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There is currently a large number of people in the United Kingdom suffering from various forms of financial hardship and struggle, with 100,000s of individuals in debt with debt levels of £10,000 or above.
There are a range of debt solutions available for individuals who are facing difficulty, & there is an epidemic of debt in the United Kingdom where there is a dire need for help with financial management (personal finances).
DMP's – Debt Management Plans – One of the most popular financial solutions.
What is a debt management plan?
This is an informal financial solution for individuals who have debts (generally around £5000-£10,000) where the monthly repayments are renegotiated with creditors in order to make the monthly debt repayments more manageable.
This is a highly popular solution for individuals in debt and PayPlan offer a free debt management service for people in a position similar to that described above, although there are other debt management companies' that may charge fees for a similar service. PayPlan also has great reviews on Trustpilot.
IVA's – Individual Voluntary Arrangements – Another popular financial solution.
An IVA (Individual voluntary arrangement) is a more formal arrangement between yourself and your creditors that enables people to have a legally binding arrangement with their creditors (generally over a five year term), this also enables people to write off significant portions of their debts' over that period (it's possible to write off 75%-85% of debt) (the company described above “PayPlan” also offer IVA's as do many other British companies').
Either one of these financial solutions could make sense for you dependent on your debt level.
For lower debt levels: The DMP
The debt management plan tends to be a better solution if the debt is less aggressive and the level of debt itself is lower than in other cases (lower than £10k-£15k) as it is an informal, more simple arrangement.
For higher debt levels: The IVA
The individual voluntary arrangement is generally for people with debt levels that exceed £7,000 (minimum) but people with debt levels moving into the six figures have been moved into an IVA and people have benefited greatly from the IVA as a financial solution.
Do I Qualify For These Debt Solutions?
This will be dependent on a range of different factors:
1) Are you employed?
Generally speaking in order to qualify for either an IVA or a DMP you must be employed, you need an income in order to make repayments, so either employment OR other forms of income will more than likely be necessary.
2) Are you able to make some form of debt repayment even though you may have other outgoings?
This is another important factor in deciding if you can actually afford to make any debt repayments at all (however in both a debt management plan or an IVA you will need to make repayments).
3) How many creditors do you have (specifically for an individual voluntary arrangement you will need a minimum of 2 creditors in general).
4) Are you willing to enter into an agreement to help you to repay your debts over a period of time? Can you stay committed to the plan to get you out of debt?
This article was a collaborate piece with the debt management firm, PayPlan.
I am Eileen Adamson, Your Money Sorted coach, working online with UK based professional women, helping them to develop a better relationship with money. Through this, I can help you to create time, freedom and financial security for you and your family.