Debt Solutions

Re Scheduling

If it can be established that you have assets which are worth sufficient to pay off all of your liabilities in full, you may simply require your debts rescheduling. If you are a property owner, for example, you may have sufficient equity in your home to enable you to raise a remortgage to pay off your unsecured liabilities in full. Providing a competitive interest rate can be obtained, this is likely to reduce the amount you are required to pay each month.

We do also speak with people who have savings and debts. The best form of saving is to pay off your debts.

Debt Management

Debt Management is negotiating with your creditors to reach an agreement to pay them in full over a longer period of time than was originally agreed. Such an agreement is necessary when you are unable to make the payments which were originally agreed.

It is possible to make such agreements with your creditors directly yourself, however, there are a number of companies who offer ‘debt management plans’ to those with financial problems. It is essential that you receive impartial advice on all of the options available to you before you decide to enter into a debt management plan (DMP).

If you do enter into a debt management plan with a company, from the payments which you make on a monthly basis, that company will usually take a percentage for their fee.

Generally we would suggest a DMP if a short term solution is required due to a temporary drop in income.

Informal Agreements

Depending on your circumstances, it may be appropriate to approach your creditors in an effort to reach an informal agreement with them. That agreement may be to pay them either in full or in part by way of a one off payment or payments over a certain period of time.

Your creditors will require a full financial disclosure and may be influenced by why and/or how the debts have been incurred.

IVA’s

An Individual Voluntary Arrangement (IVA) is a legally binding agreement, for the satisfaction of debts, either in full or in part which is binding on all unsecured creditors. It is a method of avoiding bankruptcy, while still being subject to a formal insolvency procedure.

A proposal for an IVA must be made with the services of a licensed Insolvency Practitioner. It should be clear that, despite various guidance notes and best practice instructions from the regulatory bodies of IP’s, some debtors continue to be ‘encouraged’ to propose an IVA which may not be the best option for them, but rather give the greatest return to the IP.

Anyone considering an IVA should ensure that they receive best advice, explore all the options available to them and, in particular only make a proposal that they are 100% certain that they can afford. If creditors require a greater contribution, the debtor should give very serious consideration to his/her response.

Bankruptcy

Despite ‘advice’ provided by some debt counsellors, Insolvency Practitioners, etc., in some instances, bankruptcy is the best method of freeing a debtor from unmanageable debt. Bankruptcy is a necessary procedure in today’s capitalist society.

Bankruptcy is a formal insolvency procedure for someone who is unable to service their debts as they become due. It is often the last option to be considered when all of the above have been proven to be impossible or inappropriate.

It is possible for an individual to petition for his/her own bankruptcy or a creditor may take that action. Once a Bankruptcy Order is made, the debtor is required to provide full details of his/her financial life to the Official Receiver who will assess their ability to make contributions to their creditors from either assets or income.