The process for getting out of debt will vary quite a bit from country to country. In the United States, borrowers can work out debt management plans or file bankruptcy. In the United Kingdom, borrowers also have more formalized debt management plans, and intermediary step called an IVA, and bankruptcy.

If your debt is between £3,000 and £15,000 you may want to consider Debt Management Plan (also known as DMP) – an agreement between you and your creditor to make monthly payment. It can be managed by yourself or by a third party (DMP `operator`) which can negotiate with your creditors on your behalf.  If you have surplus income (£200+ after essential living expenses) you will make one monthly payment, which then will be distributed between your creditors.  Most companies will charge for this service, but there are some organizations like National Debtline or Consumer Credit Counseling Service which will do it free of charge.

If you have a debt over £15, 000 you may want to consider Individual Voluntary Agreement.    This solution offers you an ability to pay off one portion of your debts and write off the debts you cannot afford to pay.  If you go for IVA your interest fees and debts will be frozen.

If you have a substantial amount of debt, an IVA may not be enough for you to get out of debt and you may find yourself bankruptcy. This should be avoided if at all possible, but may not be avoidable for everyone.

Options like Administration Orders, Informal Arrangements, Consolidating Debts are also available among others.  There are many ways of resolving debt problem and it is often confusing to choose between them. The best way is to use free and independent advice available to you through various organizations all over the UK.  Don`t neglect this opportunity and sort out your debt problems now.

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This entry was posted on Friday, November 12th, 2010 at 11:20 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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