How can you Avoid Bankruptcy?
If you are struggling with overwhelming debts you may believe that declaring bankruptcy is your only option. In the UK however there are in fact lots of different ways for people to resolve their financial troubles and become free from debt.
Many of the people who speak to us about their debt problems each day tell us how they are seeking a way to avoid bankruptcy. This is understandable as for many there is a negative perception of bankruptcy and it is often seen as a last resort.
There are a number of reasons why you may want to avoid bankruptcy -
To discover the best solution for your debt problems try our quick Debt Solution Finder on the right hand side of this page or call us on 0800 028 4422 for immediate advice.
Although for many people bankruptcy will be the best solution it is always advisable to first consider all of the alternatives.
Individual Voluntary Arrangements (IVAs)
IVAs offer a real alternative to bankruptcy for people suffering from serious debt problems. To qualify for an IVA you will usually need to have debts in excess of £10,000 (lower amounts sometimes considered). In an IVA you make a single affordable monthly payment for a fixed period of time, usually five years. At the end of this period any remaining unpaid debt is written off by your creditors.
More information - Individual Voluntary Arrangements
Debt Management Plans (DMPs)
Debt Management Plans are one of the most common debt solutions used by people living in the UK. They are an option for people struggling with unsecured debts such as loans, overdrafts and credit cards. A Debt Management Plan will restructure your debts so that you make an affordable payment each month. By restructuring your payments you will be able to regain control of your finances.
More information - Debt Management Plans
An Administration Order can help you deal with unsecured debts as well as other minor debts such as council tax arrears. Your debts are restructured into a single reduced payment that you make to the court each month. The court then distributes this payment to your creditors on a pro rata basis. You can apply for an Administration Order if you have multiple debts totalling less than £5000 and have a County Court Judgement (CCJ) against you.
More information - Administration Orders
Debt Relief Orders
A Debt Relief Order is an alternative to bankruptcy for people on a low income and with few assets. They are a way for you to apply for bankruptcy without having to go through the full Court bankruptcy procedure. Debt Relief Orders are a cheaper option to bankruptcy but it is quite restricted on who can apply. Typically you will need to have debts of less than £15,000 and assets of no more than £300.
More information - Debt Relief Orders
Protected Trust Deeds
If you live in Scotland then you may qualify for a Trust Deed. Similar to an IVA it will restructure your unsecured debts so that you make an affordable payment each month for a fixed period of time. Trust Deeds usually last for three years at the end of which the rest of your debts are written off.
More information - Scottish Trust Deeds
Full and Final Settlement
If you have access to a lump sum of money then making a Full and Final Settlement offer may be a good bankruptcy alternative. In Full and Final Settlements you arrange to make a one off lump sum payment in exchange for the rest of your debts being written off. Typically this is only an option for people who are able to re-mortgage, have significant savings or have saleable assets.
More information - Full and Final Settlements
If you are suffering from serious financial problems and are looking for an alternative to bankruptcy then Royal Exchange can help. Since opening our doors we have helped over twenty five thousand families and individuals break free from their debts.
We provide a free no obligation consultation and debt assessment service. Our advisors are here to help you to avoid bankruptcy or, if your circumstances mean that becoming bankrupt is the most appropriate solution, we can advise you on every stage of the process. All calls to us are treated with the strictest confidence.
For more information about bankruptcy and its alternatives call our debt helpline on 0800 028 4422 or complete our enquiry form to request a call back.