It is extremely important within the current climate
and worsening economic conditions that consumers are forearmed
with detailed information on their options and rights.
Should they find that their situation becomes intolerable
as a result of circumstances beyond their control the
right advice and options are essential. Debt can seem
like a bottomless black hole that no matter how hard the
consumer tries to extricate themselves from they only
seem to tread water. People get into debt for a number
of reasons, rarely because of frivolous living but because
circumstances change such as loss of income through job
changes, divorce or separation, illness and other life
changing events, and of course 'The credit crunch'. Most
clients of First Mortgage Trust make contact after attempting
to keep up their credit repayments for a long period,
but without success.
Bankruptcy: A first time bankrupt with debts will generally
receive their final discharge one year after the date
of the bankruptcy order. There is the possibility the
bankruptcy discharge period will be under a year in a
small number of cases. If you refuse to agree or acknowledge
Bankruptcy proceedings a Bankruptcy Order can still be
filed against you. In the case of disputing a creditor's
claim, a good course of action is to try and agree to
an out-of-court settlement prior to the hearing of the
Bankruptcy petition. Attempting to settle after the order
is made to the court can be a complicated process and
expensive. A bankruptcy can be initiated by either a debtor
or creditor petition. The creditor needs to be owed a
minimum of £750, a debtor petitions for their own
bankruptcy.An Official Receiver will require a comprehensive
list of all your assets and details of what you owe and
to which creditors.
IVA (Individual Voluntary Arrangement): However there
can be a social stigma associated with bankruptcy and
they cannot be kept private because they are always advertised
publicly. An IVA is a private agreement with your creditors.
There is no professional disqualification with an IVA,
If you are made bankrupt, then you are not allowed to
be involved in promoting, forming or managing a company
without the permission of the court. If an IVA is set
up professional and/or employment status will not be affected.
Furthermore, you can carry on running your own business
and acting as a director even if you have an IVA along
with the fact that Costs of an IVA are typically lower
than bankruptcy. Once you have completed your IVA according
to the specified terms then you are deemed to be debt
free.
Debt Management Plan: A DMP is an informal debt solution
for anyone who has unsecured debts that they can't afford
to repay including credit and store cards. The agreement
with creditors is designed to reduce the amount paid each
month so life continues on an affordable budget. A DMP
requires you to have disposable income and owe money to
more than one creditor. Payments are made to creditors
on a pro-rata basis. It is advisable to remember that
it will be difficult obtaining further credit before the
DMP is completed. There is normally a debt threshold with
further criteria that 3 or more creditors are owed.
First Mortgage Trust is a premier resource for personal
finance information along with an extensive collection
of debt related information and reference. For more information
on debt management and
the IVA
process visit now.
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