Debt solutions:
Other solutions

There are other options which should be considered for debt and financial problems. If you were to speak to a Personal Finance Advisor and it became apparent that one of these solutions was a suitable solution GW Financial Solutions UK Ltd. would advise you of this, and, provide you with contact information so that you could access further information and explore that solution further.

What is Bankruptcy?

Bankruptcy is a solution for people who have little or no ability to repay unsecured debts. A Bankruptcy order can be applied for by your creditors against you, or you can choose to make yourself Bankrupt (Voluntary Bankruptcy). If you choose to petition for Bankruptcy you now do this by completing your application online. A Bankruptcy order has to be applied for through the county courts and court costs are likely to be involved. Application fees totalling to £680 are payable when submitting the online petition for Bankruptcy. If you are on benefits or low income you may qualify for some reimbursement of this.Bankruptcy is an option for those with no other way of regaining control of their finances, for people in this situation it can be a huge relief, although it should be recognised that it is a form of insolvency and can have some long term effects on your ability to get credit as well as other areas of life.

How would this work?

GW completes a detailed assessment of your personal financial circumstances, and if we believe Bankruptcy is the best solution for your current circumstances then this is how it would work for you: A petition is required for the courts to assess your suitability and reasons for needing Bankruptcy. Once this is complete and submitted, an appointed representative of the court, called an Official Receiver, will conduct a detailed investigation in to your income, expenditure and assets. They will be a point of contact with you until discharged from Bankruptcy. GW will offer advice on how you can apply for Bankruptcy or where you need support, will direct you to appropriate sources for assistance.

Advantages and Disadvantages

So what are the advantages of Bankruptcy?

  • Regain control of your living expenses
  • A fresh start, clear of debt
  • Legal action halted, creditor contact ceases and interest and charges on these debts are frozen

What are the disadvantages of Bankruptcy?

  • There are restrictions on the type and level of personal expenditure allowed
  • You may be required to contribute towards the Bankruptcy order for up to three years, where your affordability allows – this is known as an Income Payments Agreement
  • In some cases Bailiffs may still be able to enforce action – with council tax arrears, for example
  • Records of your bankruptcy will appear on the Individual Insolvency Register for three years after your bankruptcy has ended.
  • If you have valuable assets such as a home or expensive vehicle you may be required to sell these

What is a Debt Relief Order?

A Debt Relief Order is also a solution for people who have little or no ability to repay unsecured debts. A Debt Relief Order can only be applied for through an approved intermediary. You can find an intermediary in most Citizens Advice Bureau’s and some Local Councils. A DRO has certain criteria which must be met for an application to be considered. This includes having a debt level of no more than £20,000, a disposable income of no more than £50 per month, assets and vehicles of no more than £1000 value. In addition, you must not be homeowner, nor have entered in to any form of insolvency or bankruptcy within the last six years. As with Bankruptcy, a Debt Relief Order is an option for those with no other way of regaining control of their finances, for people in this situation it can be a huge relief, although it should be recognised that it is a form of insolvency and can have some long term effects on your ability to get credit as well as other areas of life.

How does it work?

GW completes a detailed assessment of your personal financial circumstances, and if we believe a Debt Relief Order is the best solution for your current circumstances then this is how it would work for you: GW will direct you to appropriate sources for assistance.  An approved intermediary would assess your suitability and complete an application form with you. Once you pay the £90.00 fee, the application is submitted and then you would wait to hear back from the Official Receiver to tell you whether your application has been successful.

Advantages and Disadvantages

So what are the advantages of a Debt Relief Order?

  • Regain control of your living expenses
  • A fresh start, clear of debt
  • Legal action halted, creditor contact ceases and interest and charges on these debts are frozen

 What are the disadvantages of a Debt Relief Order?

  • There are restrictions on the type and level of personal expenditure allowed
  • Any goods you have on Hire Purchase agreements may need to be handed back.
  • Not all debts can be included in the DRO and you will be responsible for paying those outside of the DRO. Your intermediary will be able to advise you on what can and cannot be included
  • Notice of the DRO will stay on your credit record for six years. This may make it difficult for you to get credit or find a new home in the future.
  • Whilst the DRO is in force, and for three months afterwards, your details will appear on the Insolvency Service’s Individual Insolvency Register, which can be viewed by anyone.

You can access free advice on these, and all other solutions, from both the Money Advice Service and Stepchange

There are a number of solutions available to residents of Scotland which are not available for those living in England. Two solutions are mentioned below, this is not an exhaustive list of solutions available to Scottish residents and more information on the range of solutions can be found using the suggested link to the Citizens Advice Scotland (below).

There is a Debt Arrangement Scheme (DAS/DPP) which is similar to a Debt Management Programme administered by Scottish Government. In Scotland Bankruptcy is often referred to as Sequestration, and there is also another form of Bankruptcy called a MAP (Minimal Assets Process)

Here are some advantages and disadvantages with each of these solutions, for your consideration:

Debt Arrangement Scheme / Debt Payment Plan

Advantages:

  • Interest & charges are frozen
  • Assets are protected
  • Based on affordability

Disadvantages:

  • Credit rating is affected
  • In most cases there is no opportunity to write off debt
  • Details of the DAS/DPP will be recorded on a public register

Sequestration

Advantages:

  • Released from responsibility of repaying the debt (in most cases)
  • No contact or legal action from creditors
  • Fresh start

Disadvantages:

  • Credit rating is affected
  • Assets are at risk (such as property, vehicles and savings)
  • Details of the Sequestration will be recorded on a public register

Minimal Assets Process

Advantages:

  • Released from debt usually after 6 months
  • No contact or legal action from creditors
  • Fresh start

Disadvantages:

  • Credit rating is affected
  • May affect tenancy agreements
  • Details of the MAP will be recorded on a public register

 GW does not offer assistance on any of these solutions however if you appear suited to any of these during a Personal Consultation with our Personal Finance Advisors we will direct you to free sources of debt advice who can assess your suitability and offer direct advice on exploring them.

If you live in Scotland you can access a free source of debt advice using the link below:

https://www.citizensadvice.org.uk/scotland/debt-and-money/help-with-debt/what-options-are-there-for-dealing-with-debt-s/

There is always the option of running your own debt solution and ‘self- managing’ your debts.

With the right tools and skills, confidence and time you could contact your creditors and negotiate reduced payments.

This may be advisable if:

  • Your financial difficulties are short term
  • You have very few creditors
  • You understand the legal route of recovery to a degree
  • You have time to prepare your affairs and speak with your creditors

This would involve:

  • Calculating what you can afford to pay as a total towards all your debts
  • Going through an income and expenditure review with each creditor
  • Explaining the circumstances around your financial difficulties
  • Requesting a reduced payment with a freeze on interest and charges

Things to be aware of:

  • You would need to ensure that the amounts agreed with each creditor do not exceed the total you can afford between them, or you will still be overcommitted!
  • It may involve a number of calls to each company, and it’s always worth asking them to confirm what is agreed in writing
  • It can be time-consuming so do make sure you have the time put aside for a detailed conversation with each of your creditors
  • It could be costly, on your phone bill, so always look for a free-phone option before calling them

We would be happy offer you practical support to assist you with this and will certainly recommend this course of action if, during our conversations with you, we felt you could be successful with this route.

If you want to discuss any of these options in more detail, or if you want to find out which one might suit your circumstances best, get in touch.

or

Fill in some details and we’ll get in touch.

By submitting this form you are consenting to GW Financial Solutions UK Ltd. contacting you on the telephone number provided to discuss debt solutions