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10 Reasons an IVA Is Worth It

Do you have multiple debts to manage? Are you thinking of taking out an Individual Voluntary Arrangement (IVA)? Are you wondering if IVAs are worth it for you?

IVAs are a way to try and get out of financial difficulties, but they are not the only way to do so. There are different debt solutions available, so make sure the one you choose is right for you.

Having debts can be stressful, especially if you feel isolated by it, and it can seem to become more and more overwhelming until they start impacting your mental health. If this is you, there is help available. 

If you do meet the criteria, there are many reasons why applying for an Individual Voluntary Agreement could help you, and they can come with a lot of benefits for your situation.

What Is An IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors, that usually enables you to pay back one monthly affordable amount and freezes the interest on your unsecured debts. It is overseen by a licensed Insolvency Practitioner. If you maintain regular payments as agreed, it usually lasts for 5-6 years. After that, the remaining debt you have not yet paid is written off.

An IVA is usually available for people who owe more than £5000 and do not have enough money to repay those debts.

There are a range of advantages for IVAs, from realistic payments to protecting your assets. Here is a list of 10 reasons why having an Individual Voluntary Arrangement could benefit you and your financial circumstances.

1) You only repay what you can realistically afford

Coins stacked up next to a jar of coins

Debts can seem more overwhelming and stressful when you have to pay off large amounts, especially if that amount is not something you have access to without going into more debt. By having an IVA, you only pay back an amount that you can afford.

The amount you can pay back is worked out after considering the amount of money you will need to pay for necessities, including food and childcare. Whilst you will still need to pay back a minimum of around £90 every month (dependent upon circumstances), this will encompass all the debts you include in your IVA and is usually a much lower amount than what you would normally pay.

2) Overturns a CCJ or bankruptcy order

Wooden gavel in a courtroom

A CCJ is a County Court Judgement. It is when someone takes legal action against you for not paying your debts, and the court decides that you owe your creditor money. It will contain how much you owe, how to pay it and a deadline by which to do so.

If you have an Individual Voluntary Arrangement, you no longer have to pay the CCJ directly. Whilst your IVA is in place the creditors included in it cannot take any further legal action against you to recover those debts including petitioning for your bankruptcy.

3) Stops all of your creditors contacting you over a debt

Woman putting the phone down in her office

Part of the stress that accompanies debts is the constant contact with creditors, whether that be via phone calls or letters. When you have an IVA, your creditors are legally obliged to stop contacting you to make payments towards debts, giving you peace of mind.

Your creditors are legally required to provide you with informational documents such as an annual statement. However, the rest of their contact will be with your Insolvency Practitioner (IP), who works with you concerning your IVA.

4) Writes off the debt completely after 5 years

Money in jar with green leaf growing on top

One of the biggest reasons why IVAs are so beneficial is that after the completion of the agreement, any remaining debt will be written off no matter how much you still owe. So at that point, you would be free of any debt that was included in your IVA, and your disposable income would be yours to do with as you wish.

5) Protects your career and job

Man shaking hands with executives after agreeing a new contract for job

If you go bankrupt, it can limit the type of job you are allowed to have, or the industries you can work in. For example, going bankrupt can mean you are no longer able to be the director of a limited company.

In contrast, it is significantly less likely that your job or employment will be impacted by taking an IVA, and sometimes you don’t even have to inform your employer that you have one.

If you have any questions about how an IVA may impact your job or career, check your employment contract and see if it mentions anything about having an IVA.

When considering any insolvency solution always check with your employer to see if there could be any consequences to your role.

6) Your assets are completely protected

Padlock on credit card

Assets include your car and home, and the threat of losing them can be a source of stress when debts are involved. With an IVA, the creditors involved are unable to repossess your home or other assets to go against the remaining balance of your debt.

You can sell some of your assets if you wish to, and this is something you can discuss with your IP. They may even encourage it to help pay off your debts quicker, but you are not at risk of losing your home, or anything required for living day to day.

7) No interest charges

Interest rates login screen on laptop with calculator next to it

Interest can make debts larger, especially if you can only afford to pay the minimum amount each month. When entering an IVA, the creditors involved set their debt at the amount that was owed on the date that it was approved. This means no further interest or charges can be applied whilst your IVA remains in place.   

8) Prevents legal action

Lawyer sitting down with man and discussing situation

If you are worried about legal action resulting from your debts, an IVA could be the solution you need.

If you have an IVA and you comply with its terms, your creditors cannot take legal action against you. This includes stopping bailiff action on any included debts.

9) All payments are included in one payment per month

Asian woman using smartphone buying online shopping by credit card while wear sweater sitting on desk in living room at home.

Having multiple debts can cause anxiety, especially if those debts are to numerous creditors. Instead of paying multiple amounts towards different debts, an IVA means you only pay one amount a month, which is the affordable amount you established with your IP. How that amount is divided between your creditors is worked out by your IP, allowing you to repay your debts with less stress and through one easy monthly payment.

10) A whole host of debts can be included

Close-up shot of family gathered together at wooden table and keeping records of expenses, woman taking notes in notepad

A large range of debts can be included in your IVA, which can make them easier to handle for you and your finances. These include credit card debts, personal debts and council tax debts to name a few.

Some debts cannot be included, such as mortgages and court fines, but the ones that are included can reduce the burden on your finances that can come with not having a debt solution.

When seeking help for your debts, you must find the solution that is right for you. Have a look and see whether a Debt Relief Order (DRO) or IVA would suit you and your circumstances more.

If you need help with your finances, you can apply for an IVA with Swift Debt Help, and they will help you manage your debts going forward.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Energy Saving Tips: Helping You To Avoid Debt

Since energy prices increased, millions of households are beginning to feel apprehensive about switching their heating on during the colder months. With rising utility bills, many are seeking alternative options to enable them to cut costs whilst keeping warm.

Although energy providers have introduced a price cap of £2,500, which is better than the original cap that was initially announced (£3,549), it is still an increase of 26% for the average household.

But, what is the energy price cap? 

The energy price cap is the maximum amount that energy suppliers can charge. This is set by Ofgem (The Office of Gas and Electricity Markets).

If you do decide to turn on your heating as normal but are unable to afford this increase, then you could end up in debt, which, if left unpaid, could reduce your credit score. This can negatively affect your ability to apply for credit in the future.
So, instead of automatically switching on your heating and having to deal with debt at a later date, consider other alternatives to help you keep warm this winter and reduce your energy costs.

6 Ways To Keep Warm Without Gas Or Electricity

As previously mentioned, many people affected by the increase in energy prices are discovering new ways to cut back on their energy usage. 

Below are just a few of the ways that could help you stay warm whilst reducing the number of times you have to switch on your heating. These tips will be particularly helpful if you are elderly and want to know how to stay warm in bed.

1.  Invest In Thicker Curtains

thick curtains making home warmer

Thicker curtains can help to trap the heat by acting as an extra barrier. Thick curtains tend to be more expensive than thin ones; however, this initial cost will save you money in the long run since they will be more effective in retaining heat and preventing drafts.

You may feel that you still need to turn your heating on, but it should be for a shorter period of time than usual.

As a side note, during the day, particularly when the sun is out, try to open your curtains to let in some natural daylight and heat.

2. Check Your Open Fireplace

open fireplace

If your home has an open chimney, it can provide an easy route for heat to escape. 

To prevent heat from being lost this way, you should try to have a closed damper or draft excluder installed on your chimney. Additionally, by adding either of these features, it can help to stop cold drafts from sweeping down the chimney and into your home.

3. Close The Doors Of Unused Rooms

closing internal doors

Unused rooms do not need to be heated. If you leave radiators on in unused rooms, the heat in there will be wasted, so you will be increasing your energy bills for no reason. 

Instead, you should only try to heat the rooms that are regularly used. If you do this, cold air will build up in unused rooms, so you should keep the doors closed, to prevent it from moving to the other rooms in the house.

4. Wrap Up

woman wrapping up to keep warm

It seems obvious, but layering your clothes will help you to stay warm. Try wearing multiple thin layers rather than a single thick layer; this way of layering will keep you warmer because heat is trapped between each item of clothing, acting as an insulator.  Focus on your extremities, such as your feet and hands, since these can lose heat fast.

Additionally, have a blanket to hand for particularly cold days, or invest in a long fluffy dressing gown.

If you are looking for more long-term solutions to help you save money on gas and electricity and you are a homeowner with the flexibility to make changes to your property, then you may want to consider the below options.

5.  Invest In Double Or Triple Glazing

window with triple glazing

Consider investing in double or triple glazing. Although having these fitted can be initially expensive, it will save you money in the long term. 

Double or triple glazing works by trapping heat between the panes of glass which then acts as an insulator. This insulated barrier helps to reduce the amount of heat that is lost, making it more difficult for it to pass through the glass.

So, even if you need to turn your heating on, with double or triple glazing, it should not have to be for long. Additionally, once off, the heat will remain in your house for longer than it normally would.

6. Invest In Solar Panels

house with solar panels

Use the sun to heat your house by investing in solar panels. Solar panels absorb the energy from sunlight and convert it into electricity.

The initial cost of purchasing a solar panel is high, and it takes around six panels to heat a one bedroom house. 

However, you could just purchase one panel, and use it to provide electricity to heat the main room that you use.

Hopefully, this blog has provided you with useful tips to help you stay warm this winter and reduce your energy bills, whether you are a homeowner or tenant.

Regardless of whether you are employed or  unemployed, there are things you can do to ease your financial situation if you are struggling with debt.
Additionally, you may want to consider a debt solution, such as an Individual Voluntary Arrangement (IVA), to help you manage your debt.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Report A Loan Shark

The last couple of years have put a strain on many of our finances, and the recent increase in energy prices has not helped. When people are financially struggling, this can give illegal moneylenders, or ‘loan sharks’, the opportunity to exploit them.

If you suspect someone of being a loan shark, then you should report them immediately. But, what exactly is a loan shark?

The definition of a loan shark will be explained in this blog, but first, we will cover the type of people that loan sharks usually target.

Since Covid-19, many people have found themselves getting further into debt, particularly those on a low income and who need the money to cover rising energy and food costs. If they are unable to repay what they have borrowed, it can negatively affect their credit score. Once this happens, it can be difficult for them to apply for further credit, so they may consider taking out a loan from an unauthorised company.

This is where loan sharks come in.

Definition Of A Loan Shark

great white shark dorsal fin breaching sea surface

A loan shark is an unlicensed moneylender; they are not authorised by the Financial Conduct Authority (FCA). This means that they are illegally lending money and breaking the law.

Loan sharks often work from home, they can act as a business,  and they tend to have a lot of customers.

If you borrow money from a loan shark, there will not be much paperwork involved, which means you will have no terms and conditions to refer to, so you will not be able to thoroughly understand what you are getting yourself into. 

Additionally, the interest rates will be very high on any loan you take out with a loan shark. If you are unable to repay them, they often take illegal action against you, such as using threatening behaviour or even violence. They may even try to force you to borrow more money to pay off your existing loan shark debt.

How To Check If A Lender Is Authorised

couple facing debt problems able pay out their mortgage thoughtful woman looking frustrated holding pen while managing family budget making calculations using calculator notebook pc
Couple facing debt problems, not able to pay out their mortgage. Thoughtful woman looking frustrated, holding pen while managing family budget, making calculations using calculator and notebook pc

If you suspect that you have borrowed money from a loan shark, you can check if they are on the Financial Services Register

After you search the FCA register and discover that the lender is not on there, then you should report them. They are lending money illegally and they need to be stopped; you are under no obligation to repay them.

Reporting A Loan Shark

If you think a person is lending money without being approved by the FCA, you can contact the Illegal Money Lending Team, according to where you are located, and you can report loan sharks anonymously.

If you are based in England, then use the below details to contact the Illegal Money Lending Team.

This is a 24-hour service. Please note that if you live in Wales, Scotland, or Northern Ireland and you need to report a loan shark, then the contact details will be different from the above.

How To Get Out Of Loan Shark Debt

If you have borrowed money from a loan shark, then it should be of some comfort to know that you are not legally obligated to repay them. If a lender is not licensed by the FCA, then they have no legal right to take action against you if you do not repay them.

As previously mentioned, Stop Loan Sharks can provide valuable information to help keep you safe.

Swift Debt Help cannot help with loan shark debt since the lender is operating outside of the law; however, if you have any other types of debt, we may be able to offer a solution to help you deal with debt, such as an Individual Voluntary Arrangement (IVA).

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Thinking About Cancelling Your Direct Debit To Your Energy Supplier?

From 1st October 2022, the energy price cap increased by 80%. Due to this, millions of households will see their energy bills rise, and those working on minimum wage, particularly those in a single-person household, will struggle to pay for their energy. 

On average, people who pay for their energy by direct debit will see their annual bill rise from £1,971 to £3,549 per household.

Because of this dramatic increase, some people are considering joining the Don’t Pay UK campaign, cancelling their direct debits to their energy suppliers until energy bills are reduced. 

However, if a person cancels their direct debit, it can result in severe consequences, especially if they have no plan, or means, to pay in the future.  

There are other ways to deal with rising energy costs, some of which we will cover in this blog.

What Happens If I Cancel My Energy Direct Debit

Drawing of people holding an online banking login page and a credit card in front of a tablet

You may be considering cancelling your direct debit to your energy supplier if you cannot afford your energy bills. But here is why you should not do that:

  • You could be sent a CCJ (County Court Judgement); a court will demand that you pay what you owe.
  • Your energy supplier could apply to a court for a warrant, which will enable them to enter your home to disconnect your supply. It is very rare for this to happen; it is more likely that your energy supplier will offer to install a prepayment meter before they take further action.
  • A debt collector agency (a company that specialises in collecting a debt), may pursue you until you have paid off your debt. 
  • Your energy supplier could issue you a fine or charge you an extra admin fee, so you may end up paying more.
  • If your energy bill is left unpaid, or if action is taken against you by the energy supplier, then this will be seen as bad debt. In this instance, your credit rating could be negatively impacted.

Direct Debits Are Cheaper

Drawing of different 'Sales 50% off' labels

Usually, paying your energy bills by direct debit can work out cheaper. 

Many energy suppliers offer a discount on your bill if you pay by direct debit. It may only be a small reduction, but this could make a big difference over the next two years whilst the energy crisis lasts.

However, if you cancel your direct debit without warning your energy suppliers, you may lose this discount if you decide to pay by direct debit in the future.

Another perk to paying your energy bill by direct debit is that it is easier for suppliers to refund you if you make an overpayment.

What To Do If You Can’t Afford Your Energy Direct Debit

Man holding an empty wallet

As soon as you realise that you are going to struggle to pay your energy bills, contact your energy supplier. They should be able to offer a solution to make it easier for you to pay your bills at the same time as ensuring that they receive what you owe them. 

Some energy suppliers are offering grants to help pay people’s energy bills, particularly for those who are most affected by the rise in energy costs. To find out if you are eligible for a grant, contact your supplier.

As previously mentioned, your supplier may offer to fit a prepayment meter, also known as a pay-as-you-go meter, if you are struggling to pay your energy bills.

Prepayment meters can help you budget because it is easier to keep track of what you are using; however, they work out more expensive in the long run.

In some circumstances, you may be able to switch your energy supplier if you find one that offers you a better tariff. However, if your current supplier sent you a bill over 28 days ago that you haven’t yet paid, then you will be unable to switch until you do.

Help With Energy Bills

woman doing accounting

There are debt solutions available to help if you are unable to pay your energy bills and have outstanding utility bill debt

For example, Swift Debt Help can offer (if eligible) an IVA (Individual Voluntary Arrangement). 

An IVA is a legally binding agreement that can be arranged by a licensed insolvency practitioner (IP) to help you pay off your debt in an affordable way. Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage and food. Once an affordable amount for the payment plan is put in place, then you will have to pay the agreed amount each month and stick to the agreed terms. 

To be eligible for an IVA you have to:

  • Owe at least £5,000.
  • Have 3 types of debt with at least two creditors.
  • Have a regular source of income.
  • Live in England, Wales, or Northern Ireland.
  • Be unable to pay the money that you owe.

For more help and advice on cancelling your direct debits, or applying for an IVA, contact us to see whether you are eligible for a viable financial solution to assist you with your energy bills.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

4 Benefits of Using Your Credit Card Sensibly

Credit cards are common in our society, and many people use them to pay for a large range of things, from the weekly grocery shop to washing machines and other household appliances. But just because we know about them, it doesn’t mean we know about the benefits that come with them.

If you know how to use a credit card wisely, there are an array of advantages that they can bring you and your credit score.

Here are 4 benefits of using your credit card sensibly.

Benefits of a credit card

1) A credit card can build your credit rating

credit card with credit score

The amount you can borrow from Lenders, and the associated interest rates depends on your credit rating.

A credit rating is what banks and other lenders use to establish the risk of lending you money. The rating is typically a three-digit number based on your credit report. The credit report is a record of how you’ve maintained bills and paid off debts in the past. The higher the number of your credit score, the better the credit rating. Different credit reference agencies have their own scales when it comes to establishing credit ratings, so yours might look different depending on who you use.

Your credit card account and payment history form a significant part of your credit report. This means that using your credit card responsibly and paying it off regularly can improve your credit rating.

Better credit ratings can make it more likely that you can access lower rate, or higher value lending, such as a mortgage. They can also increase your chances of getting better deals on things like mobile phone contracts.

There are different ways of improving your credit score, but they can all help you with bigger purchases later on, including car loans.

2) Credit cards can give you extra security

security from credit card

When paying for things online, there is always the risk that the items you order won’t be what you expected, if they arrive at all. This is where a credit card can help.

By paying for online purchases through your credit card, you can have extra protection concerning those products or services. If you are unhappy with the service or product you have received, you can request a chargeback through your credit card company. This is because of Section 75 of the Consumer Credit Act 1974, which means you can request a chargeback for numerous reasons, including if the merchant has closed down or if the product doesn’t arrive to name a few. It doesn’t apply to debit cards.

For Section 75 of the Consumer Credit Act 1974 to be in effect, the purchase must be over £100 but under £30,000. However, you don’t need to have paid the full amount on your credit card.

This extra protection can also apply to booking holidays, such as in some hotels and airlines.

3) Credit Rewards

rewards from credit cards

Using your credit card isn’t just about credit ratings and protecting your purchases, although they can be useful. You can get rewards by using it too.

Several credit card companies offer rewards to whoever owns the credit card when an eligible purchase has been made. By buying the likes of groceries and petrol on your credit card, you can gain credit card rewards through points for every pound spent.

Different credit cards can have different rewards available, with some offering cashback on items and others offering air miles. Reward points to be spent elsewhere, such as in restaurants or shops, could be another reward available for some credit cards.

For example, credit cards that offer air miles can be popular with people who have to travel frequently as they can offer discounts on flights. This can potentially apply to other elements of travel such as hotel costs too.

If your credit card offers cashback, it should be noted that some companies need you to log in to your account and have your settings allowing you to receive said cashback.

4) Responsibly using your credit card can increase your spending power

spending power with credit card

When using your debit card, you are limited to the amount of money you have in your current account, regardless of your situation or extenuating circumstances. With a credit card, you no longer have this issue.

By using your credit card responsibly, you can increase the amount of credit you have available to spend. This is particularly useful when an important purchase has to be made, or something immediately needs replacing, especially if it is an expensive item. Sometimes you just don’t have enough savings in your current account to cover unforeseen circumstances, and that’s where a credit card comes in. In the cases of those unpredictable emergencies, they can act as a safety feature so your life can continue, and you can pay off the money in manageable instalments later.

As well as increasing your spending power, using your credit card responsibly for a bigger purchase can also mean there are more rewards for you to gain on your credit card account, whether that be through cashback, points or air miles.

Remember, any credit borrowed from your credit card must be repaid.

Do you need help with credit card debt?

In January 2022, the average UK household’s credit card debt was £2100, which may increase as the cost of living rises.

There are various ways in which Swift Debt Help can aid you with your credit card debt, including offering advice to those who need it. Whether you need help to organise affordable payments, legal advice or just someone to talk to, we are here to help you get control of your credit card debt.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

What To Do If Bailiffs Are At Your Door

If you allow your debt to escalate, and fail to take action to pay your bills even after receiving warning letters, then you may be visited by bailiffs. They will try to collect money from you, or assets for the value of your debt.

This is a situation that no one likes to be in; however, bailiffs have to follow certain procedures, which means, if you are visited by them due to unpaid debt, then you do have some rights that you should be aware of.  

What Are Bailiffs?

bailiffs collecting debts

Bailiffs (also known as enforcement agents) are usually self-employed or employed by a private debt collection company. Although they are not, typically, employed by the court, they are certified by the court to collect unpaid debts on behalf of creditors.

Bailiffs have the legal power to remove goods that they’ll sell to pay off your debt. 

Additionally, they can also be instructed to visit your home to deliver court documents.

If they cannot gain access to your property (if you fail to let them in), then bailiffs may take items from outside of your property, such as your car. 

Depending on the type of debt, or whether they are trying to enforce a High Court Writ (a formal order allowing them to gain access and seize assets to sell), then a bailiff can apply to the court for a warrant. If this is issued, then it will allow the bailiffs to use reasonable force to enter the property.

There are different types of bailiffs and agents:

High Court Bailiff (High Court Enforcement Officer)

This type of bailiff is an officer of the High Court in England and Wales. They are responsible for the oversight of Writs of Control and usually give this authority to a Certificated Enforcement Agent.

County Court Bailiff 

This type of bailiff is employed by the county court and enforce county court orders. They can try to obtain payment from you (of up to £5,000, if that is what is owed) or some of your items to sell at auction.

Certified Enforcement Agent

A certified enforcement agent is no longer classed as a bailiff (since new laws came into effect in 2014). These agents are certified by a local court. They can enforce rent arrears, council tax arrears, and parking fines, just to name a few.

What Can Bailiffs Take?

As previously mentioned, once access to your property is gained, bailiffs can take some of your items to sell. The money received from the sale will be used to pay off your debt.  

The items that bailiffs are permitted to take and sell include:

  • Luxury items, such as a TV or jewellery.
  • Items that belong solely to you or items that you own jointly.
  • Items from outside of your property, such as a car.

However, there are certain items that bailiffs cannot take. For example:

  • Items belonging to someone else (known as third-party goods).
  • Items that you need to live, such as a table and chairs, cooker, bed, phone, washing machine, etc (which are covered under ‘basic domestic needs’).
  • Items that you’re still paying for.
  • Anything that could cause damage to your home if removed.
  • Items that you need to work or study, such as tools, computers, vehicles, etc.
  • A vehicle displaying a blue badge permit.
  • Pets or guide dogs.

If a bailiff tries to take any of the items listed above (known as exempt goods), try to provide evidence as to why they can’t. 

If evidence isn’t provided and they still take the items, then you need to complain within seven days, providing evidence and explaining why the goods are exempt. The bailiff should respond to your complaint within ten days.

However, if you don’t receive a response or if the bailiff refuses to return the items you believe to be exempt, then send the complaint directly to the creditor to whom you owe money.

Can A Bailiff Force Entry?

In some circumstances, a bailiff can force entry into your property, but it does depend on the type of debt you owe.

However, you should know that:

  • You don’t have to open your door to a bailiff. Keep your door locked. If your door is unlocked, then bailiffs are allowed to gain entry as this isn’t classed as a forced entry.
  • They cannot enter your home by force, such as pushing past you (call 999 if you are physically threatened by a bailiff).
  • If only children are present, all under the age of 16, then a bailiff cannot enter the property.
  • They are not allowed to try to gain access to your property between the hours of 9:00pm and 6:00am.

It is worth noting that a debt collector is different from a bailiff since they do not have the same power. If they say that they’re a debt collector, tell them to leave.

Can Bailiffs Force Entry With A Locksmith?

key in door

It is very rare, but bailiffs may sometimes have the right to gain entry into your property by asking a locksmith to open your door.

However, you are usually given the chance to arrange to pay off your debt before it leads to the above situation.

Options For The Debtor

If you’ve been sent warning letters stating that bailiffs will be used if you don’t pay off your debt, then your best option is to get in touch with a debt solution company, such as Swift Debt Help.

For example, a debt solution that could ease your financial situation is an IVA (Individual Voluntary Arrangement). Bailiffs cannot take action against you if you have an IVA in place. 
If you’re seeking further advice on IVAs to help you gain control of your debt, then get in touch with us today, and we’d be happy to assist.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

7 Quick Tips on Dealing With Debt

Managing your finances when you are in debt can be incredibly stressful. It’s difficult to find the right balance so you can manage debt repayments and increasing interest, while also covering your monthly living expenses. More people find themselves in this situation at the moment because energy price hikes, inflation, and the increased cost of living are putting more pressure on their finances. Currently, the average UK debt for adults is £33,000 and this figure is likely to increase in the near future.

When debt is piling up, it’s always a good idea to seek advice from a specialist before things get out of hand. However, there are some key things you can do to stay on top of the situation. Here are 7 tips on dealing with debt.

1. Pay Off Credit Cards

Man paying with credit card on laptop.

Credit card debt should be a priority because they usually have high-interest rates and it’s easy to get into a debt spiral if you have multiple cards. If you are not in a position to pay off the full balance, pay off whatever you can afford. Paying little and often will bring the balance down and 

reduce the interest, making the debt more manageable. When paying off credit cards, focus on the ones with the highest interest first so you can reduce your overall monthly payments as much as possible.

If you have over 3 lines of credit with at least 2 creditors, you may qualify for an Individual Voluntary Arrangement or a Debt Management Plan. An IVA allows only pay back what you can realistically afford each month with any remaining debt being written off at the end of the agreed term.

2. Build an Emergency Fund

Drawing of man and woman adding coins to a jar to build an emergency fund

People assume that all disposable income should go towards paying off debts, but that is not true. As long as you are meeting the required contractual repayments on your debts, it can be a good idea to save money, even if you have a lot of debt payments to make. That way, if you are hit with an unexpected expense like home or car repairs, for example, you have money to pay for it.

Without an emergency fund, you may otherwise be forced to borrow more and push yourself further into debt. So, even if you can only afford to save a small amount, put aside whatever you can. If you do decide to save, always make sure you pay your contractual monthly repayment amounts on your debts first.

3. Take Account of All Your Debts

Young caucasian family having debt problems, not able to pay out their loan

Knowing exactly what you owe allows you to make an informed decision about how to deal with your debts. But when you have lots of different debts, it is easy to lose track. So, gather all of your debts and write them down on a piece of paper so you can get a total figure for what you owe and how much your monthly repayments are.

Visualising your debts in this way helps you see whether you can actually afford to pay them back or if you need to seek help. If you find that you cannot realistically afford to pay your debts, Swift Debt Help can assist you. You may be eligible for a formal debt solution such as an IVA or Debt Relief Order if you have multiple debts. Otherwise, we can talk you through the rest of your options and find the best way for you to tackle your debts.

4. Prioritising Debts

Man writing down his debts, using laptop to look at finances

If you do decide that you can pay debts on your own, you should start by prioritising them. Sort them into the most and least important based on how much you owe, what the interest rates are, and what the consequences for non-payment are. For example, if you are on a last warning your creditors could take legal action and pass the debt onto collectors. This could result in bailiffs being instructed who may attempt to repossess items from your home as a means of satisfying the debt. This debt would be considered a priority debt.

If you have council tax debt and your arrears reach a magistrates court, you could be issued a CCJ, an Attachment of Earnings Order, or even sent to prison, so this debt would also need to be dealt with as a priority. 

Ideally, you should pay all debts on time. But when this simply is not possible, prioritise them and focus on the most important ones first.

If after prioritising your most important debts you find you don’t have enough left over to pay the rest of your creditors what they are demanding, get in touch with Swift Debt Help to explore all the options available to you so you can understand the help available to people struggling with debt.

5. Create a Spending Plan

notebook budget calculation

A strict spending plan can free up more money to go towards clearing your debts. Start by tracking your income and all of your essential outgoings to calculate how much disposable income you have left. You can then start finding areas to cut back and save money.

Meal plans help you be more economical with your shopping, for example. You can also try turning down your heating a few degrees to make savings during the winter. Look at all of the small expenses like subscriptions too because these quickly add up.

6. Seek Help

Person holding man's hands, showing moral support through debt problems.

Trying to deal with debts on your own can often be difficult and extremely stressful. When things get out of control, always remember there are services available to assist you in resolving the problem.

Struggling to deal with the problem alone could make your situation worse, so if you find that you are unable to pay your debts, contact us at Swift Debt Help right away and we can show you what your options are. There are many different processes available that can help you deal with debt.

7. Exclude All Luxuries

Jewellery on display

Finally, you should try to exclude all payments that are not completely necessary. This includes eating out, delivery meal plans, TV subscriptions and memberships, buying lunch or coffee at work, cosmetic treatments, and any other non-essential purchases. Although this may seem extreme, it allows you to pay more towards your debts and chip away at them little by little.

Once you are meeting the minimum required monthly repayments on all of your debts, you will be in a more stable financial situation, and you can start paying for luxuries again if you wish.

If you have numerous debts of different types in varying amounts, it can be difficult to keep track of payments and manage your finances.

If you have read the above tips and feel that you may need more help, or wish to understand the options available to you in your circumstances, Swift Debt Help debt solution finder is a great first step in finding the help you need. You just need to enter your debt amount, your residential status, and your contact information and you will one of our friendly team will provide you with essential information about your available options. Otherwise, get in touch with Swift Debt Help directly and we will give you all of the expert advice you need.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

The 5 Stage Process of Dealing With Debt

People with debt problems often hide their situation because they are ashamed. But the reality is, that it is more common than we realise. In February 2022, the average adult in the UK owed £33.410 in total debt.

Mounting debts create a huge amount of stress and we all have coping mechanisms to deal with this. We have identified 5 stages many people might go through as debt begins to spiral out of control. Consider if these ring true for you, and if so, understanding where you are in the process could make it easier to intervene and take action to resolve your problems.

1. Denial

man giving a thumbs down

Debt is incredibly common and most people use credit in some form. Borrowing an affordable amount on a credit card and paying it off right away can benefit you. But when your debts get out of control, it’s important that you address the problem right away. Unfortunately, the first stage of dealing with debt is usually denial.

Even though the payments are out of control, people tell themselves that they are borrowing responsibly and they will easily be able to get back on track next month. Their spending habits don’t change, so they still make a lot of luxury purchases and don’t save money or pay their debt.

Emergency spending is also common in people that are in denial about debt because they fail to plan for the future. When all of your money goes into credit card payments and you don’t have any emergency savings, an unexpected payment pushes you further into debt.

A large proportion of people in debt denial will overspend and build up large credit card debts. Ultimately, this means that the situation gets worse every month and people in denial tend to avoid looking at their bank balance or credit card statements because they are afraid of the outcome.

2. Panic

Tired teen girl feeling dizzy, having panic attack and massaging her temple.

Denial can only last so long before you are forced to face your debt problems. Interest payments will increase on unpaid debts and the situation will snowball. Missed payments and unpaid bills start piling up and creditors will send letters and call you on the phone, demanding payment. Eventually, collection agents may start coming to the house too, so it is impossible to avoid the situation. This is when panic sets in. Once people realise that they are in a serious debt situation and they don’t know how to deal with it, they usually react in one of two ways; some people accept that they are out of their depth and seek help with their problems. However, some people try to manage the problem alone and move into stage 3.

3. Self-Determination

Successful businesswoman working hard on laptop computer in her office dressed up in white clothes.

Sometimes, people believe they can fix the problem themselves or are too proud to ask for help. Depending on the severity of the problem, some people can make positive changes to resolve their situation themselves and get back in control. But often, small changes to habits or using money-saving tricks only make a tiny dent in the large debts. Even getting a second job and making big cutbacks on spending can fail to solve the problem, especially if it has been ignored for so long. 

Although people can buy themselves a bit of time, serious debt problems cannot always be dealt with on your own. In many cases, it is too late for budgeting and you need to consider formal debt solutions. It is a good idea to have a realistic look at your situation and what you can practically achieve to help. For some people, it might be best to skip the self-determination stage and seek professional advice as soon as they recognise the problem, rather than delaying the inevitable.

4. Frustration

Frustrated woman with head and glasses in hands. Laptop open in front of her with paperwork on the desk.

Eventually, people get to a stage where they have tried everything and their debts are still increasing every month. At this point, the frustration begins and the debt problem starts impacting other areas of their life. Relationship problems are very common because people hide the scale of the debt. When they recognise that they cannot fix the problem and they need to admit how bad the situation is, this can lead to family tensions. People also try to shield friends and family from the situation, so they will isolate themselves.

Realising that they have tried everything and nothing has worked also creates a feeling of helplessness. This, coupled with the sheer stress of the situation, can lead to mental health issues like anxiety and depression.

If you do find yourself in this position, you can fill out a ‘debt and mental health evidence form’ and send it to your creditors. This gives them your consent to access information from your doctor about your mental health, so they are aware of the impact that debt is having on you. Many creditors will take this into account when contacting you about payments or negotiating a payment plan with you. 

5. Acceptance

Man stamping 'acceptance' in notepad.

Acceptance is the end of the debt cycle. After trying everything else and seeing the impact that it is having on their lives, people finally accept that they need help dealing with their debt issues. When people eventually reach acceptance, they seek the advice of a debt solution company like Swift Debt Help. 

If you have debts with multiple creditors and you are unable to pay, an Individual Voluntary Arrangement may be the right option. This allows you to write off a portion of the debt and consolidate all of your different debts into one manageable payment. It also stops creditors from chasing you, so you can take the pressure off and focus on repaying the debts.

Being trapped in a cycle of debt can feel hopeless and you might experience all of these stages, but help is out there. At Swift Debt Help, we can give you advice about different debt solutions and support you through the process. There are processes you can enrol in before you get to the debt recovery solutions stage, so you can protect your financial future,

If you are looking for a way to solve your debt issues, our excellent solution finder tool can help you find the right processes for you. Alternatively, get in touch directly and our expert team can give you all of the advice you need.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

What Are The Differences Between Good And Bad Debt?

Not all debt is considered bad debt. There is such a thing as good debt, which can benefit your financial position.

For example, good debt can help to improve your credit score, making it easier to apply for credit and to be approved for loans at better interest rates. In the long run, this will have positive effects on your life. 

Bad debt, however, will financially drain you, lower your credit score and make it harder for you to better your financial position or apply for loans, such as a mortgage. 

If you are struggling with bad debt, then you may want to consider applying for an IVA (Individual Voluntary Arrangement). An IVA is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you affordably repay your creditors.

In the meantime, to help you understand the differences between good and bad debt, we’ve created a list of the types of debt that fall under each, along with ways to help you go about ensuring you obtain good debt.

What is Good Debt?

Businessman pushing credit score dial towards a good score

Good debt should allow you to improve your credit score. This will help to demonstrate to lenders that you can effectively manage your finances, which will open further credit options for you.

To obtain good debt, careful planning needs to be involved. For example, you need to have a budgeting plan in place to ensure you can afford repayments in the long term. 

Examples of good debt include:

  • Taking out a loan to open a business or grow an existing business. With a business plan and budgeting plan in place, borrowing money to help build a business can provide financial stability in the future if the business succeeds. 
  • For educational purposes, such as a student loan to attend university. Repayments will only need to be made once you’re earning a certain amount of money.
  • Applying for a low-interest credit builder card and sticking to the monthly repayments. Late or missed payments will affect your credit score negatively. 
  • Taking out a mortgage to enable you to buy a home. A mortgage is a type of secured loan since it is protected by an asset (in this case it is the house) that can be used as collateral should you not fail to make the repayments.

At a later date, you may decide to remortgage your home to allow you to get a better interest rate. This can be made possible if you have acquired a better credit score since applying for your first mortgage. 

What is Bad Debt?

Drawing of man chained to a debt wrecking ball

Bad debt usually occurs when you apply for unnecessary credit, such as a personal loan, and you haven’t planned how you’ll repay the lender. 

Debt can also accumulate, turning into bad debt if you don’t have the resources to make regular repayments.

Examples of bad debt include:

  • Applying for a car loan. An item that isn’t considered a necessity, such as a new car, quickly depreciates in value and usually has a high-interest rate.
  • An instalment payment plan, such as a phone payment plan. If managed well and monthly payments are made, then an instalment plan can improve your credit score. However, if you’ve opted for a phone that costs beyond your means, then this may affect your ability to stick to the payment plan and it will negatively impact your credit score. 
  • High-interest credit card. For example, credit cards that have a 20% APR or over will make your debts a lot more expensive and harder to repay. 
  • Payday loan. This debt can come with extremely high-interest rates. This type of loan is designed for short-term use, so if you aren’t able to repay the amount when you’re next paid, then the debt will accumulate quickly.

We hope this blog has provided you with a clearer understanding of the differences between good and bad debt.

If you are struggling with debt and would like to find out if you qualify for an IVA, then get in touch with Swift Debt Help, and we’d be happy to assist.  

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Pay Off Debt When You’re Unemployed

Unemployment can be stressful, particularly if you aren’t prepared for it when it happens. Not only do you have the pressure of looking for another job whilst trying to pay your utility bills and rent/mortgage, but if you’re already in debt, then this can add further stress if you’re unable to make regular payments. 

The average UK person has an unsecured debt of £3,817. The types of unsecured debt include credit cards, personal loans, or overdrafts. 

And, of course, if you’re unable to pay for the cost of living, you may see yourself going even further into debt with no means to repay your creditors. 

Paying off debt while unemployed can be hard; however, there are actions you can take to help limit the amount of credit you use. 

Additionally, there are debt solutions available, such as a DRO (Debt Relief Order) or a DMP (Debt Management Plan), that can help to relieve your financial stress.

Ways to Help Reduce Debt:

It is worth getting in touch with your creditors to explain your unemployment status and, because of it, that you’re struggling to make repayments. Your creditors may give you some breathing space on the proviso that you’ll restart paying your debt once you’re back at work. 

In the meantime, consider the below points:

  • Try to avoid further use of your credit card or dipping into your overdraft. 

Also, don’t be tempted to increase your overdraft or credit card limit since the credit will only help you temporarily, and you’ll put yourself further into debt, particularly if there’s interest to pay, which there generally is.

To help prevent you from using more credit, cut down on your expenditures. Only buy the necessities. Set out a budgeting plan and stick to it. With any money left over, use it to slowly start chipping away at your debt. 

  • Avoid taking out any more payday loans. 

Increasing your debt whilst you’re unemployed will make your situation worse. This is especially the case with payday loans because they tend to have very high-interest rates. 

Options for Debt Help When Unemployed

If you’re in debt and without a job, then it may feel like there aren’t any means to ease your financial situation.  

However, some options may be available to you if you meet certain requirements.

Below, we have provided a summary of these options to help with your debt.

1. Breathing Space

If you live in England or Wales, you can get temporary protection for up to 60 days from your creditors while you consider your options and get debt advice. This is a Government scheme called ‘Breathing Space’.

If you receive it then:

  • enforcement action cannot be taken against you
  • your creditors cannot contact you about debts included in your Breathing Space
  • your creditors cannot add interest or charges to your debt, however you will ultimately remain responsible for your debt repayments

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser who will check you are eligible. If you are, then will submit an application on your behalf. You can look for a ‘debt adviser’ on the MoneyHelper website.

2. DRO (Debt Relief Order)

A DRO allows your debt, and any interest owed, to be put on hold for twelve months. 

To be able to apply for a DRO, your debt must not exceed £30,000, you must reside in England, Wales, or Northern Ireland, and you can’t be a homeowner. 

Once you have a DRO in place, your creditors will be unable to take legal action against you.

After twelve months, when the DRO is complete, if you continue to meet the eligibility criteria, then any outstanding debt will be written off. 

Although this can be a useful solution for many people, one essential criteria that must be met is that you have less than £75 per month left over after paying your essential bills. If you get back into work during the twelve-month period, and you have more than £75 available then it is likely that you will have to find an alternative debt solution.

Woman paying with card via her phone

3. Bankruptcy

Bankruptcy could be a debt solution to consider. This is a legal status where your valuable assets (these do not include ‘tools of the trade’ or items that are necessary for living, such as clothes and furniture) are sold to pay what you owe to your creditors.  

You can file for bankruptcy regardless of how much debt you’re in. When applying, you’ll need to pay £680 to the Insolvency Service. 

Once you’re declared bankrupt, creditors can no longer take legal action against you. 

The details of your bankruptcy will be published on government-owned websites; the Gazette, and the Insolvency Practitioner. 

Additionally, the details of your bankruptcy will go on to your credit report and will remain there for six years.

There are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

Bear in mind that people in receipt of benefits, with no other income, will not be asked to make a monthly payment contribution into the bankruptcy to reduce their debts. However, if a person does become employed during their bankruptcy, they may be required to make regular monthly contributions.

4. DMP (Debt Management Plan)

A DMP is an informal arrangement between you and your creditors where you use a third-party company to set up a payment plan to pay off your debt. 

Your financial situation will be assessed and a figure decided as to what you can realistically afford to pay each month. 

You’ll still have to pay the full amount that you owe to your creditors; however, since your monthly payments will be reduced, your finances will be a lot easier to manage. 

Additionally, the payment plan is flexible, so if your situation changes, then a new amount that you pay each month can be negotiated.

This is a suitable option for you if you have many unsecured debts (non-priority debts). 

The DMP will come to an end once all of your debt has been cleared. 

Using a calculator for debt management

5. Individual Voluntary Arrangement (IVA)

An IVA (Individual Voluntary Arrangement) is a legally binding but flexible agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms until your circumstances change.

If you find a new job, and your income increases, then get in touch with your Insolvency Practitioner who will reassess your circumstances. If you can afford to pay more towards your debts, then you will be required to do so.

We hope that you’ve found this blog useful by discovering ways to help you out of debt.

If you want to find a debt solution that is right for you, then get in touch with Swift Debt Help, and one of the experienced members of the team will call you to discuss your options. 

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.