Debt Help

If you’re looking for debt help then the chances are that you’ve already read lots about Individual Voluntary Arrangements (IVAs) and Debt Management Plans (DMPs). But how much do you know about the other solutions that are available and how do you know which one is right for you?


Debt problems can be thought of as a scale of seriousness, with minor lifestyle changes required for less serious problems at one end, right through to more formal solutions, such as Bankruptcy, at the other.

Which solution is right for you depends on your circumstances.

For example, if you own your own home and you can afford to remortgage then your creditors will expect you to release any available equity. This is also beneficial for you as more often than not, borrowing secured against an asset, such as your home, has a lower rate of interest than unsecured loans and credit cards.


If you are cash insolvent (if you don’t have enough money to meet your credit commitments as they fall due) but you have money left over before paying anything towards your unsecured debts each month, then it is likely that you will have a few more options available to you.


Depending on the size of the debt and how much you can afford to re-pay each month (it’s important to recognise that your creditors and sometimes even the courts will have a say in which solutions are available to you), this could be an administration order, an informal agreement (more commonly known as a Debt Management Plan) or even an IVA.


If you have little or no surplus income or you don’t have any material assets then a Debt Relief Order or Bankruptcy (LILA and Sequestration in Scotland) is likely to be your best option.


It’s also important to consider other factors such as whether the solution is legally binding on all of your creditors, whether it will have an effect on your employment and what fees are involved.


Understanding which solution is right for your circumstances is vital, which is why it’s so important to speak to someone that will consider all of the options available to you, not just the solutions they specialise in.


Whatever you decide to do, please remember to continue making payments to rent, mortgage, Council Tax, utilities, HP & Magistrates Court fines as a priority, as failure to keep up with these payments has much more severe consequences.


Debt Advice Foundation is a registered UK charity offering free, confidential debt help. Please call 0800 043 40 50 to speak to an adviser.