Personal Insolvency UK

There are many people in the UK who have trouble paying their bills; for one reason or another they enter into debt difficulties (Personal Insolvency).

There are many options you may choice in order to get out of your Personal Insolvency, but before deciding on which way to choose it is important that you talk to a debt counselor.

A counselor will be able to help you decide which option would be best for you. Do not wait until you are way far in debt, there will be less options available to you.

Types of Personal Insolvency

There are several different options that you can choose from to help get you out of debt and they are as follows:

  • Bankruptcy
    You file for Personal Bankruptcy when you are not able to pay anymore your debt. Bankruptcy is a severe solution, in fact once the Court has made you bankrupt, an official will take over your money, property and take control of all your assets.
    When you file Bankruptcy your bank account will be frozen and you may lose many of your possessions including your cars and home.
    It can affect you for years to come, you may not be able to open another bank account or buy a home and get a loan. Bankruptcy clears all your debt, but with many serious consequences. In general is better consider this an option of last resort.
  • Informal - Family Arrangement or Debt Management Plan
    If you are behind in paying your debt contact your Creditors either in writing or calling them and let them know what your situation is. They might set it up to where you can make smaller payments or set up other arrangements for you.
    This arrangement is not a legal agreement and can be changed anytime by the Creditor.
  • IVA - Individual Voluntary Arrangement
    This is similar to the family arrangement except IVA is legally binding.
    You will make a proposal to the Courts to pay your Creditors a certain amount over five-years.
    This may be preferred choice to Bankruptcy. With this option you will not lose your possessions. Consider professional advice in case you opt for an IVA. 
  • Debt Relief Order
    If your Personal Insolvency and debt totals more than £15000 you can apply for a DRO.
    This option is for those who do not have a lot of assets and only have £50.00 extra a month. This procedure does not go through the Courts.
    You will need to contact the Insolvency Service. It works by getting your debts put off for a total of 12 months.
    Your Creditors cannot contact you for a payment during this 12 month period. If your situation has not improved during this time all of your debts involved will be terminated and you will no longer be responsible for paying them.
  • Administration Order
    This order can be made against you by your those you owe money to. With this order you will have to make regular payments until your debts are paid in full. But your total debts must be less than £5,000 and have an income.

List of independent organizations

All types of people can go into debt even the rich and famous, get help as soon as you see you are in difficulties, there are many organizations that can help you for free to decide which option above would be best for you. In this list we mention only independent organizations.

Also many for profit Debt Solution Company typically offers free initial advice. It is very important to find an organization that you can trust and that will not charge you a lot of money.

There are many firms that will charge a big fee and not actually get you totally out of debt, just be aware of the organization you choose.

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