Is insolvency the fresh financial start you didn’t know you needed?
Having money problems isn’t something that’s admitted very often.
New data released by the Insolvency Service has revealed that individual insolvencies in the first quarter of 2019 were the second-highest since 2010, increasing by 15.9%.
There’s a stigma that surrounds debt, giving the topic a taboo status, but admitting that you are struggling financially can be the first step to turning your luck around.
Here at Creditfix, we believe that finding the right support to get back on track can help you to get the fresh financial start you didn’t know you needed.
According to a survey recently released by the Salvation Army, 1 in 3 people say they are currently living with debt; and the same number admit to feeling more worried about their finances this year.
Ignoring your debts won’t make them go away
Living with debt can feel like the loneliest place in the world, but everyone is going through their own struggles and it’s important to remember that you’re not alone.
There are thousands of others out there who are in the same situation as you. Whether that’s hiding bills under your mattress or having late night stares at your ceiling wondering what to do next.
Ignoring your debts isn’t going to make them go away, so why not take the plunge and get some expert debt help.
Seeking debt help might seem embarrassing and many people believe that it’ll have a negative effect on your creditor score. However, falling further and further into debt by missing payments will only going to make it more and more difficult for you to obtain credit in the future.
If you’re worried about your finances or are struggling to make it from payday to payday, there are a whole bunch of options available to help you with your debts.
By getting some debt relief help, you can regain control of your finances in an arrangement that allows you to repay what you can afford to your debts.
It’s always best to seek advice that’s impartial to ensure that you find a solution that best fits your situation.
What options are available?
Individual Voluntary Arrangement (IVA)
An IVA is an agreement between you and those you owe money to that allows you to make one single, affordable, monthly payment towards your unsecured debts. They typically last for five years and any remaining balances are written off after this period.
This is a popular solution for those with a debt level of over £6,000 who are struggling to make repayments.
Debt Relief Order (DRO)
Another option for those in debt is a DRO, designed for people to write off debt that they won’t be able to repay in a reasonable timescale.
It freezes payments on unsecured debts for 12 months – if you are unable to make payments after this period, the debts will be written off. This can be a great option for those who don’t see their circumstances changing within the near future.
Debt Management Plan
Commonly known as a DMP, this option is a way to reduce monthly repayments. An agreement is negotiated between you and those you are in debt to, to pay back what you can afford.
Unlike other debt solutions, a DMP is informal; meaning it is not legally binding. However, it can be a great solution for those struggling to keep up with repayments but who can afford to make regular payments and whose circumstances are likely to improve.
Bankruptcy is a formal insolvency procedure where you hand over control of your money and possessions to an ‘official receiver’. This generally involves the sale of valuable assets such as your car or home to obtain funds to pay towards your debts.
You are discharged from this after a period of 12 months. However, if it is found that you can afford it, you may be asked to make monthly payments to the bankruptcy for up to two years after being discharged.
Whatever you decide to do, it’s important to note that it will have a negative impact on your credit score. But once you have completed an agreement, you’re free to start over and rebuild your credit score – giving you back the control you thought you’d lost.
Join us next time, where we’ll give you the rundown of life after insolvency.
If you are struggling to manage you repayments or would like to discuss your debts, contact a Creditfix Adviser for free advice on 0808 2234 102.