Manage my Debt

Can you help me manage my Debt?

We receive a lot of calls and emails from the public requesting help to ; "Manage My Debt?"

Money Advice Direct advises 1000’s of people on UK manage debt each month. Britons have taken on record levels of mortgage and credit card debt, causing concern that people could be in need of help to manage debt than ever before.

This section if the website will explain:-

• What steps can you take to avoid getting into debt?
• If you are already in the red and worried about coping, how can manage the debt?

What steps can you take to avoid getting into debt?

Debt is a fact of life for many people these days, but if you follow some golden rules you can avoid getting into trouble. There are some ways of minimising your chances of getting into debt. One of the most common forms of debt is caused by overspending on credit cards. If you can't trust yourself, avoid them. If you feel that you can manage a credit card, you should subscribe to one with a low interest rate.

Already in debt?
Please note that if you are in debt the debt will not go away, you must learn to manage the problem before it escalates out of control. Debt can be enormously stressful, so it is important to get advice early to work out a debt management strategy.

Methods to help manage debt in the UK

Individual Voluntary Arrangements (IVA) to manage debt over £15,000
An IVA is a formal alternative for individuals wishing to avoid bankruptcy.

The IVA was established by the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA compromises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged. An IVA is ideal if you have been refused loans to clear debt.

An IVA is a contractual arrangement with creditors and can be as flexible as an individual's own circumstances; they can therefore be based on capital, income, third party payments or a combination of these. An IVA is ideal alternative to bankruptcy to clear debt.

Creditors take a decision at a creditors' meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in bankruptcy. A vote is taken - by value. More than 75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved. If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.

Debt management plans to manage debt over £15,000
Please don't panic if you have been refused credit or loans in the UK you can still clear debt with a debt management plan. If you have enough money left over after paying your priority creditors and essential expenses, you may be able to arrange a debt management plan.

A debt management plan is an arrangement with your creditors to pay back the debt by regular installments. Instead of you speaking to your creditors yourself to arrange the plan, a Debt Management Company (DMC) does it for you. Usually you have to pay for this service although there are some DMCs who will do this for free.

Trust Deeds to manage Scottish debts over £8,000
The Protected Trust Deed (PTD) is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.
Provided certain conditions are met, the Trust Deed may be registered as “protected”, thereby preventing creditors from petitioning for the debtor’s sequestration.
The main advantage of entering into a trust deed are that it takes the pressure off as all correspondence and the Trustee will handle all of the communications from a persons creditors.

Bankruptcy to write off debts over £750
Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order. If you have been refused loans to clear debt then bankruptcy may be the only option.

Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.

Please note that if you are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the Individual Voluntary Arrangement procedure (IVA).

Money Advice Direct is a confidential and non-judgemental advice services to help you manage your debts. Please call 0800 074 6918 or apply on line. A dedicated case worker will help you cope with the stress and help you work out a suitable debt solution.

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