DEALING WITH DEBT
When you are struggling with debt, the world can seem to be a cold, hard place. However, when you face the fact that you have to get yourself out of financial difficulty, you will find that there are a lot of things that you can do to free yourself of debt.
NEVER use any company that asks you to pay them a fee for reducing the amount of your debt. If you need free debt advice, there are places where you can get free impartial debt advice, and begin to sort out your debts.
A good place to start is with your local council. They have departments that will give you free advice on how you can reduce your debts, and tell you about various government schemes that may help you with credit card debt and mortgage arrears. You can also go to your local Citizens Advice Bureau – they will offer you excellent impartial advice on how you can improve your financial situation.
Here is an article by Mark Davis that may be of interest. Please note that it has been written with a view to promoting his website www.piggybankrupt.co.uk, and therefore Instant Haven Ltd. cannot and will not take any responsibility for any course of action you may decide to take after having read it. Below the article are some useful links and numbers if you need FREE debt advice - and we strongly advise you to do as much research as possible before committing to any course of action.
Relief using a Bankruptcy Petition
Article by Mark Davis
Many people assume that presenting a bankruptcy petition is the worst way of dealing with your debts. Well, imagine the situation where bankruptcy is in fact the best solution for you and after years of trying various other solutions you end up going bankrupt anyway. Often the worst solution is taking no action at all or choosing the wrong solution. This article presents some facts about bankruptcy and explains how it can bring you some relief.
By presenting a bankruptcy petition you are making a declaration that you are unable to repay your debts and you are asking the court for relief from those debts. You will usually be bankrupt for a maximum period of one year. Your assets (though not all) will be shared out among your creditors and during the bankruptcy there will be an investigation in to your affairs. At the end of the twelve months you will be discharged and clear of your bankruptcy debts.
It is important to dispel some myths about bankruptcy. The most common myths surround assets. By going bankrupt you do not automatically lose all of your assets. You may be able to keep your home and car for example. Other assets such household items and items used by you personally in your business will be exempt. It is assets that are of a significant value and that are not exempt that are at risk.
Another myth is that bankruptcy is a complete fresh start. This is not always the case. If you can afford to contribute to your bankruptcy debts from your disposable income then you will have to do so for a period of three years.
When considering bankruptcy advice should always be sought. It can be complicated and the consequences are in abundance. It is important to keep in mind the long term effect on your credit worthiness.
There are a number of alternative solutions that you should always consider alongside bankruptcy. This includes an individual voluntary arrangement (IVA) and a debt management plan (DMP).
Case Study
A little while back Mike had to find a new job after being made redundant by his previous employer. His new lower salary was such that he was unable to meet his debt repayments. With the help of a debt management company Mike arranged a debt management plan. Under this plan it was projected that it would take him 15 years to repay his debts, this included the fees charged by the debt management company.
Three years on Mike’s situation had not improved much. He had just enough to live on and his house was in negative equity. Mike had a car worth approximately £1000 that he needed to get back and forward to work. He could not rely on public transport. After seeking advice and considering the consequences Mike decided on bankruptcy. He is now relieved of his debts and no longer struggles to make payments to the debt management company each month. He was able to keep his property as there was no equity in it and was also able to keep his car. Mike’s bankruptcy lasted twelve months and he is now looking forward to a bright and debt free future.
Mike’s case shows how the wrong solution can leave you struggling for years. Alternative solutions should always be considered in line with your personal circumstances and future objectives. Through advice from an organisation that specialises in bankruptcy Mike was able to ascertain the likely outcome of bankruptcy compared to other solutions.
This guide provides a simplistic overview only and also and very brief case study to demonstrate that bankruptcy can be a viable option. If you are seeking to deal with your debts then you should always seek professional advice. This article should not be used to help you identify a solution to your debt problems.
Copyright Mark Davis 2010
Useful links and telephone numbers for people struggling with mortgage arrears and debt.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/index.htm
http://www.direct.gov.uk/en/moneytaxandbenefits/managingdebt/planyourwayoutofdebt/dg_10023185
0800 197 6026 Business Debt Line – a free debt advice service for the self-employed and small businesses. Free, confidential and independent advice.
0208 405 3535 Debt Line – a service provided by the Citizen’s Advice Bureau to give impartial and confidential advice to individuals dealing with debt and related issues. They will take calls from all over the U.K.
