In the United Kingdom debts have reached a record high (per household) of £15,400, which is the mean value of debt across the United Kingdom.
To counter this many organisations, like First Debt Advice, have come up with ways for people to not only make things more manageable in the longer term, but to also eliminate personal debts altogether.
How Can Personal Debts’ Be Eliminated?
The IVA (individual voluntary arrangement) is one such solution which can eliminate debt, it works by placing a consolidated debt repayment, (payable monthly) which slowly writes off any personal debts over a five year period, after which the person in debt becomes debt free, this is possible no matter how much debt the person has provided it is a minimum of £5,000, with 2 or more lenders, in most cases this would be a minimum debt level to warrant an individual voluntary arrangement to remove the debt.
There are also other ways to remove and eliminate debt, such as bankruptcy, which is a more aggressive way to wipe away debt which carries consequences, such as the sale of property (to recover the debt), which can mean the sale of a home, the sale of any non-essential vehicles and other personal property, and other general items which carry value.
With bankruptcy there is also the added disadvantage of being included on the insolvency register which is advertised in the London Gazette, along with the upfront fee of £480 payable before bankruptcy begins.
The best way to think of bankruptcy is like a personal form of liquidation, in which any and all means of becoming debt free are practiced.
There is also the option of the less formal DMP (Debt Management Plan) which is similar to the IVA but without the legal protections and the same authority as an IVA, it is important that the debtor has £3k or more of debt otherwise the debt management plan would not be necessary.
Another lesser known debt solution is what is known as the “debt relief order”, which is a scheme where people in a certain situation with no assets can potentially (subject to qualification), can write off debt.
With Scottish Trust Deeds it is possible for residents anywhere in Scotland to write off their debt in 5 years provided they stick with the scheme and make the monthly contributions towards the plan.
Free Debt Advice?
On the subject of free debt advice this is offered in the form of a free debt assessment in many cases, which is where the debt management or IVA (or both) company consults with the potential client about their current financial circumstances and recommends a debt solution to help them in their predicament.
Whatever situation people find themselves in with debt, there is help out there, no one need suffer in silence with their debts with the debt solutions available.