Getting out of debt can be as straight forward or complicated as you want to make it. There are various different solutions you could qualify for that use government legislation to help you become debt free, which would enable you to reduce your monthly payments dependant on your circumstances.
| Advantages | Disadvantages |
|---|---|
| Creditors who vote against your proposal are still bound by it | Your IVA is entered on a public register |
| Creditors whose lending is unsecured can’t take any further action | The insolvency practitioner may require payment in advance for preparing your proposal |
| Your insolvency practitioner will help you prepare your proposal | If your circumstances change, and your practitioner can’t get creditors to accept amended terms, the IVA is likely to fail |
| You make only a single payment each month or quarter | If your IVA fails, you may be made bankrupt |
| On completion of the IVA, the balance of what you owe your creditors is written off | If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property |
| Creditors may not approve the arrangement | |
| Your credit file will be affected for a period of 6 years |
| Advantages | Disadvantages |
|---|---|
| Reduce Hassle from creditors | It will affect your credit rating |
| Financial stability in 48 months* | You may have to sell or remortgage |
| Only your disposable income will be used to pay creditors | Only unsecured debts are covered |
| Able to negotiate terms | It will be advertisied in the local press, but only could be found if someone knows look |
| If you're a business, carry on trading | Creditors will be able to pursue you for any new debts |
| Creditors may not approve the trust deed | |
| Your credit file will be affected for a period of 6 years |
Bankruptcy is one way of dealing with the debts you cannot afford to repay. You can write off up to 100% of your debt with a bankruptcy order. Promethean Finance can you give you advice on a Bankruptcy Assistance service if, following completion of your statement of affairs, it is believed this will be the best option for you.
| Advantages | Disadvantages |
|---|---|
| Debts are written off, with certain exceptions explained below | Your bankruptcy is entered on a public register and is advertised |
| Creditors can’t take further action unless the debts are secured on your home or other property | Your employment may be affected |
| It allows you to make a fresh start after oAnly a year | You will remain liable to pay certain debts |
| You may be able to avoid having to sell your home if your spouse, partner or a relative can buy your share of its value after any debts secured on it have been paid | Any business you have will almost certainly be closed down |
| On completion of the Bankruptcy, the balance of what you owe your creditors is written off | If you apply to the court for your own bankruptcy, you will have to pay a court fee and deposit totalling £680 |
| Your credit file will be affected for a period of 6 years |
Fees
We do not administer debt management plans or charge for them, please give us a call and speak to one of our advisors to find out what the best options is and if a debt management plan is, we can then point you in the right direction.
| Advantages | Disadvantages |
|---|---|
| Fair and open way of sharing payments, widely understood by creditors | You remain liable to pay your debts until they are paid in full |
| The debt management company will help you prepare your plan, including agreeing the level of your household and personal spending based on guidelines, which can then be used to put your case to the creditors | The debt management company can’t force creditors to accept your proposal or freeze interest. A plan is not binding on creditors who refuse to take part in it, but they can’t refuse to accept any payments made to them |
| The debt management company will negotiate with creditors on your behalf, so offers are more likely to be accepted and interest frozen than if you try to do this yourself | Creditors could still take enforcement action against you, for example by getting a county court judgment and then an order, which creates a charge on your home*, even if you are keeping up your payments under the plan, unless they agree not to do so |
| You may be able to vary your payments if your circumstances change | You may not be able to make reduced offers if your circumstances worsen and you can no longer afford your agreed monthly payments |
| You make single payments each month or quarter to the debt management company, which is responsible for administering all payments to your creditors | Having a charge on your home means that if you don’t repay the debt, the creditor has a claim on the proceeds if the property is sold |
| Any monthly payment you make should be passed on to creditors within 5 working days | A plan can last for several years. However, some creditors may be prepared to freeze interest for only a shorter time. If interest and charges cannot be frozen for the full length of the plan, then the total amount you end up paying under the plan could be more than the original amount of your debts, and could extend the lifetime of the plan |
| Some debt management companies do not charge you a fee | Your credit file will be affected for a period of 6 years |
| Creditors may be prepared to write off the balance of what you owe after a period of time if: you have shown that you have made every effort to repay them as much as you can; and you have maintained regular payments to the debt management company |
Fees
We do not charge or administer Debt Relief Orders, please give us a call and speak to one of our advisors to find out what the best options is and if a debt management plan is, we can then point you in the right direction.
| Advantages | Disadvantages |
|---|---|
| Your debts will be written off at the end of the DRO. There are a few exceptions, as explained opposite | Your DRO is entered on a public register |
| None of the creditors listed in the DRO application can take further action against you without the court’s permission | You can’t have a DRO if you have an existing bankruptcy order, an IVA, are subject to bankruptcy restrictions, or you have had a DRO in the last 6 years |
| It allows you to make a fresh start after 1 year | You won’t be able to have a DRO if you own a house, even if it has no equity (value) |
| The fee (£90) is affordable and can be paid in instalments but the fee must be paid before the application can be made | |
| You will keep your assets and a vehicle as detailed above. | You will remain liable to pay certain debts – in particular: student loans, fines, debts arising from family proceedings, budgeting loans and crisis loans owed to the Social Fund |
| The approved intermediary ensures that you are given appropriate advice and that you fit the criteria for a DRO | Your employment may be affected |
| Your DRO could be revoked (withdrawn) if you don’t co-operate with the official receiver during the year your DRO is in force | |
| You can’t act as a director of a company or be involved in its management unless the court agrees | |
| You will be committing an offence if you get credit of £500 or more without disclosing that you are subject to a DRO | |
| You may have a debt relief restrictions order* made against you for 2 to 15 years if you acted irresponsibly, recklessly or dishonestly | |
| Your credit file will be affected for a period of 6 years. |