If you become insolvent, you might naturally assume that you will have declare yourself bankrupt. However, there are a number of alternatives to bankruptcy available depending on your personal circumstances.
Debt Relief Order
The Debt Relief Order is a relatively new (April 2009) Government solution, issued by the Insolvency Service. This is designed for those whose debts are less than £15,000 and whose disposable income, after all living expenses are paid, is less than £50. In order to be eligible for a Debt Relief Order, a debtor must have assets totalling no more than £300 in value. This is a bankruptcy alternative clearly designed for those who earn too little and own too little to escape their debts.
Another bankruptcy alternative is the IVA, which allows a debtor through a licensed insolvency practitioner, to renegotiate their repayments with their creditors. An IVA can freeze interest and cut the total outstanding debts down toÂ a level that the debtor can realistically afford.
Debt Management Plan
A debt management plan is an informal agreement between a creditor and the debtors, whereby the repayment plan is renegotiated to a level at which the debtor can realistically afford it. This alternatively to bankruptcy is often organised through a debt management company who has plenty of experience in negotiating with creditors.
If your personal circumstances allow is, a debt consolidation loan is another bankruptcy alternative that MoneySolve can advise on.
There are a host of potential bankruptcy alternatives available and debt advice experts at MoneySolve can assess your circumstances and help you to decide the best way to solve your financial problems.