ALTERNATIVE SOLUTIONS

When dealing with debt, there are numerous suggested options. These may include things such as Debt Management Plans (DMP), Individual Voluntary Agreements (IVA) and Bankruptcy amongst others. However some of these may not be right for you. Other options are available, and are outlined below. These won’t always be suitable, but they may be useful in helping get your debt under control.

At moneyextra.com you won’t find debt advice but you will find details that should help you make an informed decision. If you need help with your debt, then you should speak to the Money Advice Service or Citizens Advice Bureau for free.

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Administration Order

An Administration Order (AO) isn’t for everyone – indeed only people with debts under £5,000 and at least one Court Judgment against them. It is a solution that is similar to a Debt Management Plan (DMP), in that you’ll be paying a lower affordable amount to your creditors until your debts are fully repaid, but it is managed by the courts and they charge a fee (10% of your monthly payment).

The advantage of an AO over a DMP is that once it is agreed with your creditors (and it can be rejected, so you may need to look at other options), they cannot contact you without the permission of the courts. If you’re feeling pressured by creditor contact, an AO can be a relief.

However there are also drawbacks to an AO that you need to be aware of. A court can put an order in place to take your monthly repayments directly from your wages, meaning your employer would know about your circumstances, and there are certain roles (public office and directorships) that you cannot hold while an AO is in place.

Remortgage

If you’re a homeowner with equity in your property, it may be that remortgaging is the best option to help pay off your debts. When you remortgage you can free up a lump sum of cash, which can be used to reduce your other debts.

If your funds are insufficient to completely clear your debts, you may be able to agree settlements with your creditors to clear your debts for a reduced total fee.

A remortgage will only be recommended to you if it will mean your new mortgage payment is lower (and more affordable) than the combined total of your current mortgage and debt repayments. This may however mean that your unsecured debts will end up costing you more, as despite lower interest rates you’ll be paying it off over a much longer time.

Self-help

While there is help available through a multitude of debt solutions, it may be that you want to go down the self-help route. This may involve simply working harder on your budget to help reduce other outgoings to help cover your debt payments, but for many it means contacting your creditors yourself and negotiating to help get through your financial difficulties.

Trustworthy debt solutions experts will be able to provide you with the tools you need for this, including letter templates that you can tailor to suit your own situation. Alternatively you can find out more by visiting the Money Advice Service website here.

Seek help

As with any debt solution, you should not look into Administration Orders, Remortgaging or dealing with creditors yourself without seeking expert advice. Everyone’s debt situation is different, which is why these various solutions exist – make sure you find the one that’s right for you by consulting a debt specialist.

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“Disclaimer: No information on this website shall be construed as advice and content is offered for information purposes only. You should always seek advice from an appropriately qualified solicitor on any specific legal enquiry, an appropriately qualified Independent Financial Advisor on any specific financial matter, or an appropriately regulated and qualified debt management company. Full terms of use

Debt Free Direct is a trading name of Clear Start Partnerships Limited and is authorised and regulated to issue debt advice by the Financial Conduct Authority.

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