Solutions only available in England, Wales and Northern Ireland
An IVA could help write off up to 85% of your debt
You Could Freeze Interest & Charges & Get A Reduced Payment Plan That Is Affordable
To find out more about managing your money and getting free advice, visit Money Helper, independent service set up to help people manage their money.
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Debt Solutions
Debt Management Plans (DMPs)
A Debt Management Plan (DMP) offers a structured yet adaptable approach to handle your debts and regain financial stability.
It is an informal agreement between you and your creditors to pay back your debts over time. It is managed by a DMP provider, who works with you to organise a payment schedule based on your income and expenses.
With a DMP, a budget is tailored to your needs, encompassing crucial household expenditures like rent, mortgage, utility bills, and grocery shopping. The surplus income after these essential costs, known as your ‘disposable income,’ is utilised to repay your creditors.
The length of time a DMP varies based on the total debt and monthly payment amounts; it can last several years.
Alternative Debt Solutions might be suitable for you
While a Debt Management Plan (DMP) could be a viable option to tackle your debt issues, it’s important to explore and assess other available debt solutions before you commit to a DMP. It’s advisable to thoroughly investigate all potential alternatives to ensure the choice you make is the best fit for your financial situation. For further details, please complete the form above.
- Often creditors agree to halt additional interest and charges. This means the payments you make directly reduce your principal balance.
- We handle all communications with your creditors, ensuring they receive all necessary information. As long as you maintain communication with us, you shouldn’t need to directly interact with your creditors.
- Instead of juggling multiple payments to various creditors, you’ll make a single monthly payment to us, simplifying your financial commitments.
- We lower payments towards your non-priority debts, facilitating easier management of your essential living
- Should your financial situation evolve, we’re prepared to re-discuss your payment terms with your creditors to accommodate these changes.
- It’s important to note that your creditors are not obligated to accept the proposed repayment terms, nor are they required to stop applying interest and additional charges.
- Being in a debt management plan does not shield you from potential recovery efforts or legal actions that your creditors might initiate.
- Participating in a debt management plan will affect your credit rating, indicating an inability to meet original credit agreements. Additionally, if you have previously missed payments on your debts, it’s likely that your credit report has already been adversely affected.
- The company that administers the Debt Management Plan will charge you a monthly fee depending on their fee structure.
Individual Voluntary Arrangements (IVAs)
An Individual Voluntary Arrangement (IVA) is a structured debt solution that enables you to “freeze” your debts and establish an agreement to repay them over a fixed term, typically spanning 5-6 years. Any debt remaining after this period is forgiven.
An IVA represents a formal, legally binding agreement between you and your unsecured creditors. It is set up and monitored by a certified Insolvency Practitioner (IP). Essentially, you commit to repaying as much as you can afford over the agreed term, and at the end of this period, your creditors consent to write off any outstanding balances.
Our role is to help you determine an affordable monthly payment amount and evaluate if you have additional resources to enhance the agreement, such as proceeds from asset sales, remortgaging, or savings.
The fees associated with an IVA are established in agreement with your creditors. These fees are deducted from the payments you make into the arrangement after it is approved, ensuring there are no additional costs for you.
Alternative Debt Solutions might be suitable for you
While a Individual Voluntary Arrangement (IVA) could be a viable option to tackle your debt issues, it’s important to explore and assess other available debt solutions before you commit to a IVA. It’s advisable to thoroughly investigate all potential alternatives to ensure the choice you make is the best fit for your financial situation. For further details, please complete the form above.
- Legal Protection from Creditors: Once an IVA is in place, it legally prevents creditors from taking further action against you for debt recovery.
- Fixed, Manageable Repayments: An IVA consolidates your debts into a single, affordable monthly payment, tailored to your financial situation.
- Debt Forgiveness: Upon successful completion of an IVA (usually after 5-6 years), any remaining unsecured debt is written off.
- Interest and Charges Frozen: Most IVAs result in the freezing of interest and additional charges on your debts, preventing them from growing further.
- Avoidance of Bankruptcy: An IVA can be a more favorable alternative to bankruptcy, especially for those who may lose significant assets or face professional restrictions.
- Financial Stability and Budgeting: IVAs help in establishing a budget that covers your living expenses, providing a structured path to financial stability.
- Confidentiality: Unlike bankruptcy, IVAs are not publicly advertised, offering more privacy.
- Improved Credit Standing in Long Term: While an IVA affects your credit rating initially, it can lead to improved financial health in the long term once debts are settled.
- Professional Guidance: You receive advice and are guided through the process by a qualified Insolvency Practitioner.
- Customized to Individual Circumstances: IVAs are flexible and can be adjusted if your financial circumstances change, ensuring they remain sustainable throughout the term.
- Non-compliance with the agreement terms could lead to the IVA’s failure, potentially leaving you with the original debt amount.
- Your IVA will be listed on the Insolvency Register.
- If the IVA fails, either your creditors or your Insolvency Practitioner (IP) might initiate bankruptcy proceedings against you.
- There will be spending limitations imposed on you during the IVA.
- Homeowners with equity might be required to attempt a re-mortgage towards the end of the IVA. Failure to re-mortgage could extend the IVA by an additional 12 months.
- Certain debts, like mortgages, secured loans, taxes, and fines, are not covered under an IVA, necessitating continued payments.
- Borrowing additional funds during the IVA is not permitted.
- An improvement in your financial situation may necessitate increased payments to creditors.
- An IVA will appear on your credit report for six years, significantly impacting your creditworthiness.
- If your financial situation deteriorates and you’re unable to meet the IVA payments, the arrangement might collapse.
- Receiving a lump sum, such as an inheritance or settlement, during the IVA requires you to contribute the entire amount to the IVA. Any return of funds only occurs after all debts, fees, and IVA costs have been fully paid.
No upfront fees are required. Fees apply should you decide to enter an arrangement.
- To set up an IVA, you need to instruct the services of an Insolvency Practitioner (IP) so there are some costs involved. An IP is a licensed professional.
- There are three main costs associated with an IVA as shown below. All these costs are already included in your monthly IVA payments, or any other monies you pay in.
- The fees outlined within your IVA proposal will be £4,250 for a 5-year term. This is subject to change if the term is extended for any reason or if further monies are introduced into the IVA (such as from the sale of an asset) but these will be detailed within your documents. Your creditors may choose to modify these fees before acceptance of the IVA, usually, so they get a better return, these will be discussed with you for your agreement before the IVA can be accepted.
These costs include:
- Nominee’s Fee
This covers the preparation of your IVA proposal, which includes assessing your current financial situation and repayment offer to creditors. It also covers admin and facilitation costs during the process up to and including the approval of your IVA.
- Supervisor’s Fee
A supervisor’s fee is also included within the fee proposed to your creditors. Should additional monies be realised your Supervisor may be permitted to draw extra fees from those funds.
The supervisor’s fee covers the expenses incurred while implementing your IVA for its duration. This includes the cost of collecting your monthly payment and distributing it to creditors, handling any queries from yourself or creditors, managing creditor relations, undertaking annual reviews, and any other work involved in implementing your IVA.
- Disbursements
Disbursements may vary from case to case. If an IVA is agreed on a fixed fee basis, these costs will be included in this fee, however, if the fees are modified by your creditors these may be due on top of your Nominee & Supervisors fees. Just remember, these will all be covered by your monthly payments. These will also be fully detailed within your paperwork.
Disbursements usually cover expenses paid to third-party companies for software licenses, insurance, or any requirements of the arrangement. They could also include the cost of additional services hired to offer the best returns to creditors.
Bankruptcy
Bankruptcy is the most known form of insolvency. Bankruptcy helps you deal with debts you cannot afford to pay off within a reasonable period. It is a legal process through which you can write off the debts you have been unable to pay and may involve selling off certain assets (your belongings and property).
An average bankruptcy in the UK lasts 1 year but it can last longer, depending on your circumstances. You may be required to make payments into your Bankruptcy for up to three years.
You can only declare Bankruptcy if you are living in England, Wales and Northern Ireland. Those residing in Scotland can apply for sequestration, which is the Scottish equivalent of Bankruptcy.
We provide advice on bankruptcy and other solutions.
Alternative Debt Solutions might be suitable for you
While a bankruptcy could be a viable option to tackle your debt issues, it’s important to explore and assess other available debt solutions before you commit to bankruptcy. It’s advisable to thoroughly investigate all potential alternatives to ensure the choice you make is the best fit for your financial situation. For further details, please complete the form above.
- Filing for bankruptcy in the UK can offer significant relief to individuals overwhelmed by debt.
- Firstly, it provides legal protection from creditors, as they are no longer allowed to pursue debt collection or legal action once the bankruptcy process has begun. This leads to a reduction in stress and harassment from creditors.
- Secondly, upon completion of the bankruptcy term, usually after 12 months, most of the debts are discharged, allowing the individual to start anew financially.
- Interest accrual, additional charges, and debt collection efforts will be suspended.
- You might be able to retain necessary household items.
- Additionally, the process can offer a structured way to manage one’s financial situation, the entire application can be completed online, and the fees can be paid in installments (applicable only in England and Wales).
- You may be required to make monthly payments for three years, based on what the trustee determines you can afford.
- Your bankruptcy will be listed on a public register and will appear on your credit report for six years.
- The duration of your bankruptcy could be prolonged.
- Your employment status may be impacted by the bankruptcy.
- Interest accrual, additional charges, and debt collection efforts will be suspended.
- Typically, debts are discharged after a period of 12 months.
- You might be able to retain necessary household items.
- The entire application can be completed online, and the fees can be paid in installments (applicable only in England and Wales).
- You may be required to make monthly payments for three years, based on what the trustee determines you can afford.
- Your bankruptcy will be listed on a public register and will appear on your credit report for six years.
- The duration of your bankruptcy could be prolonged.
- Your employment status may be impacted by the bankruptcy.
- Interest accrual, additional charges, and debt collection efforts will be suspended.
- Typically, debts are discharged after a period of 12 months.
- You might be able to retain necessary household items.
- The entire application can be completed online, and the fees can be paid in installments (applicable only in England and Wales).
Bankruptcy Fees
Costs and Fees for Declaring Bankruptcy in the UK
In England and Wales:
- The application fee is £130.
- The bankruptcy deposit is £550.
In Northern Ireland:
- The court fee is £151.
- The bankruptcy deposit is £525.
- There is also a solicitor’s fee, which is approximately £7 (this may vary based on the solicitor).
- For residents of Northern Ireland who are on a low income or receiving certain benefits, the court fee might be waived. However, the bankruptcy deposit is mandatory for everyone.
- After filing for bankruptcy, an official receiver will examine your finances to determine if you can contribute towards your debts. If you have a disposable income of over £20 per month after essential expenses, you may be required to make monthly payments for up to three years under an ‘income payment arrangement’ (IPA).
- The official receiver will not obligate you to contribute to your bankruptcy if you cannot afford it, ensuring you retain sufficient funds for monthly living expenses.
- Should you possess valuable assets, like property, vehicles, expensive jewellery, or savings, the official receiver may sell these items. The proceeds from these sales will be used to repay a portion of your debts.
Debt Relief Orders (DROs)
Debt Relief Orders (DROs) are officially recognized debt solutions intended for individuals with minimal or no assets and a low income.
Should you not own a home, possess limited disposable income, and have debts under £50,000, a Debt Relief Order (DRO) might offer a viable approach to managing your financial obligations.
As an alternative to Bankruptcy or an Individual Voluntary Arrangement, DROs are accessible to those living in England, Wales, and Northern Ireland.
Alternative Debt Solutions might be suitable for you
While a Debt Relief Order (DRO) bankruptcy could be a viable option to tackle your debt issues, it’s important to explore and assess other available debt solutions before you commit to DRO. It’s advisable to thoroughly investigate all potential alternatives to ensure the choice you make is the best fit for your financial situation. For further details, please complete the form above.
- Interest and additional fees will be suspended. However, these may be reinstated if your DRO is unsuccessful.
- Your approved intermediary will handle the submission of your application, eliminating the need for you to appear in court.
- You will retain possession of your household items.
- The record is maintained on a public register for a duration of 15 months.
- It remains on your credit report for six years from the commencement date, potentially affecting your ability to obtain credit in the future.
- If your financial situation improves during the ‘moratorium period,’ which lasts for 12 months following the approval of your DRO, the order might be revoked. In such cases, your creditors could request repayment and may apply interest and additional charges to the owed amount.
- The DRO can also be revoked if you violate any of its stipulated conditions.
- Collection efforts by your creditors will be halted.
- Your debts will be eliminated, or ‘discharged,’ after a period of 12 months.
- Your approved intermediary will handle the submission of your application, eliminating the need for you to appear in court.
- You will retain possession of your household items.
- The record is maintained on a public register for a duration of 15 months.
- If your financial situation improves during the ‘moratorium period,’ which lasts for 12 months following the approval of your DRO, the order might be revoked. In such cases, your creditors could request repayment and may apply interest and additional charges to the owed amount.
- The DRO can also be revoked if you violate any of its stipulated conditions.
- Taking out a Debt Relief Order (DRO) can significantly lower your credit score, as it indicates to creditors that you have had trouble managing your debts.
No fee is required for a DRO application.
- Taking out a Debt Relief Order (DRO) can significantly lower your credit score, as it indicates to creditors that you have had trouble managing your debts.
Debt Solutions
What is a Debt Management Plan?
A Debt Management Plan is an informal agreement between you and your creditors to pay back your debts over time. It is managed by a DMP provider, who works with you to organise a payment schedule based on your income and expenses.
What is the minimum level of debt?
No specific minimum or maximum debt requirement. A DMP is ideal for individuals with disposable income to make regular, reduced payments but struggle with current debt obligations.
How long does a DMP last?
Varies based on total debt and monthly payment amounts; can last several years.
What fees are involved?
In the first 6 months of your monthly payment plan, we charge £42.00 of your agreed monthly payment. This is for the setting up of your plan. Thereafter we charge just your monthly management fee. An advisor will go through everything with you.
Will it affect my credit score?
A DMP can negatively impact credit rating, indicating an inability to meet original credit agreements, usually for six years from the start of the DMP.
What is an IVA?
An Individual Voluntary Arrangement is a formal, legally binding agreement between an individual and creditors to pay back debts over a specified period. It must be set up by a qualified professional, known as an insolvency practitioner.
What is the minimum level of debt?
Generally suitable for higher debt levels, often around £10,000 or more. An IVA is for individuals with stable income who can make regular payments but can’t manage debts through a DMP. Only unsecured debts can be included in an IVA. Government fines and child support payments can not be included.
Can interest and calls be stopped?
Once you have your IVA approved, any interest and / or charges are frozen. These can’t and won’t be added to your debts by your creditors, preventing the debt amount from increasing. Once your IVA has been accepted by 75% (by value) of creditors, they are bound, by law, to no longer contact you requesting payment directly. The Insolvency Practitioner team administering your IVA will deal with creditors on your behalf.
How long does an IVA last?
An IVA typically lasts for five years but can be extended.
What fees are involved?
No upfront fees are required; if your IVA application is rejected, there will be no charge. Fees apply should you decide to enter an arrangement. The Insolvency Group fees are taken from your monthly payment or asset realisations paid into your arrangement.
We operate a transparent fixed fee model, which incorporates the Nominee Fee, Supervisory Fee and all costs and expenses associated with the arrangement £3650.
Fees will be taken from your monthly payment or asset realisations paid into your arrangement.
Will it affect my credit score?
An IVA will significantly affect your credit rating for six years, indicating formal insolvency.
Please note that with an IVA (in the fourth year), the supervisor may require the debtor, if they are a homeowner, to revalue their home and realise the equity to pay off some or all of the debt.
What is a DRO?
A Debt Relief Order is a way for people with low income and low levels of debt to have their debt frozen for a year and then written off if their situation doesn’t improve. It’s a cheaper alternative to bankruptcy and is intended for those with minimal assets.
What is the minimum debt level?
Total qualifying debts must not exceed £30,000. A DRO is for individuals with very little disposable income (no more than £75 left each month after household expenses) and minimal assets. Assets with a value of £2,000 or less can be kept, together with a vehicle worth less than £2,000.
How long does a DRO last?
A DRO lasts for one year, after which debts included are usually written off.
Can homeowners apply for a DRO?
A DRO is not available to homeowners.
Will it affect my credit rating?
A DRO affects credit rating for six years as a form of insolvency.
You should always check to see if a DRO (Debt Relief Order) is a better option for you. Our team can provide you with information.
What is bankruptcy?
Bankruptcy is a legal status where a person is declared unable to repay their debts. It can free you from overwhelming debts so you can make a fresh start, subject to some restrictions, and ensures your assets are shared out fairly among your creditors.
What is the minimum level of debt?
There is no specific minimum debt level; focused on inability to repay debts. Bankruptcy is a last resort for those who cannot repay debts and have exhausted other options.
How long does bankruptcy last?
Discharge typically occurs after one year, but the impact can last longer.
Will it affect my credit score?
Bankruptcy will impact on credit rating for six years, with public record.
IVA Example
| Loan | £10,000 |
| Overdraft | £1,000 |
| Credit Card(s) | £8,095 |
| Store Card(s) | £3,500 |
| Overdraft | £10,000 |
| Total Owed | £22,595 |
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