Although a bankruptcy may be a better option for some personal circumstances, it is the solution that has the most long-term impact. From restrictions in some careers such as owning your own limited company, being in the armed forces or police officer, working in finance, even being a MP.
Being made bankrupt can even impact on some services you receive, including the types of bank accounts you can access, limitations on some insurance policies, even getting a mobile phone contract. There is also the social impact of bankruptcy of your name being searchable on the bankruptcy register, within search engines like Google and Bing and your details being printed in a UK news publication.
Thankfully there are options available to those not wanting to enter into a voluntary bankruptcy.
A Debt Management Plan is informal agreement with your creditors to reduce your debts with an affordable monthly repayment. The benefits of going down an informal route, is it will allow flexibility in payments for when life throws you a curve ball. Debt management plans can stop creditor contact and combine all your debt repayments into one affordable monthly payment. Another main advantage is that you will not end up on a public register, but it’s important to note, it will still impact on your credit rating for up to 6 years after your final payment is made.
If your total debt is more than £7,200, we might recommend arranging an IVA for you. Unlike a Debt Management Plan, this is a legally binding arrangement between you and the companies you owe money to. Under an IVA, you might have to pay more to your creditors than going bankrupt and it will last for a longer period of time but it gives you the opportunity to protect your assets and also with the help of an insolvency practitioner (IP), propose an affordable monthly payment to your creditors based on your personal situation. Whereas with a bankruptcy you are in the hands of official receiver who will determine how much you pay back each month and what happens to your assets.
This may seem daunting for many but this can be a solution for some people who are struggling with repaying their debts especially if it is just one creditor or if your situation is just temporary.
A phone call to DFH could be all you need. Our financial advisers are on hand to listen to your financial situation and give advice on all the options available to you. There are no fees for this initial fact find and advice so you have nothing to lose finding out how to move forward. If a paid for service is the best solution for your personal situation, then our advisers will clearly make you aware of these.