Thousands in debt could find themselves without support of their debt solution provider in the New Year as the Financial Conduct Authority (FCA) application window for debt solutions practices based in the North West closes on the 31st December 2014. This means that unless the provider has submitted their application for full FCA authorisation, they will no longer be able to carry out regulated activities, which includes debt management plans, and their customers will be left without protection from their creditors and without a debt solution plan to pay off their debts.
Hopefully this won’t happen but if people do find themselves out in the cold this January, they mustn’t panic. There are a number of regulated practices across the North West who are FCA authorised and people can check who they are on the Financial Services Register and the Consumer Credit Interim Permission before choosing the next step forward.
People should take time, do their research, check that the practice is FCA regulated and only sign-up to a debt solution which is appropriate for their circumstances. There are also a range of free advice and services that people can find out more about these on the Money Advice Service website.
Here at The Debt Advisor Ltd we are authorised and regulated by the Financial Conduct Authority (Reg 606669) and are members of The Debt Resolution Forum (DRF). Whether its business or personal debt, we are dedicated to offering sensible help and advice whether you are employed, self-employed or run a business.
There are many debt solutions which could help bring relief from debt including the Individual Voluntary Arrangement (IVA), Protocol Debt Management Plan (P-DMP), Bankruptcy, Debt Relief Orders and Debt Consolidation. We have summarised the various debt solutions below, for further information please click on the links under each section or contact us on 0800 085 1825 or 0333 9999 600 to speak with one of our advisors.
Debt Management Plan
A Debt Management Plan could be the right solution for you if you can demonstrate that you are able to repay your debts in 10 years or less.
Usually Debt Management Plans are available to those with a minimum of £3,000 of unsecured debt and 2 different creditors and be able to afford to pay at least £80 per month towards clearing your debt.
Advantages and Disadvantages of the Debt Management Plan and fees charged can be viewed here.
Individual Voluntary Arrangement (IVA)
An IVA could be the right solution for you if you are struggling with unsecured debts, usually with a minimum of £7,000 with 2 different lenders and at least 3 unsecured debts.
An IVA (Individual Voluntary Arrangement) is a legally binding arrangement with your creditors which allows you to repay your debts in affordable monthly payments over a fixed period of time, usually five years.
An IVA can bring tremendous relief from debt but it does require discipline. You will no longer be able to resort to credit and your expenditure will be assessed using either the Money Advice Trust trigger figures or the StepChange Debt Charity Budget Guidelines 2013 and you will need to justify expenditure which exceeds these guidelines. If you have a property, you will be required to look at refinancing your property, usually in the 5th year of the arrangement, but if this is not possible, an IVA can provide that you pay 12 extra contributions instead (assuming you have equity in your property). The advantages, disadvantages and fees associated with an IVA are detailed in our FAQ section.
Bankruptcy is often considered the last resort for people with serious debt problems especially if you have a property to protect. Bankruptcy can provide significant relief from debt especially if you have minimal assets and surplus income available to repay your debt.
Bankruptcy is a complex insolvency procedure. A Trustee in Bankruptcy has wide powers to ensure that they are able to get hold of your assets (which exclude your normal household goods and personal possessions), turn these assets into cash for the benefit of your creditors.
Bankruptcy is normally for a period of 1 year however, if you have surplus income, you will be expected to make income contributions for 3 years. Bankruptcy does have a “sting in the tail” – Bankruptcy Restriction Order “BRO”. This is action that can be brought against you if your Trustee considers that you have incurred debt knowing you had little chance of paying it back. This would include incurring debt recklessly or gambling. The BRO then extends certain restrictions of bankruptcy such as not obtaining credit, not acting as a director of a limited company.
There are solutions to get you out of debt and these will depend on your status. If you are salaried and perhaps living in rented accommodation, the advice will differ to that given to someone who is self employed and a home owner. Talking to someone who understands the stress of debt will help. If you feel as though Bankruptcy is the only option and you would like us to assist you, we charge £500 +VAT for assistance in preparing the debtors petition paperwork and £600 +VAT if you have a pending charging order.
You can read more about Bankruptcy here.
Debt Relief Orders (DROs)
A Debt Relief Order may be a suitable option to deal with your debts if you are on a low income with less than £300 worth of assets and have £15,000 or fewer debts.
The Debt Advisor do not assist with the completion of DROs, however there are a number of approved intermediaries who can help you complete an application for a Debt Relief Order (DRO). Visit the Citizen’s Advice website for further details.
All debt solutions should be very carefully considered; The Debt Advisor will always provide you with advice on the most appropriate option to help you get back on “your financial feet”. The Debt Advisor is regulated by The Financial Conduct Authority and is also a member of the DRF and we adhere to their codes and standards.
Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. The Debt Advisor complies with the Consumer Credit Act and you have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.
Call us today on 0800 0851 825 to speak with one of our advisors. If you’re calling from a mobile you can reach us on 0333 9999 600.