There are four main steps when dealing with debt and our advisors can guide you through.

Dealing with debt

Step one – make a list of everything you owe

You should sort out exactly what you owe and who you owe it to. The people you owe money to are known as your creditors. If you owe money to a creditor, you are known as a debtor.

Step two – put your debts in order of importance

The most important debts are known as ‘priority debts’ and they aren’t always the biggest ones. Priority debts are ones where serious action can be taken against you if you don’t pay what you owe. For example, you could lose your home, be disconnected from a service or even go to prison.

Priority debts usually include things like:

• mortgage repayments
• secured loans
• rent
• Council Tax
• utility bills
• taxes
• court fines

You need to sort out payments on your priority debts first.

Non-priority debts include things like:

• credit card and store card payments
• bank loans
• overdrafts
• home-collected credit – like a Provident loan where the agent collects payments weekly
• catalogue repayments
• money you’ve borrowed from family or friends

You can’t ignore these, but you don’t need to deal with them as a first priority.

You can get help sorting out your priority and non-priority debts from Marshall Bentley.

Step three – work out a personal budget

Work out a weekly or monthly budget to see what your income and expenses are. it can also show you where you can save money. A budget will help you decide what you can reasonably afford to repay your creditors, so it’s important to be realistic.

You can get help from Marshall Bentley when working out your personal budget. There are also self-help packs and online tools you can use to help you.

Step four – get advice on the different ways to deal with your debts

There are lots of options for dealing with debts. For example, arrangements you can make with your creditors or more formal ones that Marshall Bentley can organise for you.

Bankruptcy is a way of dealing with debts when you don’t have any available money to pay.

Once you have received your discharge then you are totally debt free subject to some limitations.

Bankruptcy should only be considered when an individual cannot pay their debts. If you have no or little disposable income then bankruptcy may simply be your only option. Being made bankrupt for the first time generally means you will receive your discharge one year after the date of the bankruptcy order, or even less than a year in some cases.

It is always important you seek professional advice before declaring yourself bankrupt. It may seem very appealing to think you can be debt free in 12 months especially if you have a high level of debt, but as mentioned earlier, there are some drawbacks to bankruptcy which you need to be fully aware of.

Who can be made Bankrupt?

Anyone can be made Bankrupt, including individual members of a partnership. People associate bankruptcy with seizing their assets which is not strictly true. Essential items which you use for day to day living are allowed to be kept. Only extravagant items such as an expensive car that will be advised to be downgraded. The official receiver decides on what you do and do not keep. Those assets that the Official Receiver takes will be sold to first recover the costs of the bankruptcy proceedings and then repay the creditors.

The Trustee may have to sell your home in order to realise your beneficial interest and help repay your creditors. Your beneficial interest in the property is the amount you will usually receive from the sale proceeds.

For instance, this will usually be the amount after:

• The amount outstanding on the mortgage is repaid
• Your partner is paid their half of the sale proceeds if it is a joint mortgage

It may be possible to put off the sale until the end of the first year after your bankruptcy so that you have time to make alternative housing arrangements. This is time you may be granted if you have a partner or children living with you.

If you do not wish to lose your home you may be able to get someone to buy your interest. There may also be exceptional circumstances where the court will not order the sale of the property.

If you are considering bankruptcy and you own a property then seeking bankruptcy advice will answer any questions and help you decide what is best for your circumstances. It may be that an IVA is a more suitable solution that will allow you to keep your house.

You may be made bankrupt if you default on your IVA payments and the IVA is terminated.

Is IVA the best option for you? Our team will talk you through it.

WHAT IS AN IVA

An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your unsecured creditors that can help you avoid bankruptcy.

An IVA can allow you to repay the unsecured debt you can afford at a realistic rate. At the end of your IVA, your lenders will write off the outstanding unsecured debt – as long as you’ve upheld your side of the agreement.

Unlike bankruptcy, it’s very unlikely to force the sale of your home.

WHAT WILL I GET WITH AN IVA

Once your IVA is in progress:

• The Supervisor of the IVA will handle correspondence with your creditors.
• You will have legal protection from creditor action – as long as you stick to the IVA terms
• You will have monthly payments you know you can afford
• Your home will be protected from repossession, although you may need to release equity.
• You will get a dedicated professional who will regularly review your circumstances to ensure you’re in control of your finances

WHAT IF MY SITUATION CHANGES ONCE MY IVA HAS STARTED

Creditors understand that a lot can happen while the IVA is in progress, and that something could change, making it difficult (or impossible) for you to keep up with your payments. You could lose your job, for example, or your rent/mortgage/utility bills could rise more rapidly than expected.

If this meant you couldn’t keep up with your payments, your IVA could fail, and you could even end up being made bankrupt.

IVAs are designed to offer some flexibility where there has been an unforeseen change in circumstances. If you run into difficulties in the middle of the IVA, your creditors may accept a few changes to the terms, rather than abandoning the IVA altogether. They may, for example, agree to accept lower payments for a longer period. As with the original IVA proposal, any ‘IVA Variation’ would have to be accepted by creditors accounting for 75% of the debt.

Similarly, if you receive a lump sum of money, they may accept a ‘full and final settlement’, bringing the IVA to a successful conclusion earlier than expected.

WHAT’S THE DIFFERENCE BETWEEN AN IVA AND BANKRUPTCY?

I’M A HOMEOWNER, WILL MY HOME BE AFFECTED?

An IVA is extremely unlikely to lead to the sale of your home, although you may be required to release some of the equity in it halfway through the final year of the IVA.

This is one reason homeowners with debt problems are particularly interested in IVAs, rather than bankruptcy, which would require them to release any equity worth over £1,000 and could force the sale of their property.

WILL IT AFFECT MY CREDIT RATING?

Your ability to obtain credit will be affected for 6 years.

You may be made bankrupt if you default on your IVA payments and the IVA is terminated.

A Debt Relief Order, or DRO, is a particular type of insolvency agreement that one can apply for.

A DRO can be used if one is not able to afford to pay off his debts. The agreement has been specifically designed as an alternative debt management solution for those people who are on low incomes.

DRO is aimed at helping those people who have comparatively low levels of debts, but also have low disposable income and minimal assets.

Debt Relief order lasts for a period of 12 months, and during this period, the creditors are not allowed to take any action against the borrower to recover their money.

At the end of this 12 month period, one is cleared of all the debts that were listed in the DRO. However, if the financial situation of the borrower improves during this 12 month period then the creditors may opt to review the original DRO.

Who Can Apply for a DRO?

In order to apply for a DRO, you would be required to hire an approved intermediary, who would be checking if you qualify for a DRO, and who would then apply the order on your behalf. Instead of being arranged in the courts, a DRO is supervised by the Insolvency Service. Currently it costs 90 pounds to set up a DRO. There is a provision to pay this amount in instalments too.

There are certain criteria to be met in order to qualify for a DRO. They are as follows:

• You should be able to prove that you are unable to settle your debts
• The aggregate liabilities held by you should be less than 15,000 pounds
• Your total gross assets should not exceed 300 pounds. The only exception is your car, whose total value should not be more than 1,000 pounds.
• You would be required to verify that your net disposable income is no more than 50 pounds.

Are All Debts Cleared After a DRO?

Certain types of debts, including child maintenance, student loans and magistrate’s court fines cannot be included in a DRO.

Pros and Cons of a DRO

As with any other thing, there is a bad side and a good side to a DRO too. However, for the most part pros of DRO outweigh the cons.

Pros:

• You are debt free in a year
• DRO is a quicker and cheaper option than bankruptcy

Cons:

• A DRO affects your credit rating and remains there for up to 6 years. This makes it difficult to obtain a loan in future, should the need arise.
• In case your financial situation improves, you would have to start making debt repayments.

In brief, a DRO is an ideal choice if you happen to be on a low income and are looking for some debt relief or debt management solution.

The cardonebanking account is open to everyone and it’s quick and easy to apply.

If you’re like so many people and find yourself constantly going overdrawn, then we can help.

NO CREDIT CHECKS & NO ACCOUNT OPENING FEE

The cardonebanking current account is a secure banking facility that’s hassle free. You won’t be charged bounced payment fees or incur any overdraft fees.

Card One will give you peace of mind that all your regular outgoings are taken care of by their account management team.

What you’ll get:

• Sortcode and account number
• cardonebanking Prepaid MasterCard®
• Online account access

Easy Access to Your Account

Online Banking
An online banking facility also makes monitoring your account easier. You can view balances, check transaction history and print statements 24 hours a day, 7 days a week.

Automated Telephone Banking
Card One’s automated telephone banking service allows you to check you balance, load your card and activate your new cards automatically and within seconds.

Mobile Banking
You are able to access your account on the move using their mobile banking service checking your balance and loading funds to your MasterCard by simply sending a text message (SMS).

Fixed monthly fee of £12.50

It is possible to stop repossession at any time during the repossession process.

You do not have to lose your home and you can stop repossession in one of the following ways

• If you can now afford to pay your mortgage
• If you can show that you have a buyer for your home
• If you can pay off your mortgage in full by selling other assets or taking out a new mortgage.

You would need to provide evidence of the above by supplying the necessary documentation such as an offer from a buyer or a mortgage lender.

If a court has issued a Possession Order or an Eviction Notice, it does not mean that you are certain to lose your home. If there is enough equity in your home you could:

• Sell the house and move to a cheaper property or rent another property.
• Remortgage your home.
• Sell the house and rent it back from a company who specialises in this.

Selling your home and then buying a cheaper home or renting can have the advantage of stopping repossession and could also release much needed equity tied up in your current home.

Remortgaging your property is an option to seriously consider. House prices have risen significantly in recent times meaning you could release equity tied up in your home. This money can be borrowed to pay off expensive credit cards and store cards at much lower interest rates.

As we all know, applying for a mortgage can be quite a daunting process.

Marshall Bentley are here to help you obtain the best mortgage deal available to suite your requirements and financial budget.

We can help you obtain any type of mortgage which is available in the market. These include fixed rate, tracker, discounted rate and a whole host of mortgage products for a residential or commercial buyer.

We specialise in helping clients with adverse credit ratings to try place their feet on the property ladder.

A capital repayment mortgage is a typical mortage where a proporation of your repayments go towards paying off the capital on your outstanding mortgage, and a proportion goes towards paying off the interest.

An Interest Only mortgage is a popular option for people who are buying properties which they intend to let out. This type of mortgage allows the borrower to repay the interest on the mortgage, without the need to pay back to capital on the mortgage. At the end of the mortgage term the mortgage balance becomes due which, for buy to let properties is often done by selling the investment to return any increase in property value over the years.

We have access to some excellent interest rates & high street mortgages, we will be able to source your mortgage or remortgage from some of the best rates in the UK, as well as making the application process as simple as possible, we will manage your application form start to finish making applying for a UK high street mortgage as simple as possible – submitting the application is the start of the process, make sure it completes by using a company who will track the underwriting procedure from start to finish.

If you are interested in obtaining a mortgage, please contact Marshall Bentley for a key facts illustration.

Purchasing a home will probably be the biggest investment you are likely to make. An expert team at Marshall Bentley are available to provide you with help with all your mortgage needs. And remember, we search the “whole market” to find you the best possible mortgage package

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it.

Full and Final Settlement is a method of paying off a portion of your debts in one lump sum.

In return your creditors will agree to write off  the rest of your debt. You are generally able to propose a full and final settlement if you are coming into a windfall, using savings or in some cases a friend or relative puts forward the money to help you pay off  your creditors.

Normally in a Full and Final Settlement there are signs to indicate that your circumstances are not going to change for some time, so it is in the creditors best interest to make this agreement with you. It should be pointed out to the creditors that the money will not always be available and if a friend or relative is putting forward the money they will not make the payments unless the offer is accepted.

We at Marshall Bentley pride ourselves on being able to assist you in putting forward settlement offers which most reflect your financial circumstances.

This is certainly one solution which can help you make a fresh start.

See how a Marshall Bentley business consultant can help “Power Up” your business.

Managing a business of any size can be is difficult enough these days, but owning and running a business is becoming more difficult than ever before. Dealing with staffing issues, promoting your services, looking after your cash flow, managing health and safety and running the normal operations of your business are just a few of the tasks that you will be performing day to day just to try to keep your business running smoothly and profitably – and all of this before you even venture into the complicated and costly world of your legal obligations.

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Contact Marshall Bentley and let us help you change the way you work.