We live in an era where debts have become a part of life. Each day we have to think of ways in which we can get free from our loan burdens. Hence, to get rid of such situations and to pay the debts on time, the UK government has come with several government debt help scheme. These are various methods you can try to pay off your debts easily.
Government debt schemes include a range of solutions and forms of insolvency introduced by the government. These include debt relief orders (DROs), individual voluntary arrangements (IVAs), protected trust deeds and the Debt Arrangement Scheme (DAS).
Government debt help scheme to Pay Off Your Debts
Now, when you are unable to pay off your debt, you can try various options advised by the government debt help scheme. Here we will be mentioning some of the government debt help scheme for easy relief from such circumstances.
Debt Management Plans
The first and foremost way to pay your debts as advised by the government is simply trying the debt management plan. In a debt management plan, you will either repay the amount by paying some amount each month. Or, if you have any problem with repayment, you can repay the money in a few months.
Now, government debt help scheme or debt management plans can be either executed by a company or yourself. However, you have to be very serious about your payments and pay the amount on time. If you consult a company, they will provide you with individuals who will take care of the complete situation.
They will talk to the creditors and will perform the entire task without involving you. All you have to do is pay money to them and then they will pay it to the creditor. They will make sure that the money is paid to all your creditors.
Also, they will need all your financial details like assets, debts, and income. Make sure to provide them all so that the process can be quick. However, keep this in mind that there is no guarantee that the creditors will agree to the plan.
For a person who owes money and has a county court or high court judgment against him, an administration order can be of help. An administration order will help you pay a debt of £5,000 or less.
The money is payable to the local court who then divides it into all your creditors. You should keep a note that once an administration order is issued, the creditors or lenders cannot bother you anymore.
Through an administration order, you will be able to know the amount of money that is repayable, the money you will have to pay every month, and the time span for the same. However, the court charges a fee of 10% of your debt.
It is important to note that for an administration order, you need to owe at least two creditors and provide them proof of your financial stability so that they could know that you can pay the amount.
Besides, whatever money you owe should be repaid every month. Otherwise, the court can cancel the arrangement or retain the money from your salary. The administration order is included in the Register of Judgments, Order, and Fines. However, after a time period of 6 years, it is removed.
Debt Relief Orders
Another way in which you should be able to pay off your debt is by trying debt relief order or DBO. By this method, you will be able to write off your debt with the minimum assets. This means that if you owe a small amount of money as debt or do not hold enough property or assets to fulfil the credit then you can opt for Debt Relief Order or DRO to write that off.
On filing for a DRO, you will not be repaying any debts or interests for a year. Throughout the entire time, your financial condition will be observed. If any stability is not noticed, the debt will be written off.
However, you can only go for DRO, if you are a citizen of England, North Ireland, or Wales and owe money less than £20,000. It further charges a fee of £90 and is not valid for people who are a homeowner. When you opt for DRO, it is included in the credit report and may have a negative impact on it.
In a DRO, you will have almost all the debts covered, including criminal fines, TV license arrears, budgeting loans, fraudulent debts, etc.
Individual Voluntary Arrangements
IVA Debt Advice or Individual Voluntary Arrangements is an agreement between the borrower and creditor to pay off your debts within a time period of 5-6 years. Usually, you will have to pay an affordable sum of money every month. After paying off your debt on your final month, the unsecured debts will be written off.
All the IVA fees will be incorporated within the repayment money. However, it is not necessary that the creditor will have to accept your IVA. They might not do so.
IVA impacts your credit ratings negatively. Other than that, any failed IVA may result in bankruptcy. All your expenses will be monitored throughout the IVA process. You may further have to pay a high-interest rate, for any re-mortgage of equity.
Debt Arrangement Scheme
This scheme is relevant for Scotland citizens only. Debt Arrangement Scheme is a debt management tool that helps you fulfil the debt by paying an affordable sum of money every month. However, you will have to be consistent with your monthly payments or the creditors may charge interest in the future.
Once you file for DPP, your creditors are not allowed to take any actions or contact you. The interests will stop throughout the DPP as well. If you face any difficulty in between, you can go for a payment break for some time. Although, this will be added to the DPP. Make note that, the DPP will be included within your credit file for a time span of 6 years. It will also be included in the DAS register.
This is the last option one should try to pay off their debts. If nothing works then you should file an application for a bankruptcy order. In doing so, all the unsecured debts will be written off and you can start brand new.
Once you file for bankruptcy, your creditors will not be able to take any actions on you for not paying the debt. Other than that, they will also stop bothering you for payments, interests and other charges and there will be no further contact from your creditors.
However, it should be kept as a last option because once you file for bankruptcy, you may have to lose your properties. You will have to lose your home, vehicle, or any other high-value property in order to repay the debt.
Other than that, there are chances that you may lose your job or some legal roles. It can impact your credit file and this bankruptcy will be included in your credit file for up to a time period of 6 years.
You can also try sequestration, which is again a quick way to get rid of your debts. To define the term sequestration, we can say that it is a way to pay off the debts to the creditors by giving away a particular property. The property can be anything that costs more than the money you owe like a house or car.
Through sequestration, all the unsecured debts that you owe will be written off. You will gain peace with no contact from the creditors. This is because when a person opts for sequestration, the creditors are not allowed to bother or disturb them with constant calls.
However, it may drop you from certain job designations. This means that if you are a company director then you will be forbidden to act so. Also, this sequestration may be visible on your credit file till a time span of 6 years. Hence, it may get problematic for you to take credit.
Minimal Asset Process (MAP) Bankruptcy
There are various instances where the borrower does not own any such asset that is more than the amount they owe to the creditor. For such cases, a minimal asset process (MAP) bankruptcy is filed. This a way in which the borrower is given a brand new start and all the debts are written off. To opt for MAP, you will need help from an approved money advice organization.
For MAP, you will have to pay a sum of £90 to the Accountant. MAP will also keep you away from constant bothering from creditors. More or less all the unsecured debts are included within MAP Bankruptcy.
However, MAP bankruptcy is going to be included in your credit ratings and can also affect your job. This can also be problematic for people who are self-employed.
Besides, MAP can also affect your bank accounts and stop them from functioning. Keep in mind that the MAP is not for student loans, court fines, or any child maintenance. Although, more or less all unsecured debts are incorporated within it.
What is a Government Debt Consolidation Loan?
When you take a loan to pay off other debts or loans that are unsecured, then that is called government debt consolidation loans.
Government debt help UK Consolidations Loans are used to pay credit card debts, store card debts, and personal loans.
The best thing about government debt help UK consolidation loan is, instead of paying the loans separately, all the loans will be collected in the form of a single loan that needs to be paid to the consolidation loan provider.
Benefits of Government Debt Consolidation Loan
Government debt help UK Consolidation Loan has certain benefits associated with it. Here we are mentioning each for you.
- Much lower interest rates as all the loans (including loans with high interests) get incorporated into one single loan.
- It can help you to keep your credit score or credit rating intact.
- The entire concept of Government Debt Consolidation Loan can keep your budget precise. As all the money will be paid in the form of a single payment.
What is the Greek Government Debt Crisis?
In 2018, the financial crisis resulted in a global recession where out of numerous European countries, Greece got affected the most. That’s because the amount of debt taken by Greece was much more they could afford to repay.
This resulted in deficit money and high debts. The country then requested the European Union and International Monetary Fund for loans. And Greece got 289 billion Euros as a financial rescue.
However, this was achieved by economic difficulties and austerity measures. The public was furious due to excessive tax, salary, or pension deduction and many such occurrences. As a result, the anguishes resulted in riots. <