A Guide To Government Debt Management Plans

Whether you have credit card invoices, loans, bank overdrafts, or excessive daily bills, there is a government debt management plan for you. The UK government has created several plans to help the increasing number of residents who are finding themselves in debt.

Depending on the types and amount of debt they have, UK consumers may qualify for one or more of these plans. When increasing debt puts you in an uncomfortable financial position, it is nice to know that help is available.

We can guide you through all the various government approved debt management plans and debt solutions. You could get up to 85% of your debts written off with government approved debt management plans such as an IVA (individual voluntary arrangement). An IVA was introduced in 1986 under the Insolvency Act. Contact us today if you are struggling with debts and see if you qualify for government debt management plans.

⏱ Get A Free No Obligation Debt Assessment:

Please fill out this form and we will get in touch with you shortly.

  • Your Personal Details

Government Debt Management Plan Options

In addition to the various informal arrangements that consumers can use to get themselves out of debt, there are formal programs offered by the government. An Individual Voluntary Arrangement (IVA) is formal agreement with creditors to repay all or a portion of debt over a specified period.

Only an authorized debt specialist can establish an IVA and some costs are involved in this plan.

An individual with £5,000 or less in debts who can afford regular payments to creditors may qualify for an Administration Order. This debt management program must be applied for through a local county court and certain conditions and costs apply.

A Debt Relief Order (DRO) may be used with certain kinds of debt totaling less than £15,000. An individual cannot be a homeowner nor have much spare income and must apply for this program through an authorized debt specialist.

Bankruptcy is typically considered a last resort for people in debt. An appointed trustee takes control of assets including the home, possessions, and spare income and uses or sells them to help repay debts. Financial affairs are investigated during the bankruptcy process and the individual will be subject to financial restrictions for several years.

A person made bankrupt can apply for a Fast-Track Voluntary Arrangement (FTVA) through the Official Receiver in bankruptcy court.

An FTVA will cancel the bankruptcy so the individual can handle debts. Creditors must agree to this arrangement and costs are involved. In addition, the applicant must meet certain conditions including having assets such as shares or property that can easily be sold to repay debts.

When the bankruptcy is cancelled, all references to it are removed from the official records and assets that have not been sold and are not needed to repay debts are returned.

Identifying which Government Debt Management Plan Is Appropriate The first step to managing and eventually eliminating debt is realizing that financial problems exist. While nearly everyone owes money, some people owe more than they can afford to repay and others regularly spend nearly everything they earn.

Ignoring a financial problem will only worsen it and when bills become debts, a formal debt management plan from the government may be necessary.

Learning more about each government program may not be enough. Often, guidance from someone skilled in debt management is necessary. This is where our company comes into play, as we partner with IVA and other debt management specialists who can provide advice and solutions. There is never an obligation to accept a government debt management plan but many people find it their best option.

Are Government Debt Management Plans Right For You?

As formal solutions to debt, government debt management plans have various qualification requirements, costs, and restrictions. Though one of these programs may be the best solution, individuals in debt should take some preliminary steps before jumping into it. They may realize that their debt is not as severe as first thought. A professional adviser can help consumers see exactly where they stand and what the best course of action will be.

Steps To Take Before Considering Government Debt Management Plans

Once people have recognized that they are in debt, they should develop or revise their personal budget. This identifies where the money is being spent and how much the person can afford to pay creditors. If there is not enough money to repay debts, the individual should identify where costs can be cut or look for sources of additional income. If the budget has already been combed through, a debt management professional may unearth other ways to reduce spending or increase income.

By scrutinizing their expenses, people often identify areas for potential savings. They may reduce entertainment or dining expenses or lower their cellular phone or cable plan. Some people comparison shop with different providers to reduce their expenses, while others sell non-essential items like an unused motorbike or second household vehicle.

By selling unwanted items, some people receive enough money to make a substantial repayment of debt.

Increasing income is the other side of the coin. Many people do not realize they are not receiving their full income entitlement. Some are paying too much tax and others are not taking advantage of tax credits. Still, others are not receiving all benefits they are entitled to and applying for these would substantially reduce their debt.

Consumers may be able to increase their income by taking a second job or renting a spare room in the home.

Using Government Debt Management Plans To Repay Debt

If there is no way to squeeze any more money from the budget and a substantial amount of debt exists, government debt management plans may be a solution. These programs affect credit rating and the status of the home very differently. The program chosen also determines the actions creditors are permitted to take to recover money owed to them such as going to court to make the debtor bankrupt.

It is important to understand the ramifications of each government program before entering into any agreements. Consumers should also understand their responsibilities under each plan and what restrictions they face while the program is in place.

For example, during a period of bankruptcy, the affected individual may not borrow more than £500 without first informing the lender of the bankruptcy.

Once people learn more about the different government debt management plans available, they are able to identify whether any are suitable for them. Professionals can help during the research and assessment phases, relieving consumers of the burden of having to do all the work themselves. These experts can also help consumers apply for a government-offered plan to manage debt.