In this post I look at the help available for getting out of debt, and the various options available to you.
I also provide additional information as well as to where you can get further help with your debt problems in the UK.
My Debt Problem
My personal or current situation is that I am in a lot of debt. I am currently managing all the money I owe through a self-administered debt management plan.
This debt management plan has helped me to regain control of my finances and to make a start of getting our of debt.
It will take me some time to get out of debt, but at least now I am making progress towards paying that debt off.
Your options for getting out of debt
In the UK there are a number of options available to you to help you get out of debt. Below I provide a list of these options along with links to further information should you wish to find out more.
Each of the methods described have advantages and disadvantages but they can all be used to get out of debt. It will be worth finding out more from one of the various debt charities to discuss your own situation. There are links to these at the end of this article.
All of the options listed below will severely damage your credit rating to the point where you will find it very difficult to obtain further credit. However if you are in financial trouble, I would hope that is the least of your problems.
Not to be considered lightly but Bankruptcy is one way of getting out of debt and taking control of your finances. However there are a number of consequences as a result of declaring Bankruptcy and you should seek advice on whether this is the best solution for you.
You can read more about Bankruptcy and what it involves on this Blog.
Debt Relief Order
A Debt Relief Order is an order you can make an application for when you are unable to repay the debt you have.
A Debt Relief Order is granted by the Insolvency Service and is a cheaper option than declaring yourself bankrupt.
You can read more about what a Debt Relief Order is on this Blog.
Using a Debt Management Plan to help with getting out of debt
You can elect for a Debt Management Plan to help you with getting out of debt.
There are two options available. You can elect for an organisation to help you with and administer your debt management plan on your behalf, or you can also set up your own debt management plan.
There is a guide on how to set up your own debt management plan on this blog. As I mention above, this is how I am currently managing my debts. However it may not be appropriate for you, especially if you have priority debts.
A debt management plan is an informal arrangement between you and your creditors. Your creditors do not have to accept your repayment proposal and can take further action if they wish such as obtaining a County Court Judgment.
If you elect to use your own debt management plan, you will still be making payments individually to each creditor. This can present quite a challenge if you owe money to a large number of companies. It is possible though. I currently owe money to 20 different companies.
Using an Individual Voluntary Arrangement to deal with your debt problem
An IVA or Individual Voluntary Arrangement is a Formal Agreement between you and your creditors. An IVA is usually appropriate for someone who cannot make their regular monthly repayments, but is able to make a smaller payment after paying other expenses.
You can read more about an IVA and what it would involve on this blog.
Where can you get help with getting out of Debt?
There are a number of organisations who can provide advice on your financial problems. I have listed them in the Helpful Links section of this blog.