Debt Management Plans (DMP)
Unable to pay your debts? Is your monthly credit commitment too much?
If you are unable to pay your debts as they fall due each month, you may be able to enter into a DMP and at BEACON we can guide you as to how best to write to your creditors to see if a compromise and/or monthly payment can be reached/agreed.
This can include a timetable of when and how much you can pay on a monthly basis.
If you have enough money left over after paying your priority creditors and essential expenses, you may be able to arrange a DMP with your other unsecured creditors.
A DMP is an informal arrangement with your creditors. DMP’s are seen as flexible plans that can be amended as and when required.
A DMP is not always the best way of dealing with the debts as your creditors are not bound by the arrangement that you have entered into.
A DMP is informal and creditors can change their mind at anytime. There is also no guarantee that creditors will agree to freeze all interest and charges.
Creditors may only accept a DMP as a short-term measure; unless they know from the outset that your financial situation is unlikely to change.
DMP’s are normally used as a short-term fix in certain situations.
We do not operate DMP’s but we will provide you with details of responsible charities who can assist you with a DMP.
Has one or more of your creditors obtained a County Court Judgment (CCJ) against you?
If yes, the County Court can make an Administration Order.
An Administration Order is a Court based procedure where you make regular payments to the Court towards the repayment of your creditors.
An Administration Order is only an option where your total debts do not exceed £5,000.
The Insolvency Service, have produced a guide in respect of Administration Orders.
For more information call us on 02380 651441
Debt Relief Orders (DRO)
DRO’s are an alternative to Bankruptcy.
If you owe less than £20,000 with little or no surplus income and little or no assets, a DRO can be a cost effective way of escaping the stress and burden of debt.
To be eligible for a DRO the debtor:
- Must be unable to pay their debts.
- Have total liabilities (not including unliquidated or excluded debts) not exceeding £20,000. Secured debts do not qualify but count towards the £20,000 limit.
- Have gross assets not exceeding £1000 as determined by resale value. Household bedding, furniture, tools and motor vehicles worth less than £1000 are excluded. Total allowable asset value is £1000 plus vehicle value of up to £1000.
- Have disposable income, following deduction of normal household expenses for reasonable domestic needs, not exceeding £50 per month.
- Must be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales.
- Must not have had a DRO approved within the last 6 years.
- Must not be involved in any other formal insolvency procedure at the time of application for a DRO such as: an undischarged bankruptcy order, a current Individual Voluntary Arrangement, a current Bankruptcy Restrictions Order or
- Bankruptcy Restrictions Undertaking, a current Debt Relief Restrictions Order or Debt Relief Restrictions Undertaking, an Interim Order.
The Insolvency Service have produced a guide in respect of Debt Relief Order’s.
For more information as to whether a DRO is right for you, contact us on 02380 651441.
Bankruptcy is sometimes the right and best solution to an overwhelming debt crisis.
Before you take this step however it is important that you seek independent advice to make sure this is the right option for you.
Bankruptcy is a Court Order, and once you have been adjudged Bankrupt you do not deal with your creditors yourself. An official person, called the Official Receiver, will take control and deal with your creditors.
The Official Receiver will not only deal with your creditors and their claims, but will also take control of your assets (money and property). This is because, as a general rule, upon the making of a Bankruptcy Order, your assets (money and property) are no longer yours but vest in your bankruptcy estate.
Is Bankruptcy the right option for you?
You may want to consider Bankruptcy if you have no money to pay your debts and creditors are pressing for payment.
When Bankruptcy is over you are able to make a fresh start and the debts you had are usually written off. In many cases Bankruptcy can end in as little as one year.
The Association of Business Recovery Professionals, R3, have produced a guide in respect of Bankruptcy’s for creditors.
The Insolvency Service have produced a guide in respect of Bankruptcy’s for insolvent persons.
For more information as to whether Bankruptcy is right for you, contact us on 02380 651441.
Individual Voluntary Arrangement (IVA)
An IVA is a formal arrangement between you and your creditors.
Once approved it is legally binding on your creditors and as a result your creditors will not be able to continue to levy interest and charges against you; your creditors will not be able to change their minds.
IVA’s are a viable alternative for those wishing to avoid Bankruptcy; this could be because of your employment status or protection of your family home.
An IVA is a contractual arrangement with your creditors and it amended to best meet your particular circumstances. The payments in an IVA can be made from any of the following; capital, income, third party contributions or a combination.
It is most often appropriate for people who cannot meet their credit commitments in full each month, but do have some disposable income to pay toward their creditors.
If creditor’s agree to your IVA, some of your debt may be written off upon the successful completion of the IVA. The amount written off is dependent upon your personal circumstances.
An IVA can give you more input as to how your assets are dealt with and how payments are made to your creditors.
How long does an IVA last?
This will depend upon your personal circumstances, but most IVA’s are based on monthly payments being made for up to 5 years; but if you own your home this may be extended to 6 years to ensure that you do not lose your home.
When will an IVA end?
Generally, when all sums due under the agreed IVA have been paid.
The Association of Business Recovery Professionals, R3, have produced a guide in respect of IVA’s.
At BEACON we are experts at proposing IVA’s to creditors to ensure that they are they are the best option for both you and your creditors.
To find out if an IVA would be right for you – contact us on 02380 651441 or email Cheryl at firstname.lastname@example.org