Consumer Debt Solutions

If you’re in debt and are struggling to make your repayments, it can be a very stressful time for you and your family. For those in this situation, it is important that you have a basic understanding of your rights relating to debt and are aware of the various consumer debt solutions available to you.

At Consumer Law Barristers, we will analyse your specific situation and provide you with the expert legal advice you need to make sure your interests are protected. Researching different types of debt solutions – such as debt relief orders, debt management plans, individual voluntary arrangements or bankruptcy – can be a confusing experience, and although one of these solutions may help you out of debt, they should only be considered a last resort. Before committing to anything, let us help you determine what it’s claimed that you owe and whether or not your creditors can provide evidence to prove that you do in fact owe them what they are claiming.

Understanding your rights

If your debt has reached a point where you can no longer afford to make your repayments and you have decided that a debt management solution is the only way out of your situation, before committing to anything it is first essential that you have the specific details of your debt broken down for you. After all, no matter how deep in debt you believe you are, you still have clear rights when it comes to clarifying what it is claimed that you owe and who exactly is claiming it.

Just because you have been repaying a ‘creditor’, this does not mean that you have ‘admitted’ to anything, including the amount they say you owe. That’s why before signing up to any debt management solution, clarifying how much you owe, who is asking for the money, and what proof they can actually produce as hard evidence that you owe that specific amount is a must.

Prior to jumping into the stressful and confusing process of finding the right consumer debt solutions to help you climb out of debt, first let Consumer Law Barristers represent you by requesting that all of your ‘creditors’ prove what they claim you owe is actually correct. In many instances, debt collection companies and creditors cannot provide sufficient evidence that the amounts they are claiming are owed. Challenging irresponsible lending practices has seen us save our clients over £3 million.

Using consumer debt solutions – what are your options?

If your creditors and/or the companies chasing repayments from you have been able to provide evidence of exactly what you owe them, and that amount is still more than you are able to realistically service, you may need to consider using a consumer debt solution. However, it’s important to remember that this should only ever be considered a last resort.

Depending on your own specific circumstances, consumer debt solutions that could help you may include debt management plans (DMP), administration orders (AO), debt relief orders (DRO) individual voluntary arrangements (IVA) or bankruptcy. However, some of these solutions are legally binding and can have major impacts on other aspects of your life. For this reason, it’s vital that you fully understand what you are signing up for and are certain it is the best solution before committing to it. Solutions include:

 

Debt management plan: Not legally binding like other solutions, a DMP is an informal agreement between you and the companies you owe money to. Typically involving non-priority debts – credit cards, store cards and loans – you simply pay back debt in one set monthly payment, which is divided between all creditors. DMPs are usually managed by a DMP provider and must be approved by all creditors. They can be cancelled by you or your creditors at any time.

Administration order: Issued by a judge and legally binding, an AO allows you to make a set monthly payment to the county court, which will then distribute it to all of your creditors. AOs prevent creditors from placing any further demands on you as the debtor. To be eligible for an AO, you must have two or more debts amounting to over £5,000 and an unpaid county court judgment (CCJ).

Debt relief order: An option if you don’t own a home and have debts under £20,000 that you can’t afford to repay, DROs stop creditors from placing any further demands on you and allow you to make a new start free from your debts once they are completed. Typically lasting one year, DROs require you to comply with various conditions for the duration of your order and they will negatively impact your credit rating.

Individual voluntary arrangement: An IVA is a legally binding agreement in which you agree to repay your creditors over a defined period of time. Issued by a court, an IVA can be flexible to suit your specific needs and if the payments you make don’t fully repay your creditors by the end of the agreement, you won’t be liable for the remainder. However, these agreements do come with drawbacks. Although debts will be frozen while you make repayments over a set period of time, you have little control over the payments you need to make and the fees paid to your appointed insolvency practitioner will typically be high.

Bankruptcy: A final resort, you can apply to a court for bankruptcy if you have debts that you have no realistic chance of being able to repay. This court approved solution will stop creditors from chasing you and prevent further interest being added to your debts. Typically lasting a year – in which time you will be expected to fully cooperate with the courts and your appointed Official Receiver – bankruptcy will lead to your debts being written off. However, there are drawbacks of bankruptcy. Possessions such as properties and vehicles could be repossessed, as well as other non-essential belongings of significant value, and you will be banned from working in certain financial roles or being the director of a company for a set period of time.

How can we help?

At Consumer Law Barristers, we can provide you with specialist legal advice needed to challenge a lender. We’re here to stand up for you and protect your rights as a consumer against creditors who may try to exploit you.

For a free, no-obligation consultation with one of our experts, simply contact us today by phone on 0330 124 4252 or email us at hello@consumerlawbarristers.co.uk.

Are you ready to assert your rights?

In situations where you may have been struggling to meet debt repayments and have missed payment deadlines the company with whom you took out the debt will often sell it on to a third party who will then, using a variety of techniques, chase you for the outstanding amounts.

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