements
If you have debts in excess of ?15000 then you may qualify for an Individual Voluntary Arrangement (IVA). In an IVA your debts are consolidated into a single amount to be paid every month. Usually lasting a period of five years an IVA is a great way to clear your debts without resorting to Bankruptcy. Generally an IVA is only appropriate in cases where you have a regular income and owe money to multiple creditors.
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