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Monday 21 January has become known as Blue Monday. It has been saddled with lots of negative connotations, from long, dark, cold days to distant paydays and the festive season a distant memory. However, one of the major contributions to Blue Monday is debt as the Christmas credit card bills start to land on the doormat. But, addressing debt early doesn’t have to be scary – and it can help you avoid a whole host of problems later on.
Firstly, if you are worried about your debts, don’t panic. Plenty of clients end up in my office because they have gone many years without facing up to debts for fear of reputation, or losing assets. A lot of people throw the term “bankruptcy” around, but actually, most of the time, they do not occur and are often a last resort.
There are a number of solutions that may help you. A good first step is a Debt Management Plan (DMP). This is an agreement between you and your creditors to pay your debts via a debt management company. These are popular as they don’t have to go through the courts and they are a good way of spreading the cost of debt into affordable repayments.
If you have a low income, and you owe less than £20,000 you can also apply for a Debt Relief Order (DRO). This will freeze any debt repayments, including any interest, for 12 months. If your financial situation hasn’t improved after that time, your debts could be written off, however, you will have to pay a fee and you will have to appoint an Official Receiver through the Insolvency Service. If your DRO is granted, it will also be published on the Individual Insolvency Register, which is made publically available, and you will remain on there for 15 months.
Finally, for more long-term plans, you could opt for an IVA, or an Individual Voluntary Arrangement. This is a legally binding agreement which can last for 5 or 6 years. It allows multiple debts to be combined into one monthly payment between you and your creditors. IVA are similar to the DMP, however, these are a formal arrangement and you’ll need the help of an Insolvency Practitioner, which you can source from a solicitor. IVAs can also be quite costly, however, if you need more time and you need to consolidate debts, then this might be worth considering.
If you are facing Blue Monday with worrying debts, seek help at your earliest opportunity. Downs Solicitors have assisted a number of insolvency cases, for individuals and businesses. We can also put you in contact with an Insolvency Practitioner, or advise any injustice or wrongdoing associated with debt. Contact us to see how we can help.