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Personal debt solutions |
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There are times in everyone’s life when challenges arise and often these can have a knock on effect on your finances. You may have been made redundant, suffered a downturn in work, a bad debt or changes in interest rates that have made your debts unaffordable.
Whatever the reason, if you have personal financial problems seek appropriate advice as soon as possible. The sooner you do, the more options will be available to you and the quicker you can deal with you problems.
Contact your local Moore Stephens’ debt advisor in London, Belfast, Birmingham, Bristol, Chatham, Derby, Glasgow, Stoke-on-Trent or Watford for a free, confidential initial meeting to establish the best way forward.
Possible solutions
 Cut your outgoings
Prepare a detailed budget showing all of the money that you have coming in and going out each month. Review all your expenditure and make savings where possible. For example, check that you have the best deal for house and car insurance and that you are using the cheapest utilities provider. Look at your monthly direct debits and cut out any that are not essential.
 Re-mortgage
Consolidation loan
Debt consolidation involves taking out a loan to pay off some or all of your existing debts. This may allow you to make only one payment a month instead of to a number of creditors and the monthly amount paid may also be lower. However, you will need to ensure that you do not start to build up debts on credit cards again, once the existing debts have been paid off by the loan. You will also need to consider the term of the loan and whether any payment protection insurance policy that you are asked to take out is suitable.
Debt management plans
You could approach one of the companies that will contact your creditors and set up a repayment plan with them. While this may seem attractive, it is often the case that you will simply be paying someone else to arrange a repayment plan that you could quite easily set up yourself. This means that the cost of running the plan could be used to repay your outstanding debts more quickly. Your creditors are likley to continue adding charges and interest, so it can take a number of years to actually repay the debt.
Debt management plans only work where the level of debt is manageable. In Scotland, a debt arrangement scheme could be put in place, if appropriate. Where your debts are out of control, you may need one of the options available under the Insolvency Act 1986 - an IVA or bankruptcy in England, Wales and Northern Ireland or a Trust Deed or sequestration in Scotland.
Individual Voluntary Arrangement
Trust Deed
Bankruptcy
While bankruptcy is a last resort, it is sometimes the most appropriate option, especially where there is no house to be dealt with or if your income has collapsed to a level that makes any repayment impossible.
Typically, most bankrupts will be discharged after twelve months but the Trustee in Bankruptcy has a duty to investigate the background to the bankruptcy. If the Trustee considers it appropriate, he can apply for a Bankruptcy Restriction Order, which suspends discharge for between two and fifteen years.
In addition, the bankrupt often finds it difficult to operate a bank account while bankrupt and their credit rating will be affected for up to six years after discharge. The bankrupt is also required to disclose all of their assets and these will, subject to some limits, be sold for the benefit of creditors. The bankrupt can also be asked to make a contribution from surplus income for a period of three years.
Sequestration
The UK team
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