Wednesday, 25 May 2011

Reason Why People Get Into Debt

There are numerous reasons why people find themselves struggling to meet payments to their debt. People in debt are normally paying their creditors what they are due but all of a sudden something happens that prevents them from doing this.

Below is a list and explanation of typical reasons for people having a debt problem: 
  •  Redundancy – People are being made redundant at an alarming rate at present due to the financial uncertainty of the current financial climate.
  •  Reduced Hours – There is a lot of people having their hours cut so their company does not have to make people redundant.
  •  Illness – If someone is ill and off for a period of time then they may only get Statutory Sick Pay (SSP) and this will lead to lower income.
  •  Child Birth – If a family have a child then this will be an added allowance on to their expenditure
  •  Death – An added expenditure would happen if there was a death in family.
  • Unemployment – Again, this is the same as being redundant as it will result in a dramatic reduction in the family income.
  • Retiring due to ill-health – This does happen quite often and will have a detrimental effect on household income. For the person involved it will take time to get used to not working and possibly relying on benefits which may mean a change of lifestyle. Failing to adapt to this change of lifestyle could result in a debt problem.
  • Overspending – This is when people use credit to have a lavish lifestyle which they cannot afford. Once all credit facilities have been diminished then they need to seek help. This is a rare scenario however people who are not in debt often assume a person's debt problem is due to overspending. This can be the route cause of the stigma of debt.
  • Gambling, alcohol and drug misuse – When people initially have access to credit and have an underlying problem, such as gambling, alcohol or drug misuse then this can result in people using credit to satisfy their addiction.

As you can see it only needs one of the above circumstances to trigger people from living within their means to having to seek advice. The current economic climate is pessimistic; redundancies, house repossessions and debt advice is due to sky rocket.

If you have a money problem and need debt advice then always use a debt charity. Debt charities are not for profit which means the directors are not receiving any money made by the charity. This ensures the advice is not driven by how much money people can make.

  • When you contact a charity for debt advice there will be a number of options available such as Bankruptcy, IVA (England, Wales & N. Ireland) and the Debt Relief Order (England, Wales & N. Ireland). In Scotland the equivalent to the IVA is called a Protected Trust Deed (PTD). In Scotland there is also the Debt Arrangement Scheme (DAS) which is similar to a Debt Management Plan (DMP) but the DAS provides you with protection if you are a homeowner. In Scotland the legal term for Bankruptcy is called Sequestration. This comes in different variations based on the route to Sequestration. There is Sequestration itself but there is also Low Income Low Asset (LILA) along with the new Certificate of Sequestration which was introduced in November 15 2010.

Dealing With Debt

Debt is a problem affecting millions of people across the UK. Debt has a negative impact on a person’s financial, social and mental well being. Therefore, it’s unlikely anybody would want to be in debt. So, If you don’t want to be in debt, how can you resolve your debt problem?
Our step by step guide, provided by a qualified debt advisor, to resolving a debt problem will give you the tips to take control of your financial situation.

Step 1: Organise your Statement of Affairs (Income & Expenditure)

You can either create your statement of affairs on a computer or on paper. Firstly, record your income (combined if you live with a partner) including wages, child benefit, tax credits etc.
After you have recorded this please total your monthly expenditure, including your mortgage/rent, council tax, gas and electricity etc.
Once you have your total income and total expenditure, please deduct your expenditure from your income. Any money left after deducting your monthly expenditure from your monthly income is known as your disposable income.

Step 2: Your Debts

Now, please make a list of each debt except for anything secured on to your house. Record which company you owe money to, the type of debt (credit card, overdraft etc) and how much you owe.
Afterwards, please total the debt up. You should now calculate the monthly contractual payments you should make to each debt. Please add up your monthly contractual payments separately.
If your monthly contractual payments are more than your disposable income then you may need some professional debt advice from a debt advice charity.
The next step if you feel you need debt advice is not to contact a for profit company but to contact a not for profit charity. A charity will not charge you for their service whereas a for profit company is likely to request a fee. 
If your contractual payments are less than your monthly disposable income, then you are not insolvent, however a debt payment plan may help you. For example, a Debt Management Plan or a Debt Arrangement Scheme may be suitable. Again, a for profit company will charge for these services whilst a charity will offer them free of charge.

Step 3: Making the decision
Once you have spoken to the advice charity and they have given you the solution it is up to you to decide you wish to proceed, if you think it is suitable. A debt charity will be able to help you with the advice, explain the debt solution and ensure you are dealing with a reputable debt solution company.

Step 4: Enjoying the rest of your life
Once you have completed your debt solution, and it may take a number of years, you will then be debt free. The money you were paying towards the solution will then be yours and you will no longer have any debt to credit card companies or banks. The process should help your budget your finances. There are excellent money manager organisers which can help you control your finances in the future and avoid future debt problems.

Debt Advice Charities Explained people are told when they are in debt to go and speak to a debt advice charity. People are generally told debt advice charities are the best option because they do not charge the client for advice. For profit debt advice providers typically charge the client for advice in order to gain a revenue stream.

The debt advice charities can be split into three different categories. The difference between these charities is down to who owns them and where the funding is provided. Each has their merits and overall they are generally better than for profit organisations.

The three debt advice charity types include Government funded, Creditor funded & Solution funded.

Government funded

A Government funded debt advice charity is the Citizens Advice Bureau where volunteers and funded advisor's supply advice on debt advice. You can go to your local Citizens Advice Bureau for advice and help on your debts. There are positives and negatives to the Citizens Advice Bureau option.


- Most independent form of debt advice
- Government funded so the most secure


- The waiting time can be 8 weeks and longer to see a specialist
- The advice is typically provided by volunteers and this can mean the quality of advice and knowledge is not always the best in the industry

Creditor funded

The second type of debt advice charity is a creditor funded option. Debt charities such as the CCCS, National Debtline and Payplan are all funded by the creditors. The people who have clients in debt such as the major banks and credit lenders will donate money to the creditor funded charities to allow them to give debt advice. Again, there are positives and negatives to this type of debt charity


- The advice is typically immediate
- The charity status should mean the charity is not focussed on making a profit


- The advice is provided by an organisation funded by your creditors
- There are some people who believe the advice is biased towards the creditors and you could be asked to repay your debt over longer than 20 years.

Solution funded

The solution funded debt advice charity is an organisation such as Debt Support Trust. The charity helps people via the telephone and internet. This type of charity receives their funding from helping the client gather their paperwork and introducing the client to a company to provide the solution.


- The advice is typically immediate
- The charity status should mean the charity is not focussed on making a profit


- The money to continue to help other people comes from a small percentage of solutions
- Whilst this type of charity does not look to make a profit they do need enough income from helping clients to continue to help other people. The payment this type of charity receives does not come directly from the person in debts pocket.

What is the best type of debt charity?

Each debt advice charity has its benefit and negative. Do you want to wait for debt advice, would you want to speak to a charity funded by the people who gave you the debt or would you prefer to speak to a charity who receives a payment for introducing you to a debt solution company.

The alternatives option is to speak to a company who will charge you for advice and may place you in the wrong debt solution (debt management plan for over 40 years for instance).

The safest route for people in debt is the debt charities. What debt charity you decide to chose is your decision but our advice would be to speak to several debt organisations to see which one is most caring. You can also speak to a number of debt charities in order to see what debt solutions they recommend and make a decision which one you wish to follow.

Thursday, 19 May 2011

Debt Advice Analyser

Debt Advice Analyser can tell people what the best debt solution is for them. The Debt Analyser is available at

Money Manager Login For Debt Support Trust

In this video we will show how to login to Debt Support Trust and use the Money Manager Tool. This online financial organiser can help people see what income and outgoings they have as well as help them manage their money more effectively.

Protected Trust Deed Statistics

A protected trust deed is a legally binding agreement between a person in debt and their creditors. This video shows which area were highest for protected trust deeds in the last year. This statistics and the protected trust deed checker can be found here 

or here for the checker

Monday, 16 May 2011

Sequestration Case Files

Mr & Mrs P have recently received a Charge for Payment. This gives them 14 days to pay their debt of action will be taken. It is now over two weeks since this was received and they are now Apparently Insolvent. This means that they can use the charge for payment to look at Sequestration (Legal name for Bankruptcy in Scotland).

Mr P works full-time but is on a low wage and Mrs P stays at home to look after the kids. Mr P contacted Debt Support Trust about the debt situation they were facing.

There is £21,450 in debt and it is all loans and are in joint names. After considering all options Mr & Mrs P have decided that Bankruptcy is the best option for the them.

They have since contacted the AIB (Accountant in Bankruptcy) to get the forms and these have been handed back and each paid £100 for the cost of Sequestration.

Bankruptcy Case Files

Miss G has run up debts of over £20,000. She lives with her parents and does not have any assets that she could sell. She has one child and has had her income slashed as she has had to go part time.She contacted Debt Support Trust and after all avenues were explored the solution for Miss G was Bankruptcy.

After paying the fee of £450 for the insolvency service for the Official Receiver. As her income decreased she did not have to pay court fee due low wages.

Bankruptcy was then granted. Miss G did not have to pay any money every month as her income is low. Miss G will be discharged from her Bankruptcy after 1 year. Miss G is aware of the impact on her credit file but there was no other solution available to her.

Individual Voluntary Agreement Case Files

Ms E went through a divorce over five years ago now. Ms E now lives with her grown up kids in a rented house through her local authority. She has debt outstanding at approx £40,000. Her debts are two loans and a couple of credit cards.

After the divorce there was only her income and Child Support payments from her ex husband. As the kids are now 18 she does not receive any child support anymore and is struggling to pay her creditors. She has robbed Peter to pay Paul but is now at limits on both credit cards.

Ms E recently sought advice and called Debt Support Trust for financial help. After looking at all avenues Ms E has decided to enter an IVA.

The nominee looking after her case has sent out the proposal to Ms E and also to her creditors. Ms E has a disposable income of £300 per month. The monthly contractual payments for debt add up to £920 per month.

The meeting of the creditors has taken place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E can look forward to a new beginning. Ms E will pay £300 per month into her IVA and will pay so much back to the creditors and at the end the rest will be legally written off. All interest and charges will be frozen. (Unless the IVA terms are not met then these can be added back on).

Ms E can now see light at the end of the tunnel and has no assets that the supervisor will look at so has now peace of mind.

Protected Trust Deed Case Studies

Mr W has recently separated from his long term partner and now lives alone. He has approx £25,000
of unsecured debt from a personal loan to various credit cards all in his sole name. He rents his home from a local housing association.

As there is now only one wage coming into the house he is now finding it difficult to pay all of his essential bills and does not have enough money left over to service his debt. Once the essential bills are paid he only has £240 left over to pay to his debt. He needs £695 per month to cover his monthly contractual payments.

Mr W sought advice and contacted Debt Support Trust and after we gave the most appropriate advice we advised on a PTD. The trust deed allows Mr W to make an offer to his creditors in the hope he can get this sorted in the next three years. He has no assets like a house or car etc.

After Mr W signed his trust deed the trustee advertised his trust deed in the Edinburgh Gazzette and this gives the creditors 5 weeks to object. As long as a third in value or a majority in number don’t object then the trust deed will become protected. Once it is protected all interest and charges are frozen. (Unless the trust deed is not completed satisfactorily the interest and charges could be added back on).

This means that in three years Mr W will be discharged from the trust deed and all outstanding debt
will be written off.

Wednesday, 11 May 2011

Protected Trust Deed Statistics

New figures were released today by the Accountant In Bankruptcy and have shown a decrease in the number of protected trust deeds granted in the previous quarter of 2010/2011.

The new statistics have shown a drop of 25% in trust deeds granted compared with the previous quarter. The fall in trust deeds being grant seems to be linked to the rise in certificate of sequestrations which was introduced in November 2010. Bankruptcy was also on the rise within the last quarter with 2,687 people being awarded bankruptcy through a range of different routes, these can be broken into;

2,173 Awarded from debt applications
445 Creditor Petitions to the court
68 Petitions by the trustee in a Trust Deed

There was also a rise in legally binding debt management solutions such as, D.A.S (Debt Arrangement Scheme) with 478 approved. This is up 9% on the previous quarter and 15% compared with the previous year.

The LILA debt solution has also decreased by 12% to 1,204 compared with 1,368 in the 3rd quarter of 2010/2011.

From the the chart below we can the the increase in sequestrations (bankruptcy) and the decrease of protected trust deeds. The new trust deeds statistics are the lowest in over 5 years and while sequestration may have increased from the previous quarter they are the second lowest figures in over 5 years.

From this above chart we can see a decline in traditional sequestration (bankruptcy) since the new route to bankruptcy called LILA (Low Income Low Asset) was introduced. LILA is a route into bankruptcy however it is a simplified form for people who have limited income and little or no assets. This is the reason there was an increase in sequestration when LILA was introduced in the first quarter 1 of 2008/2009. It would appear that this continued decline in personal insolvency is good new for the economy as it will mean that people are beginning to be able to pay back what they owe. The unfortunate news is that there is still a long way to go before we will back back at the levels of 2006/2007. This is a good sign that things are getting better but it will probably take more before we are economically safe again.

Trust Deed - How To Avoid Dishonest Organisations

A Trust Deed is one of the most widely used debt solutions for people in Scotland, yet it is one of the least understood solutions. The Trust Deed debt solution has encouraged many debt companies to spring up and offer these solutions. One of the main benefits of the Trust Deed is that you only repay what you can afford, typically over a three year period, with the rest of the money you owe being cleared.

When a companies identifies someone as being suitable for a trust deed they will collect all the relevant documents from the client. Once all the documentation is collated it is sent to an insolvency practitioner who will pay the company for work carried out.

When a trust deed becomes protected the client will only pay back a proportion of the amount owed and so they are usually unaware of any fees or charges.

Tip: When speaking to an organisation who is going to refer you to an insolvency practitioner you can ask what fee they will get and how this will affect yourself. For the most part fees and charges for the trust deed will not affect you but it is within your rights to know anything that can affect you.

Many people have found themselves the victims of dishonest companies who have manufactured their circumstance so that they would meet trust deed criteria. In some instances the companies would charge the client a setup fee, or even carry out text marketing campaigns advertising that people could "write off 90% of their debt".

Tip: While it is not impossible for someone to pay back just 10% of their debt, it is unlikely in most cases, it also give a false impression to people who are vulnerable about what help is available.

Many of these deceitful trust deed companies have been closed down due to their business practices but new ones are alway opening up. It is also worth doing your homework before speaking to any organisation about your financial circumstances.

Tip: When looking for a debt solution like a trust deed, be careful to not speak with any organisation who have contacted you by text as this will generally be a marketing campaign. One option to stay safe when looking for debt advice is to speak with a debt charity. Also check for a charity registration number and search google to confirm this.

Money Manager Tool

The demand for a debt help tool is greater than ever before and in this article we will discuss an application which enables you to record you income, expenditure, debts and payments to debts in once easy place. We will explain how to use the money manager tool and why it has been created.

A money manager tool is a device which will take a person's income and expenditure and then show how much available income they have. There are different tools which will offer a range of options, these can include;
  • Income and Expenditure.
  • Dates and times of when money came in and out
  • Debts
Some of these tools may be free online organisers while others may be mobile applications.

How to use a money manager tool

When using an online money manager tool a person will be required to register and sign into the application. This enables their details to be stored. Once logged on there will be an option to input income and expenditure which will then tell the user how much money they have left over each month. Some applications will have an option to include a users debt, this will then give the final summary of;

  • How much a person spends
  • What they spend money on
  • How much they pay to their debts

In some cases a person may well be spending more than they have coming in. When this happens the online finance tool will help the person to see where they can save money.

Why this tool is needed

As more people are finding themselves struggling to manage their finances the need for a money manager tool has grown. When trying to find a solution to a debt problem many people will need an income and expenditure in order to make proposals to creditors. This tool means people will have their income and expenditure ready when they need it and have an acute understanding of their finances.

How the Money Manager will help people.

This online application will give people the chance to find out where they can save money as well as know what they are spending money on.  Many people have found that the reason they got into debt was because they were unsure of where their money was going. The money manager gives people the tool to effectively manage their finances and take control of their finances again.

Debt Solution - Protected Trust Deed

Protected Trust Deed is a debt solution which was introduced 1985 and has had a range of changes since then. A protected trust deed was introduced to help people pay as much of their debt as possible and stop them having to become sequestrated. This option is only available to people who reside in Scotland the English, Welsh and Irish equivalent is an IVA.

If someone meets the criteria and wishes to go ahead with a trust deed then an insolvency practitioner (I.P) will collate all the relevant documents. Once the I.P has all the documentation they will advertise the trust deed in the Edinburgh Gazette in order to let all creditors know about the proposal. If 1/3 in value or a majority in number of creditors do not refuse the offer then the trust deed becomes protected. Before considering a protected trust deed it is important to understand the criteria, positives and negatives of this solution.


  • Need to be able to make a monthly payment to your creditors of at least £125
  • Unsecured debt must be £10,000 or more
  • Need to be in full time employment
  • need to be able to repay a minimum of 10% of the money borrowed over the course of the protected trust deed to your creditors

Positives of a Protected Trust Deed

  •  Only one monthly payment to the debt
  • Interest and charges will be frozen, Unless the Protected Trust Deed fails at any stage, or you receive a windfall, then it is a requirement that interest and charges are repaid.
  • Will not have to liaise with your creditors as the insolvency company will do this on your behalf
  • Once a Trust Deed is signed it become protected and therefore means you and the creditors will be legally bound by the agreement, which means if the agreement is complete you will be debt free.
  • A homeowner may be able to retain their property, the Insolvency Practitioner will only be interested in any available equity
  • Will have less of an effect on a persons credit rating than if they entered sequestration

Negatives of a Protected Trust Deed

  • If there is any available equity within a property this may have to be included in the Protected Trust Deed proposal
  • A Protected Trust Deed may adversely affect a persons credit rating
  • Employment contract may not allow someone to enter a Trust Deed - they would need to check this with their employer
  • If someone enters a Trust Deed and does not meet the terms of the agreement they are likely to face Sequestration
  • A person will have their income and expenditure reviewed regularly and their monthly payments could fluctuate up as well as down

Debt Analyser and Money Manager Tool

A new online debt analyser tool has been created and is now able to help people with financial difficulties. The new tool will ask a user questions which will help to find the best solution to their debt problems.

In order to use the debt analyser people do not need to log in but simply to fill out the questionnaire. There are 5 sections within the online tool, these are as follows ;

Personal Details

  • This will ask the following;
  • Name
  • Email
  • Telephone number
  • Will give the option for a call back
  • Region
  • Notes

This will ask the following;

  • Do you own your property - If yes, what is the estimated value
  • How much do you owe to your mortgage
  • Do you have secured loans against your property
  • How do you owe in secured debt
  • Current equity
  • Do you own a car
  • How much is your car worth
  • Is your car purchased on HP
  • How much payment is outstanding
  • Do you have any other assets
  • How much are they worth
  • Current Assets

Unsecured Liabilities :-

  • This will include the following;
  • Total credit card debt- How much is owed and how many creditors
  • Total debt from overdrafts  -  How much is owed and how many creditors
  • Total store card debt  -  How much is owed and how many creditors
  • Total unsecured loans  -  How much is owed and how many creditors
  • Total catalogue debt  -  How much is owed and how many creditors
  • Total unsecured debt  -  How much is owed and how many creditors

Expenditure - This is a list of monthly outgoings
This will ask the following;
  • Mortgage / Rent
  • Mortgage / Rent Arrears
  • Secured Loan(s)
  • Secured Loan Arrears
  • Endowment
  • Council Tax
  • Water Rates
  • House / Building Insurance
  • Electricity
  • Gas
  • Oil
  • Entertainment
  • Telephone
  • Mobile Phone
  • Car Hire Purchase
  • Car Insurance
  • Car Tax
  • Car Maintenance
  • Petrol / Diesel
  • Food
  • Clothing
  • Child Support Maintenance
  • Life Insurance
  • Child Care
  • Transport / Travel
  • TV License / SKY / Cable
  • Dental Plan
  • Opticians
  • Medical Costs
  • Contingency
  • Outstanding Fines
  • Student Loans
  • Other
  • Total

When completing the income and expenditure it is important that all information is as close to accurate as possible. There is a guideline which many organisations will use to determine what is a suitable amount of spending for each outgoing.

Your Income - This is a list of all money coming in on a monthly basis

  • This will ask the following;
  • Take home pay
  • Partner take home pay
  • Child benefit
  • Working tax credit
  • Pension
  • Partner pension
  • Income support
  • Jobseekers allowance
  • Incapacity benefit
  • DLA / AA
  • Child maintenance
  • Other income
  • Monthly Income

Result This will give the best debt solution based on the information which was provided. In some instances you may have two or three available debt options. In this situation a qualified debt advisor would have to discuss the advantages and disadvantages of each solution to enable you to make a decision.

Tuesday, 10 May 2011

Introduction to a Protected Trust Deed to a Trust Deed

Roughly 9,000 enter a Trust Deed in 2010. It's a popular solution for people living in Scotland and in debt. It has a number of benefits including only repaying a percentage of the money you borrowed, with the rest being potentially cleared. There are a number of different debt solutions for people in debt. We're exploring the positives and negatives of the Trust Deed.

Like all debt solutions there are positives and negatives. The Trust Deed is becoming a more popular debt solution, with hundreds of companies looking to offer this debt solution. However the Trust Deed solution comes with a warning and should be considered with great care.

What are the negatives?

With the rise of the Trust Deed debt solution we've seen an increasing number of complaints to the Office of Fair Trading because of unfair practices. This means that people who are not suitable for a Trust Deed are being told it's the right debt solution for them. The money made by companies because of people entering a Trust Deed can be astronomical. This article confirms the truth behind the negatives of the Trust Deed debt solution.

The negatives of a Trust Deed include;

- If you fail to meet your contributions then you would be likely to face Sequestration.
- Your equity within your house must be taken into consideration. Some companies fail to explain that if your equity has not been dealt with by the end of your debt solution then you may have to sell your house.
- Your credit file will have a default on it for 6 years.

When is a Trust Deed right

In many instances the Trust Deed is the right debt solution. When you have severe debt problems and you realistically cannot repay your debts with your available disposable income, then a debt solution is required. If you have equity within your property which could pay your debt in full then you would not be able to enter a protected trust deed.

Who do I speak to

If you have debt problems then you have a choice who you tell. Some people don't even want to tell their closest family. It's essential you get the help you need. We've created some top tips when deciding who to contact for debt help.

1. Never speak to companies who text, email, mail or telephone you. They are the companies most likely to be making the most profit by charging you for simple advice which a free charity could offer.

2. Never feel pressured by a company into signing anything. If they are pressurising you then they are more concerned by the money they can make and will not really care about your financial situation.

3. Check for a consumer credit licence. If the company doesn't have a consumer credit licence then they are breaking the law and not a legitimate debt advice company.

4. Google. Check Google for feedback from other people.
5. Never contact a debt management company. Some for profit companies will only offer one solution- a debt management plan. The debt management plan can be useful for some people, however it is an informal arrangement with your creditors any companies only need a consumer credit licence to administer this solution. If a company only offers a debt management plan and no other solution, then you can quickly find yourself in a long term (40 years) debt management plan.

The options for debt advice

There are a number of options for people in debt and looking for help. Most people recommend speaking to a debt charity because they are not profit focussed. Other people prefer immediate face to face debt advice. In this instance you may need to pay for advice out of your own pocket. Free debt advice can be found at a number of debt charities, with the citizens advice bureau offering face to face charity advice.

The Individual Voluntary Arrangement (IVA)

An IVA is the Equivalent of a Protected Trust Deed but is only available in England, Wales and Northern Ireland. IVA's have helped thousands of people who face severe financial problems.

Ms E had went through a divorce over five years ago and lived with her grown up kids in a rented house through her local authority. She had debt outstanding at approx £40,000. Her debts were two loans and a couple of credit cards.

After the divorce there was only her income and Child Support payments from her ex husband. As the kids were 18 she didn't receive any child support and was struggling to pay her creditors. She was robbing Peter to pay Paul and had reached her limits on both credit cards.

After looking at all avenues Ms E has decided to enter an IVA.

The nominee looking after her case had sent out the proposal to Ms E and also to her creditors. Ms E had a disposable income of £300 per month. The monthly contractual payments for debt added up to £920 per month.
The meeting of the creditors took place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E could look forward to a new beginning. Ms E now pays £300 per month into her IVA and will pay this until the IVA is complete at the end the rest will be legally written off. All interest and charges were frozen. (Unless the IVA terms are not met then these can be added back on).

Ms E could now see light at the end of the tunnel and had no assets that the supervisor would consider liquidating so she now had peace of mind.

To be suitable for an IVA you would need to meet the following criteria;

- Unsecured debt must be £12,500 or over
- You must have a monthly disposable income of £200 or greater
- You must live in England, Wales or Northern Ireland
- You must be in full time employment

Benefits Of An IVA

Your IVA would be legally binding meaning no further charges or interest could be added. It also means your creditors are not able to change their mind if they agree to your proposal

You will only be asked to make affordable repayments

An IVA enables a professional person (doctor, accountant, solicitor etc) to continue to practice whilst resolving their debt problem

Bankruptcy may affect their professional status. You may have to check your employment contract to ensure you can enter an IVA

You are likely to be able to keep your home within an IVA, usually
the Insolvency Practitioner will only be interested in any equity

You would face fewer credit restrictions entering an IVA compared to bankruptcy

Negatives Of An IVA

Any available equity in your house or other asset would have to be released for your creditors

An IVA is legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors will proceed with bankruptcy

Your income and expenditure will be reviewed on a frequent basis which can mean your monthly contribution could fluctuate up as well as down

Your IVA would be noted within your credit file and it would remain there until you complete the IVA, and for a year after that

An IVA usually lasts for 5 years, whereas Bankruptcy would only last for 1 year

Bankruptcy & Debt Relief Order (DRO)

Bankruptcy is the oldest debt solution and is considered the last resort when facing financial worries. In this article we will discuss a case which led to bankruptcy and how it was dealt with.

Miss G has run up debts of over £20,000. She lives with her parents and does not have any assets that she could sell. She has one child and has had her income slashed as she has had to go part time.

After all avenues were explored the solution for Miss G was Bankruptcy. After paying the fee of £450 for the insolvency service for the Official Receiver. As her income decreased she did not have to pay court fee due low wages.

Bankruptcy was then granted. Miss G did not have to pay any money every month as her income is low. Miss G will be discharged from her Bankruptcy after 1 year. Miss G is aware of the impact on her credit file but there was no other solution available to her.

Criteria For Bankruptcy

- You cannot realistically meet any other debt solution
- Your unsecured debt must be above £750 to enter bankruptcy
- You will need to complete forms provided by The Insolvency Service

Benefits Of Bankruptcy

- You will no longer have to deal with your creditors
- Once your bankruptcy is completed you will be able to start again financially without any debt
- You stop making any payments to your creditors

Negatives Of Bankruptcy

-Your credit rating is likely to be severely affected
-You cannot credit of £500 or more without disclosing you are bankrupt
-You cannot be a director of a limited company
-You may lose your home and car
-There has been some new routes to bankruptcy added over the years, these include;

Debt Relief Order(DRO)- This is only available in England, Wales and Northern Ireland but gives people in severe financial trouble the option of declaring themselves bankrupt without the same cost or hassle. The criteria for a debt relief order is;

Not have unsecured debt exceeding £15,000
- Not have any assets exceeding £300
- Not own your property (i.e. Own a home with a mortgage)
- Not have available disposable Income after normal household expenditure exceeding £50
- Be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales
- Not have been subject to a DRO within the last 6 years

Also, you cannot apply for a DRO if you are currently Bankrupt, in an IVA or have a current Bankruptcy Restrictions Order or Undertakings or have current Debt Relief Restrictions or undertakings.

Protected Trust Deed and IVA - 'Clear Debt'

A common problem within the debt industry is the lack of clarity around debt solutions. Some websites state that it's "Easy to write off 100% of your debt" and "become debt free today". The Office of Fair Trading is clamping down on firms stating that this is possible. This article examines the truth behind the solutions where you can repay a percentage of your debt, with the rest being cleared at the end of the solution.
The debt solutions people talk about when it comes to 'writing off debt' includes the IVA and Protected Trust Deed. If you are made bankrupt you will also clear the debt you cannot afford to repay. All of these debt solutions will negatively affect your credit rating because of the default. A default on your credit rating will last for 6 years.

The IVA debt solution
The IVA (individual Voluntary Arrangement) typically lasts for 5 years and you would repay a percentage of your debt. The minimum repayment over the 5 years must be 25% however most people repay a lot more. The proposal is put to your creditors at an official meeting and if they accept the proposal your IVA will be in place. The criteria for an IVA is
- debt of at least £12,500
- minimum disposable income of £200
- at least 3 different creditors
A key criteria for the IVA is that your equity (value of your house minus what is owed to your mortgage lender) within your property does not exceed your debt and 5 years of monthly contributions.

The Protected Trust Deed solution
The Protected Trust Deed is similar to the IVA but is only available to people living in Scotland. There are legal differences between Scottish law and the rest of the UK when it comes to debt.
The Protected Trust Deed would last for typically 3 years and at least 10% of the debt must be repaid over the course of the solution. The Trust Deed is signed and advertised within the Edinburgh Gazette. After 5 weeks, if there are no objections (or less than a majority in number or a third in value) then your Trust Deed will be Protected. The criteria for a Protected Trust Deed is;
- debt of at least £10,000
- Minimum disposable income of £150
- at least 2 different creditors
If you have a house with equity then the money tied up in your house should not outweigh your debt and 3 years of monthly contributions.
There are websites, TV adverts, newspaper columns and leaflets which claim to offer miracle solutions to deal with debt. The truth is that "clearing your debts" is not as simple as it's suggested but there is a route to resolve all debt problems. It's essential when dealing with debt you speak to a not for profit charity with qualified debt advisors who can provide you with honest, transparent debt advice.
There are a number of ways to find debt charities you can trust, including using Google and searching for debt advice charity or even speaking to friends and asking for their help.
Debt Support Trust is a registered debt charity providing debt advice on Protected Trust Deeds and IVAs. The charity offers a wide range of support from benefits advice through to help with bankruptcy advice.

Avoiding Credit Card Debt Problems - Debt Advice And Support

Credit cards are a way of life for people all around the world. Credit cards can be a useful tool which support us all when we are needing a little financial help. When waiting those extra couple of days before pay-day it can also help to have the ability to buy that treat for ourselves.

While it can be useful to have a credit card because you actually can use credit cards without racking up credit card debt as long as you have the knowledge and the will to do so. While most people will use the their credit facility wisely many have found themselves using the card to pay for the day-to-day cost of living, especially when they are out of work or having financial problems already.

The best way to manage your credit card debt is to manage your finances. This means setting up an income and expenditure to be able to see how much money is left over each month. Sometime people may find that they have less money at the end of each month than they did to begin with. In these instances reductions in expenditure will be required if possible.

Start by writing down all of your income and expenses. Household expenses include your phone, gas, electric, tv and any other household costs. Now subtract your expenses from your income. If you have a negative income you will need to cut what expenses you don't need to come into a positive. It is also a good idea to figure in money for emergencies (if you don't have an emergency fund) and money to put into savings.

Now that you have your budget set, you will need to stick to it and not over spend where it is unnecessary to do so. If in debt then it would be best not to use credit facilities (until after the debt has been resolved) which could further your problem.

If this method doesn't work/help then it would be best to seek professional debt advice from a charity/company who will be able to offer a range of solutions including general advice, debt management, iva, trust deed, lila, debt relief order, bankruptcy and sequestration. For some of these solutions a person may need to have more debts than credit cards but it would not be exclusive.

While a lot if these solutions can be hard to understand or to asses but there is help available to those who want to know what options they have at their disposal.

LILA, Bankruptcy, Certificate of Sequestion

Mr & Mrs P received a Charge for Payment, this gave them 14 days to pay their debt off or legal action would be taken against them. The two weeks past and they hadn't made a payment since this was received which means they were now Apparently Insolvent. This means that they could use the charge for payment as a reason to declare themselves Sequestrated (Legal name for Bankruptcy in Scotland).

Mr P worked full-time but was on a low wage and Mrs P stayed at home in order to look after the kids. There was £21,450 debt and it was all loans which were in joint names. After considering all options Mr & Mrs P decided that sequestration was the best option for the them.

Once they had decided that this was their best route out of debt they only had to wait until their creditors petitioned the county court for the couple to be declared sequestrated.

There is a two new forms of sequestration which now gives the person in debt the chance to declare themselves sequestrated. These new debt solutions are called

- Certificate Of Sequestration - This is similar to sequestration except you don't need to wait for creditors to make you sequestrated and the criteria as follows;

- You must live in Scotland (or have lived in Scotland within the last year)
- You must not have been bankrupt in the last five years)
- Owe at least £1500 in unsecured debt
- You must pay a fee of £100 to submit your certificate of sequestration to the Accountant in Bankruptcy (AIB)
- To receive the certificate you must use an insolvency practitioner (IP) or someone who works for the IP and has been given authority to act on his behalf. You can also visit your local CAB, approved money advisors for DAS or your local authority money advisers
- Only the person in debt can be granted the certificate - creditors cannot apply for this
- On the day the certificate is granted the person in debt then has 30 days to apply for their bankruptcy. All applications made after the 30 days will be rejected and they will lose their £100 fee. The process would then need to start over and a further £100 would be charged.
- The debtor will be required to provide evidence with their application to help the AIB so that identity can be confirmed and that they qualify for the bankruptcy. Acceptable evidence will be payslips, bank statements, proof of benefits if applicable.
- Also required would be tenancy agreements and HP agreements if they have any.
You can get a copy of the Accountant in Bankruptcy Certificate for Sequestration here, however it must be completed by an IP, approved money adviser, CAB or local authority money adviser.

LILA (Low Income Low Asset) - As the name suggests this debt solution is for people with low income and low value assets if any. the criteria for a LILA is as follows;

The criteria to enter Sequestration via the LILA route is;

- Your income must be less than £237.20 based on a 40 hour week
- If you are on income support, income based jobseekers allowance or receiving working tax credits then you would have met the low income test. This will apply even if you are earning more than £237.20
- You must be unable to meet your current repayments and charges
- You cannot own property or land
- The cost for LILA is £100 and is payable to the Accountant in Bankruptcy
- If you get any monetary windfalls or inherit any property or land you would need to let your trustee know as this may need to be paid to your sequestration
- You cannot start up or be involved in the day to day running of a limited company
- You are unable to act as a Member of Parliament. Other restrictions include not being a member of a local council or on a school board etc
- It will be difficult for you to obtain credit after you being discharged

Secured Loans - Debt Advice And Support

Secured loans require a person to sign something in their possession against the loan. The reason it is called a secured loan is because the creditors can take possession of that which the credit was taken against if the loan repayments are not made.

When people secure credit against an asset they are generally able to get more in return. An example of this would be when someone takes out finance against the equity they own in their property. They could find that at time they are able to apply for more money than they would if they weren't to secure it against the property. This is usually because the creditor feels that the person is less of a risk and they will be able to recover the amount owed if they fail to make payments.

Many people have seen the benefits of secured loans and have managed to pay back what they owed without having their possessions being reposed. However this isn't always the case and in some instances a person can find themselves struggling to manage their finances if they lose a job or have other personal problems.

The main disadvantage of secured credit are those people who do not manage to pay back what they owe may find themselves at risk of losing their assets. Sometimes the temptation of a large sum of money can be too much to resist. This is especially true of those who have refinanced because they are in debt and unable to find another solution which could help them.

Those who have refinanced in order to repay other debts can find themselves owing even more than they did originally. There is a number of debt solutions which can help those who have found themselves in this situation. When trying to asses which of these solutions is most suitable it is advised to speak with a debt advice charity/company. The solutions which can help are;

General Advice - This is best for those who may need to cut back on expenses but are not suitable for any other help 

Debt Management Plan - this can arrange for regular payment to be made to the creditors

IVA - For those who are unable to pay back what is owed in full but is not suitable for bankruptcy. This is only available to people living in England, Ireland and Wales.

Protected Trust Deed - Similar to an IVA but is only available to people living in Scotland. The main difference is simply the criteria needed to meet the requirements for these solutions.

Bankruptcy - The final solution when all else fails is to petition the court to legal declare bankruptcy. This is only available in England, Ireland and Wales 

Sequestration - This is the same as bankruptcy except only available in Scotland. The only difference between these solutions is the criteria which is required to meet them.

LILA - A new debt solution which has been introduced to help people who could afford the cost of making themselves bankrupt, still manage to be declared insolvent. This is only available in Scotland

Debt Relief Order - Same as LILA except for the criteria need to be met. This solution is only available in England, Ireland and Wales.

The trade association whose members account for approximately 98% of all UK mortgage lending has stated that new house loans returned to the same levels as December 2007 levels. In addition, the remortgage market has seen a stabilisation of growth over the same period of time. According to data published by the Council of Mortgage Lenders, the number of loans that went to home movers rose by 15% from September to October 2009. A significant number within that group opted for a tracker mortgage loan, a loan where the interest rate rises and falls in line with the Bank of England base rate. This is believed to be an indication in borrower confidence that rates may remain low for the long term.

New Trust Deed statistics revealed!

New debt statistics have revealed how many Protected Trust Deeds are being administered per postcode. These new debt stats were collated by Debt Support Trust and formatted into a table in order to show which postcode was the largest for protected trust deeds.

From the new debt statistics it is clear that of the 7,980 protected trust deeds (KY11) Inverkeithing had the largest amount between 2010 and 2011 with 144 while TD4 (Earlston) had the lowest number over the year with just 1 case.

The new information has been released in the form of a table which can be searched in order to find a specific postcode. The information has also be released with information to help everyone understand what the statistics mean.

The five largest postcode areas for protected trust deeds are shown below in the list.

KY11 - 144 Inverkeithing
ML5 - 114 Coatbridge
ML6 - 113 Airdrie
EH54 - 110 Livingston
G81 - 105 Clydebank

The general postcode regions have also been collated which means people can see a general overview of which regional postcode was biggest for a Protected Trust Deed.

Note: It is worth remembering that these stats while useful are not linked to per 100,000 population. This means that we while the G postcode may be the largest for a Protected Trust Deed it is also the largest per population and therefore faced a higher chance of having the largest Protected Trust Deed. This information can help to see what effects can create debt and help to stop it in future. For example, In an area where a large factory has closed down and people have faced redundancies it is useful to know wither or not this area was large for protected trust deeds as it could have had an impact.

This information was collated after the released statistics from the accountant in bankruptcy who administers protected trust deeds. The information was then broken into individual postcodes and listed from largest to smallest.

Please note there is a discrepancy of 7 between the 7970 Protected Trust Deeds and the 7973 postcodes.
The statistics have also been split into a pie chart which shows the regional postcodes for each Protected Trust Deed. 

The introduction of certificate of sequestration last year also contributed to a large decrease in the number of people who entered a Protected Trust Deed. This new debt solution allows people to apply for sequestration without the need to prove they are apparent insolvent and therefore have their creditors seek sequestration.

Personal Finance - Tips and Support

In this article we will discuss personal finance and how people manage their money. Personal finance is something that many people still do not feel educated enough about or able to understand. This can cause many problems when people find themselves unable to manage their finances and unaware of just what help is available.

While most people over the years have relied on social help i.e benefits or pensions, this isn't something which can be relied upon as much today or even in future. This has been the case since the recession began and the cut backs took effect.

It is important when working out your budget each month that the person paid first is you followed by priority creditors (mortgage, secured loans etc). There would be no point in giving creditors the money you need to live and then having to go further into debt just to survive.

This is an important factor when working out your budget and it must be done. If payments are not made to priority creditors, then you could find it harder to get out of debt in the longer run.
It is important to make sure that you are protected against any changes which could cause debts to arise. This may be as a result of sickness which could reduce income or a family incident which could mean an increase in expenditure. One way which people can secure themselves against these factors is by having a savings account. By putting money way each month when times are good it can reduce the impact when you are struggling.

While there are fewer jobs than before due to the recession it may be worthwhile looking for a second job if you are struggling financially. This could offer the extra money needed to solve any money worries you have and may be a short term solution.

While most jobs are not able to pay enough to balance out the cost of living due to the recession, it could still help you put a little extra money in your pocket each month. The income from one job may not be enough to pay for the rising cost of food, gas, electricity etc which is why it is important to consider other options for income. This could be mean a second job which is part-time or even finding out if you are entitled to other benefits. The more options you have financially the better you may be prepared for the future.

Those who have money aside at the moment may have enough to start considering an investment into the property market. With house prices at rock bottom prices, if you have available income you can get a good deal if you are purchasing a house. This could be seen as an asset for the future or even just as extra income through rent. Another good source can be online as new innovative business options are arising all the time. It is advised though that caution is taken when looking online for extra income as people have found themselves the victims of scams.