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 could 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 the answer is yes, the County Court can make an Administration Order.
An Administration Order is a Court based procedure where can make regular payments to the Court as a contribution towards the repayment of your creditors.
An Administration Order is only possible where your total debts are not greater than £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 the amount you owe is less than £20,000 with little or no assets or no surplus income, a DRO can considered as 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 as and when they fall due.
- Have total liabilities (not including unliquidated or excluded debts) not greater than £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 furniture, bedding, tools and motor vehicles worth less than £1000 are excluded. Total allowable asset value is £1000 plus vehicle value of up to £1000.
- You have disposable income, following deduction of normal day to day household expenses for domestic needs, not exceeding £50 per month.
- You 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.
- You 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 Bankruptcy Restrictions Order, a current Individual Voluntary
- Arrangement or Bankruptcy Restrictions Undertaking, a current Debt Relief Restrictions Undertaking or Debt Relief Restrictions Order, 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 can sometimes be the right and best solution to an overwhelming debt crisis.
But before you take this step – it is essential that you get independent advice to make certain that 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. An official person, called the Official Receiver, will take control and deal with your creditors direct.
The Official Receiver, will not only take control of your assets (money and property) but will also deal with your creditors. The reason for this is, as a general rule, upon the making of a Bankruptcy Order, your assets are no longer yours.
Can Bankruptcy be the right option for you?
You may want to consider Bankruptcy if you do not have any money to pay your debts.
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 be brought to an 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.
It is legally binding on your creditors, once it has been approved, your creditors will not be able to continue to add interest and charges against you; your creditors will not be able to change their minds.
For those wishing to avoid Bankruptcy, IVA’s are often a viable alternative; this could be because of your employment status or protection of your family home.
An IVA is a contractual arrangement with your creditors and is it tailored to your circumstances. The payments in an IVA can be made from any of the following; third party contributions, income, capital or a combination.
It is a more appropriate arrangement for people who cannot make their monthly credit commitments in full but do have some disposable income to pay to their creditors.
If creditor’s do agree to your IVA, some of your debt may well 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 say and flexibility as to how your assets are dealt with and how payments are made to your creditors.
How long does an IVA last?
Most standard 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. This will depend upon your personal circumstances.
When will an IVA end?
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