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Single Mothers and debt?

Published on:March 13, 2020Author:Darcey Budsworth

Debt issues are a major cause of anxiety with single mothers particularly for those of who have recently separated. When a relationship falls apart it can feel like your whole world is falling apart.  There is very helpful information and strategies to deal with the anxiety of a relationship break down.

Most people don’t intend to get into debt. Frequently relationship breakup is to blame. More than a third of single mothers are in debt due to lack of support from their former partners. According to research by Slater & Gordon, 39% of single mothers are forced to take out loans or rely on credit cards to make up for lack of income.

Who can you talk to about debt Issues?

Knowing you owe money that you cannot afford to repay can be very scary. The problem will not go away and will only get worse if you ignore the problem. Don’t panic, its important that you look after yourself and keep calm.

The Debt Advisor has been in existence for 20 years and we have gained a reputation as the “go to” practice for debt advice and debt solutions and most importantly, we are authorized and regulated by The Financial Conduct Authority “FCA”.

The FCA register  will let you know if the organization has permission to provide debt advice and are able to help with debt adjusting which is the ability to negotiate with your creditors.

If you contact us, one of our advisors will speak to you about your personal circumstances, your monthly budget, and explain all your options so you can decide which debt solution works best for you.

We may be able to help you with debts, including:

  • Credit Cards
  • Payday Loans
  • Council Tax Arrears
  • Store Cards
  • Personal Loans
  • Overdrafts
  • Utility Bills
  • CCJ Debts

There are a number of debt solutions available, including IVADebt ManagementDebt Relief Order and Bankruptcy.

There may be more than one solution that is suitable for you. We will run through the pros and cons of all debt solutions.

IVA

An Individual Voluntary Arrangement (IVA) may be the appropriate solution for you if your debt payments are eating into the money you need to live on.

An IVA is a formal agreement with your creditors which allows you make affordable monthly payments over a 5 or 6 year period with the unpaid balance being written off at the end of that period, when the IVA is successfully completed.

The average percentage of debt written off on IVA’s we have set up in the past 12 months is 67%

An example of how an IVA could work for you:

SITUATION BEFORE IVA

Total Unsecured Debt                                                                                  £16,333.17

Debt Payments to Creditors per month                                                  £490.00                                  

 

APPROVED IVA SOLUTION

Monthly Contributions:
£104.12 for 60 months                                                                                 £6,434

Dividend received by creditors (per £)                                                   £0.17

Read the full case study: Elizabeth

Our online debt calculator can help you work out what you are paying to creditors each month and what you can realistically afford to pay in comparison.

You can find out more about how IVA’s work and the advantages and disadvantages of an IVA here.

Debt Management

Debt Management Plan (DMP) allows you to repay your debts – usually in full – but at a rate which you can actually afford without having to resort to further borrowing.

The Debt Advisor is authorised to manage DMP’s. The arrangement provides for you to make affordable monthly payments towards your debt. The payment is distributed by your DM provider to your creditors. The DM provider also liaises with your creditors to freeze interest and charges and to accept a lower payment from you.

An example of how a DMP could work for you:

SITUATION BEFORE DEBT MANAGEMENT

Total Unsecured Debt                                                                      £5,274.65

 Previous Minimum Credit Repayments                                     £430.00

Surplus Income                                                                                 £200.00

 Shortfall                                                                                              £230.00

APPROVED DEBT MANAGEMENT SOLUTION

Monthly Contributions                                                                    £200

Read the full case study: Laura

You can use our online debt calculator to work out what you are paying to each of your creditors and what you can realistically afford to pay each month.

You can find out more about how DMP’s work and the advantages and disadvantages of debt management here.

Alternative Solutions

Other debt solutions may be suitable for you.

Bankruptcy is likely to be appropriate if you do not have assets which would be at risk and also your surplus funds after providing for your reasonable outgoings are minimal.

The process is now much simpler and involves completing an online application and paying a fee of £680. Bankruptcy is, however, a complex procedure and it is advisable to get sound and sensible advice.

If your unsecured debts are less than £20,000, you don’t have assets worth more than £1,000 and you have surplus funds of less than £50 per month (after deducting your reasonable household expenditure), a Debt Relief Order (DRO) may be more suitable for you.

A DRO is a formal process which if approved, will freeze your debts, interest and creditor recovery procedures for a period of 12 months. If after that period, your situation has not changed then any unsecured debts will be written off. The application fee is £90 and you do not make any payments to your creditors.

If you live in Scotland, the solutions are different. You can find out more on by visiting Scottish Debt Solutions.

Get Debt Advice Today

For full debt advice and whether any of our available debt solutions would be the best option for you to get out of debt, you can speak to one of our advisors directly on 0800 085 1825 or arrange a callback.

The Debt Advisor Ltd is regulated by The Financial Conduct Authority. This means we are able to offer debt advice and deliver both formal and informal solutions. All debt solutions need to be carefully considered and you must take independent debt advice. We hope that the information and debt advice on this site including Frequently Asked Questions, will help inform you.

There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0800 138 7777 or by visiting their website.