Free Debt Help and Advice
If your debts are spiralling out of control and you can’t see a way out you need free debt help. There are a number of charities in the UK set up to specifically help people like you who can´t afford to pay their debts and don't know which way to turn to get back on track with their finances.
Many people are in debt in the UK. You’re not the only one.
At the end of October 2014 people in the UK owed a total of £168 billion in consumer credit. This number is an increase on the previous year, which was £158.5 billion (source: The Money Charity). That’s an extra £359.85 per UK adult that we owe on credit cards, store cards and loans.
Of course, this isn´t a good thing and we need to look at how we can pay back our debts. If you’re reading this page it’s likely you want to do the responsible thing and pay off your debts.
Where can I get free debt help?
There are several free debt-help charities in the UK, including:
- StepChange Debt Charity www.stepchange.org
- National Debtline www.mymoneysteps.org
- Debt Advice Foundationwww.debtadvicefoundation.org
- The Citizen´s Advice Bureau www.citizensadvice.org.uk
- Money Advice Service www.moneyadviceservice.org.uk
These all offer a free and impartial debt advice service, no matter how small or large your debts. What they can offer in terms of helping you deal with your creditors and administer your debts will depend on each company.
What will a free debt help company do?
They will look at your financial circumstances, including how much you owe, how much your income and outgoings are, whether you have any savings or assets and how you can best manage your debts. They will also advise you on how to handle your money better as you may be able to afford to pay off some of your debts without realising it.
They will not make any judgements about you or why you have got into debt. Their job is to offer impartial advice and help you get rid of your financial problems.
The free debt management company will consider which debts need to be paid first if you have more than one, depending on interest rates and payment terms.
They can also advise you on whether you are getting all the benefits you are entitled to.
They will then advise you on the way forward that is best for you. Possible ways of paying back your debts are:
- Individual Voluntary Arrangement (IVA) – an alternative to bankruptcy where you pay an agreed amount over a set term (usually 5-6 years) and at the end of the term your debt is written off. The payment term can be shorter if you have a lump sum to put towards your debt.
- Debt Management Plan (DMP) – you pay a single amount to a debt management company each month, who will allocate the money to your creditors. Debt management companies usually charge a fee although some charities may be able to set one up for you. The debt is not written off at any time, you pay back the full amount over an agreed time period.
- Full and final settlement – if you have a lump sum available (perhaps savings or an inheritance) you make an offer to your creditors to pay them an amount and they then write off your debts. Some creditors may agree to this as it’s cheaper for them than having to administer small payments and chase you every month.
- Debt relief order (DRO) – similar to bankruptcy but there are strict criteria. You must owe less than £15,000, have assets of less than £300 and not own your own home. On approval of a DRO your debts are frozen and you don’t have to pay them for 12 months and after that they are written off.
- Bankruptcy – a serious and possibly final solution to debt problems. Your debts will be written off if you are declared bankrupt, but you are likely to lose any assets you have such as your home and vehicles. Bankruptcy may also affect your job. Bankruptcy can give you a new financial start, but can also seriously affect your future.