How can I deal with debt?
Dealing with debts may seem like a daunting task, but with the right help and support, you can get on top of your financial problems.
Individual Voluntary Arrangements (IVA)
An IVA is an alternative to Bankruptcy. It is a formal agreement with your creditors which means they cannot take court action to claim back money that’s owed to them – providing you make regular monthly payments over a period that normally lasts for 5 years.
- Affordable repayments: Repayments are calculated on what you can realistically afford to repay.
- Interest and charges frozen:Creditors agree to freeze interest and charges which means your debt value will not increase.
- Debts written off: Any unsecured debts included in the IVA that still exist at the end of the IVA term will be written off. This means you could become free from unsecured debt at the end of a five year period.
IVAs are subject to creditor agreement, which is not always guaranteed. If you’re a homeowner, you could be asked to release equity from your property to repay creditors in the 4th year of the agreement and you’re credit rating will be affected in the medium to long term. Failure to keep to the terms of an IVA could lead to Bankruptcy.
Debt Management Plans (DMP)
A Debt Management Plan could help you repay your debts at a rate you can afford with a tailored plan that’s built around you.
- Affordable repayments: Repayments are calculated on what you can realistically afford to repay.
- Interest and charges frozen: Subject to creditor agreement, interest and charges could be frozen.
- Clear debts: Unsecured debts will be cleared on successful completion of a DMP plan.
Creditors are not obliged to freeze interest and charges; therefore you may still incur additional charges. If you choose to repay your debts at a reduced rate, you will extend the period in which you clear your debts but you will be working to a budget and time frame that you are comfortable with.
Bankruptcy
Bankruptcy can help people in severe financial difficulty, but should be seen as a last resort to solving your debt problems.
- Repay creditors: Assets are shared out fairly among creditors.
- Clear debts: You could be freed from debts included in your Bankruptcy Order after 12 months . (restrictions apply)
- Reduce pressure: By dealing with your debt problems via the courts you are reducing stress levels associated to creditors chasing you for outstanding payments.
If you are a homeowner, you could lose your property and assets to repay your creditors; you may also be required to make reasonable repayments to your creditors. Your credit rating will be affected in the long term and you will find it difficult to get credit in the future.
In certain circumstances your employment could be affected. For example you will no longer be able to hold certain public offices or become a company director. You should speak to your HR department before pursuing Bankruptcy.
Protected Trust Deeds (PTD)
A Protected Trust Deeds is a formal agreement that enables people to clear debts without the worry of creditors taking court action to recoup money owed to them. PTDs are available to people living in Scotland.
- Affordable repayments: Repayments are calculated on what you can realistically afford to repay.
- Interest and charges frozen: Creditors agree to freeze interest and charges which means your debt value will not increase.
- Debts written off: Any unsecured debts included in the IVA that still exist at the end of the IVA term will be written off. This means you could become free from unsecured debts at the end of a 3 year period.
PTDs are subject to creditor agreement, which is not always guaranteed. If you’re a homeowner, you could be asked to release equity from your property to repay creditors in the final year of the agreement and your credit rating will be affected in the medium to long term. Failure to meet the terms of the PTD agreement could result in Sequestration.
You can also view a free publication from The Insolvency Service which outlines effective debt solution called ‘In Debt? Dealing with your creditors’, here
Managing money
Making simple changes to how you manage money can make a big difference to your pocket. We strive to help you in every area of your finances, from dealing with creditors and clearing debts to banking and utility bill savings.
If you want more control over your money, the Evolution Current Account will help you get back on track and help you avoid unnecessary bank charges including overdraft fees.
The Evolution Current Account offers:
- Guaranteed acceptance (subject to basic ID checks)
- No credit checks
- No more overdraft charges
- A simple application process
- Safe and secure internet banking
- Help managing your money
We could also help you save money on utility bills by using the Solve & Save service – helping you to cut back on bills like gas, electric, car insurance and house insurance by searching the market to find the best deal for you.