Debt Guides

Debt solutions are tricky to understand, with so many companies and charities offering lots of different answers to your debt issues. What are these, and how can they help you? We present a 30 second guide to debt solutions.

Debt management plan

A debt management plan (DMP) is an informal agreement between a debtor and their creditors.

First a budget showing income and expenditure is put together, and once all essential costs are covered the surplus income left over is offered to creditors on a pro-rata basis.

Creditors can suspend interest and charges on the debt, although this is not guaranteed.

Some debt management companies charge a fee to administer DMPs. CCCS offers free DMP provision and free advice.

If you think you qualify for a DMP why not try our online debt counselling to see if a DMP is the best solution.

For more information, watch our video:

Bankruptcy

Bankruptcy is a form of insolvency in which your debts must outweigh your assets.

Personal bankruptcy can mean that you wipe the slate clean with your credit commitments.

It costs £700 to petition for your own bankruptcy but it’s advisable that you seek some impartial advice beforehand. Our specialist bankruptcy team can support you throughout the process.

Bankruptcy normally lasts 12 months. You may be asked to pay any surplus income into the bankruptcy during this time.

Is bankruptcy a worthwhile option? Use our online service Debt Remedy to see if bankruptcy is the best solution.

Debt relief order

A debt relief order (DRO) can help you rid yourself of unmanageable debt. It’s a cheaper and less extreme alternative to bankruptcy.

The cost of a DRO is £90 and you would need to speak to a competent authority such as CCCS.

To qualify for a DRO you need to fit certain criteria:

• You owe less than £15,000 in unsecured credit debts
• You are not a homeowner
• You have no more than £300 assets (although one car up to the value of £1000 will be exempt)
• You have less than £50 a month income left over after you’ve paid all of your living costs

If you think you qualify for a DRO why not try our online debt help to see if a DRO is the best option for you?

For more information, watch our video:

Individual voluntary arrangement

An individual voluntary arrangement (IVA) is a form of insolvency which is overseen by an Insolvency Practitioner.

In an IVA you would pay creditors agreed amounts of surplus income over a set time frame (usually five years).

If you have a property it may be expected that you attempt to remortgage the property to release a percentage of any equity (if this is possible).

Creditors agree to write off a percentage of the debt and freeze all interest and charges.

If you think you qualify for an IVA try our online service CCCS Debt Remedy to see if an IVA is the best solution.

Administration order

An administration order is a plan which is arranged through your local county court. It is the least extreme form of insolvency.

To qualify you must have:

• less than £5000 unsecured debt, and
• at least one existing county court judgement (CCJ)

If you are accepted, you make one affordable payment to the court each month. There is no set up fee and the creditors can no longer contact you or add any more interest onto the amount you owe.

If you have a small surplus and you won’t repay the debt within a reasonable amount of time, you can also apply for a ‘composition order’. This sets a date for the administration order to end and any remaining debt gets wiped clear.

If you think you qualify for an administration order why not try our online debt counselling to see if this is your best option.