Debt solutions in the United Kingdom
A Debt Management Plan may be useful to you if you are unable to make your current payments on time. These plans require monthly payments that are lower than your typical payments, to make it easier for you to complete them. The plan is agreed on by you and your creditor, gives the potential benefit for lower or no interest and late fees, and also remains flexible so that it can be adjusted in the future if you are still having problems making the payments. You can also stop a Debt Management Plan at any time, if your situation changes in any way. Whether this is the right plan or not for you depends on the type of agreement you are able to come to.
Your second option is an Individual Voluntary Agreements, which is known as a better solution than bankruptcy (discussed later in this piece). You and your creditor sign up for an Individual Voluntary Arrangement together and you are required to make a payment every month, similar to a Debt Management Plan. The difference here is that your monthly dues are decided based on your income and living costs, to ensure they are more affordable for you.
As mentioned above, you can always file for bankruptcy. This means that you officially and legally go on record as being unable to pay your debts. After you are bankrupt for a certain period of time, your debt will be written off. This is an effective solution but also has consequences, which is why other options are considered more appealing to most people.
The last solution we’ll discuss is Debt Consolidation. This allows you to take out money from a new company or organization and have that company pay off all of your existing debts. Similar to this is a Trust Deed, available in Scotland only, which allows you to make fixed payments to a company as that company pays your creditors. Loan consolidation can be great for reducing interest rates and going from several payments a month to only one, assuming you have multiple separate debts to pay off.