With less than 20% of people in the UK with less than £20 disposable income each month after covering bills and essentials, Debt Awareness Week UK 2023 has become very important.
In 2022 and 2023 the rise of sky-high inflation has put a strain on household finances.
But what are the options for people in the UK suffering from debts?
Debt Solutions
You can pay your debts in instalments by setting up:
Debt Management Plan
A Debt Management Plan is a contract between you and your creditors that allows you to pay off all of your debts.
Debt management plans are typically used when you can only afford to pay a minimal amount to creditors each month. The DMP is an agreement with your creditors managed by a financial company.
If you have non-priority debts such as credit or store cards, overdrafts, or personal loans, a Debt Management Plan (DMP) may be the option for you. Your DMP provider will assist you in determining an affordable payment plan and communicating with your creditors.
You typically need at least £5 to pay each of your creditors, though this quantity varies depending on the supplier. You send one monthly DMP payment to your provider and they will pay your creditors.
If you’re having financial difficulties, you should speak with an expert today who will be able to assist in resolving your financial issues.
Administration Order
If you have a county court (CCJ) or high court judgement (HCJ) against you and can’t pay it in full, you can get an administration order. This money is divided among your creditors by the court.
Without the court’s authorisation, the creditors mentioned in the administration order cannot pursue further action against you.
Receiving an administration order will have an impact on your credit score, making it more difficult to obtain credit. This will be the case with the majority of debt relief options.
An administration order is in effect until all debts and court fees have been paid. There will be a time limit on how long you can pay for a composition order, usually three years.
Individual Voluntary Arrangement
An Individual Voluntary Arrangement (IVA) is a contract between you and your creditors in which you agree to settle all or part of your debts. You agree to pay a certain amount to an insolvency practitioner, who will split the money among your creditors.
An IVA, rather than bankruptcy, can give you more control over your assets.
IVA’s can have a significant impact on both your personal and professional life, as well as your credit score. However, if properly managed, an IVA can assist you in regaining control of your finances.
An IVA will appear on your credit report for six years from the date it begins. So, if your IVA lasted five years, it will only be recorded on your record for another year after it expires.
Debt Relief Order
If you can’t afford to pay your debts, a Debt Relief Order (DRO) is one way to deal with them. It means you won’t have to pay particular debts for a set amount of time (usually 12 months).
You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets.
A debt relief order is a low-cost alternative to bankruptcy, and creditors cannot chase you for your debts during the next 12 months.
Although a DRO is a legal debt solution, it does not require you to appear in court.
Debt Repayment Programme
In Scotland, you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.
Agreement With Creditors
You may also have the option of reaching an informal agreement with your creditors.
Types Of Debts
Here are the most popular debt types:
- Catalogue Debt
- Credit Card Debt
- Overdraft Debt
- Payday Loan
- Guarantor Loan
- Personal Loans
- Bank Loans
- Court Fines
- TV Licence
- Council Tax
- Gas & Electricity Bills
- Child Support
- Income Tax, National Insurance & VAT
- Hire Purchase Agreements
- Debts to Family & Friends
- Personal Guarantees
Debt Help Charities 2023
Here is a list of the top debt charities updated in March 2023:
- Stepchange
- Citizen’s Advice
- National Debtline
- Debt Support Trust
- Christians Against Poverty
- Debt Advice Foundation
Final Thoughts
When you are looking for free help, you should be careful to ensure that the organisation you choose to help you is actually free.
Some debt management companies are set up as for-profit and can charge large fees for their services.
As some for-profit companies are established in the UK you need to be careful with some debt advice you read online. Some can be misleading as they encourage people to pursue debt solutions that aren’t appropriate to their particular debt problem.
With many debt advisory organisations and UK charitable trusts, you can seek expert advice from specialist debt advisors to assist you in your financial difficulties.
The Stepchange debt charity will also be impartial when helping you decide whether this is the right way forward or whether a different approach might be better.
- Website – www.stepchange.org
- Email – contactus@stepchange.org
- Telephone – 0800 138 1111
- Address – Wade House, Merrion Centre, Leeds, LS2 8NG
Resources
- https://www.best-companies.co.uk/i-cannot-afford-to-pay-my-debts-what-options-do-i-have/
- https://topinsolvencyfirms.co.uk/near-me/greater-manchester/
- https://debthelp.uk/
- https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt
- https://individualvoluntaryarrangements.org/near-me/greater-manchester/
- https://www.stepchange.org/debt-awareness-week.aspx
- https://www.best-companies.co.uk/best-iva-companies-manchester/
Debt Awareness Week takes place from 20th to 26th March 2023 #debtawarenessweek
