Is There Government Debt Help? 

Beware. There is no funded government debt help scheme that can help you pay off your debts. The UK government gives lots of useful advice and links on its website, similar to those on this site, and we want to help you find the best solution for you to pay off your debts. 

Don’t be taken in by companies stating that they offer government debt help schemes as they will usually charge fees for helping you get your debts under control. You can do this yourself with some smart research. These companies are using the word ‘government backed’ or 'government debt help' as a marketing tool to make themselves sound more authentic. They are not government approved.

So how do I manage my debts?

There are many different ways of getting your debts under control. This website gives all the information you should need about what’s right for you. 

You can either go it alone, reducing the amount of fees you may have to pay depending on the type of management plan you decide on, or you can get the advice of an independent debt management company. You may need to use the services of a debt management company to administer the debt. 

Getting free advice is a benefit, however, managing your debts yourself means you keep control of the situation and it’s surprisingly easier than you may think to work out a debt payment plan.

 Acknowledging you have a debt problem is sometimes one of the hardest parts.

Choosing a debt management company

If you talk to any debt management company about clearing your debts we advise:

  • Choosing a company regulated by the Financial Conduct Authority (FCA).
  • Asking if the company give free, no commitment advice.
  • Asking what fees will be charged if you decide to proceed with any kind of debt management plan.

Options for clearing debts

The best way to pay off your debts depends on your financial circumstances, the amount of debt you have and what will suit you personally.

Individual Voluntary Arrangement (IVA) – an arrangement with your creditors whereby you pay what you can afford for 5 or 6 years and after that period your debts are written off.

 Please see our link for more details on IVAs:  

Full and Final Settlement – with this method of clearing your debts you make your creditors an offer of a lump sum in return for them writing off the remainder of the debt. In some cases this works as it is cheaper for the company to administer the debt in one lump than receive small amounts from you over several years. 

Debt Relief Order (DRO) – an alternative to bankruptcy that writes off your debts after 12 months. You must owe £15,000 or less to qualify. You have to pay £90 and the order goes through the court system. When you apply the court will notify your creditors and you won´t have to make any further payments, although the debts will still exist for 12 months.Your credit rating will be affected for at least 6 years after the DRO expires. 

Bankruptcy – a serious option to writing off your debts that should not be taken lightly. You can apply for bankruptcy yourself at your local court, for a fee that is £700 at the time of writing. The easy part is presenting your financial circumstances to the judge and getting them to approve your request. 

After you have filed for bankruptcy you will be appointed an Official Receiver. This is when things get more serious. They will go through every part of your finances in minute detail, including looking at assets you have, no matter how insignificant, and joint assets, that may not be in your name but could still be sold (for example your home, even if it is only in your spouse’s name you are still married to them and the Receiver has the power to demand you release some of the equity). 

Once declared bankrupt your debts will be written off, but you won´t be able to get credit again for 6 years. 

A point to consider is your future, your job and your reputation. You may not be able to get another job if you have been bankrupt. 

You should only consider bankruptcy if you really are insolvent and there is no other way of clearing your debts. 

Note that your creditors can also apply for you to be made bankrupt if you owe them £750 or more.

 

Government Backed IVA Example

 

Debt Management Plan Example

If you would like to speak with a regulated Debt Management company, complete the form above and we will get an expert debt advisor to contact you to review your situation and discuss your options.