Debt has become an all too common feature of modern life, with the majority of UK households carrying some kind of unsecured debt. Living with debt can not only be a financial burden, but it’s also very stressful and takes a toll on mental health.
For these reasons, it’s important to be aware of some strategies for getting yourself out of debt. In this article, we discuss some effective debt solutions and, for those who stick around until the end, we’ll offer advice on getting some of your debt written off.
The Debt Respite Scheme
This is one of the more recent debt management schemes introduced by the UK government and it is designed to help people who are experiencing mental health crises.
The Debt Respite Scheme, or the Breathing Space Scheme, involves interest on your debts being frozen for 60 days so that you can devise a plan for repaying the money you own.
It also gives you legal protection from your creditors for the same duration, meaning they cannot pursue you and attempt to recover money from you over the course of the 60 days.
This can be an effective solution for many people who simply need a break from the stress or who need some time to gather the funds. It also doesn’t impact your credit score as severely as some other options.
Individual Voluntary Arrangement (IVA)
This is typically the most effective debt solution for most people and it also comes with the most impressive benefits. IVAs are legally binding payment plans that last for around 5 years, during which time interest on your debts is frozen. It also involves all of your debts being consolidated in one place where you can manage them more easily.
A specialist will evaluate your situation and determine how much you can afford to repay your creditors each month. You will then pay one manageable monthly amount towards your debt and an insolvency practitioner will distribute it amongst your creditors.
The best part is, up to 90% of your debt can be written off with an IVA! To get started, simply use an IVA calculator.
This is the first step in getting an IVA. These calculators enable you to enter the details about your situation and then they produce an accurate visualisation of what your agreement will look like. It will show you how much you will repay under the arrangement, how long it will last and how much debt you’ll have written off at the end.
Here’s the criteria for accessing an IVA, though you don’t necessarily have to meet all of them:
- You must be insolvent
- Have approximately £5000+ in unsecured debts
- Have two or more creditors
- Regular income
- Able to make minimum monthly payments
- Deal needs to be better than bankruptcy
- Live in England, Wales or Northern Ireland
If you’re interested in accessing an IVA and want to learn more, reach out to us today.