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Government Debt Advice – Four Debt Solutions You Should Know About

The national debt is once again on the increase, with the average UK household now owing £59,552. Little wonder then that the government is keen to provide support and government debt advice to those who may be feeling the strain. Alongside a recently redesigned website and dedicated government debt advice body (The Money Advice Service), there are also official debt solutions that are regulated by public bodies. Let’s explore what they are and which may be right for your circumstances…

The four core government debt advice solutions, as listed on the Gov.UK website, include:

  1. A Debt Management Plan – this is an agreement with your creditors that is managed by a financial company
  2. An Administration Orderthis is suited to those who have a county court judgment (CCJ) or a High Court judgment (HCJ), which was secured for debts owed of under £5,000
  3. An Individual Voluntary Arrangement – an IVA is managed by an insolvency practitioner and is suitable for debts of more than £5,000
  4. A Debt Relief Order or Bankruptcy Order – if you’re unable to pay your debts because you can’t afford them and you don’t have any assets to sell.

Let’s now dive into each of these debt solutions in a little more detail.

Government debt advice – Four main debt solutions

Government Debt Advice Solutions – Debt Management Plans

Overview: A Debt Management Plan is a formal agreement between yourself and your creditors. It acts as a negotiated offer for paying all your debt over a set period of time. A Debt Management Plan may be right for you if:

  • You can only afford to pay creditors a small amount each month
  • You have debt problems but will be able to make repayments in a few months

Cost: Some providers of Debt Management plans will charge:

  • A setup fee
  • A handling fee – paid each time a payment is made

Eligibility: DMPs are only suitable for unsecured debts – such as store cards, overdrafts and credit cards.

Obligations: You must keep up with your repayments, otherwise your plan may be cancelled.

Learn more about Debt Management Plans

Government Debt Advice Solutions – Administration Orders

Overview: An Administration Order can help you deal with debt if you already have a County Court or High Court judgement and you’re unable to pay the full amount.

Cost: There will be a court fee to pay each time you submit payment. The amount cannot be more than 10% of your debt.

Eligibility: As with Debt Management plans, to be eligible you must owe more than £5,000, which must be owed to at two creditors. You must also be able to show that you can afford the regular repayments.

Obligations: You must keep up-to-date with your repayments, otherwise the court has the power to:

  • ask your employer to deduct money from your wages – known as an ‘attachment of earnings order’
  • cancel the arrangement

Worried about debts that won't go away?

Learn More about Administration Orders

Government Debt Advice Solutions – Individual Voluntary Arrangements

Overview: An IVA is an agreement between you and your creditors to repay either all or part of your debts. As part of the IVA, you commit to making regular payments to an insolvency practitioner, who acts as a go-between.

An IVA is often chosen over bankruptcy as it provides for more control over the assets you own.

Cost: IVAs usually involves two fees – one during the setup and a handling fee that is charged each time a payment is made.

Eligibility: You must owe at least £5,000 to two or more providers (some insolvency practitioners insist that you have a total debt of £15,000 or more).

Obligations: If you fail to keep up with your repayments your insolvency practitioner may cancel your IVA. Your creditors may then reinitiate legal proceedings, including forcing you into bankruptcy.

Learn More about Individual Voluntary Arrangements

Government Debt Advice Solutions – Debt Relief Orders

Overview: A Debt Relief Order (DRO) is a debt solution suited to those who owe £20,000 or less. You apply for a DRO via an authorised debt adviser, who will help you assess your income and expenditure and complete the paperwork. The Gov.UK website provides an extensive list of authorised debt advisers.

Cost: The fee paid to the official receiver is £90.

Eligibility: In addition to owing less than £20,000, you also must:

  • have only minimal spare income (less than £50 per month)
  • Not own assets worth more than £1,000
  • Not be a homeowner.

Learn More about Debt Relief Orders

Government Debt Advice – Where to Seek Help

The Money Advice Service is a government-led debt help resource. Available online, web chat and by phone, they provide information and guidance on everything from debt management to work and benefits.

Contact the Money Advice Service: By Web Chat | 0800 138 777

Worried about debts that won't go away?

Government Debt Advice – Useful Links to Official Pages

 

Government Debt Advice – Contact Numbers You Should Know

National Debtline

www.nationaldebtline.org

Telephone: 0808 808 4000

Fax: 0121 410 6230

Monday to Friday, from 9 am to 8 pm

Saturday, 9:30 am to 1 pm

Money Advice Service

0800 138 7777

Typetalk: 18001 0800 915 4622

Monday to Friday, 8 am to 6 pm

Saturday, Sunday and Bank Holidays, closed

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

National Debt Help
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