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12 Debts That Can Be Included in an IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An IVA (Individual Voluntary Arrangement) is an effective debt solution for many people and it may allow you to write off a portion of your debts. Although there is no limit on the amount of debt that can be included, only certain types of debt can be included in an IVA – here are 12 that can.

1. Catalogues

ordering gifts from catalogue

Catalogues are used by many people as a convenient way of purchasing goods and spreading costs over a period of time. Catalogue debts tend to have high interest rates, so many people find themselves unable to pay. Your catalogue debts can be included in an IVA, however you should stop purchasing items in this way in order to manage your monthly budget going forward. 

2. Credit cards

If you’re struggling with credit card debt you may have previously managed this through transferring balances on to other cards and trying to keep your minimum repayment as low as possible. For many people there comes a point where credit card repayments, especially when coupled with other streams of lending, become unmanageable within their monthly budget. Credit card debts are another common unsecured debt that you can write off with an IVA.

3. Personal loans

For many people struggling with debt, an unsecured loan repayment can feel difficult to pay as it is one fixed monthly repayment, with little flexibility. It can often be larger than other debt repayments that you are faced with each month, particularly if you’ve used this to consolidate other debts from the past. Unsecured personal loans are included in an IVA. 

4. Overdrafts

Overdrafts are commonly used as a convenient way to access funds to meet monthly repayments on credit or bills. People struggling with their finances often find it difficult, or impossible, to get themselves out of their overdraft. In this situation people are often at risk of incurring additional penalty charges by accidentally going over their overdraft limit which only makes their problem worse. Overdrafts are included in an IVA. It is advisable to change banks to a provider to which you don’t owe money before entering into an IVA – any accounts to which you owe money will be frozen when you declare insolvency. 

5. Gas and electricity debt

hob with gas on

It’s quite common for people struggling with debts to build up arrears with their utility providers. These are unsecured debts, so they are also included in an IVA. This can include debts from a previous property as well as your current home. It is important to remember that you will be responsible for making payment to your ongoing usage after entering an IVA, the monthly repayments for your utility bills will be taken into account when carrying out your budget assessment.

6. Water arrears

tap with running water

The rules surrounding water arrears are the same as gas and electricity debt. You can include any existing debts in your IVA, and your ongoing monthly payments will be included in your monthly budget so you should find paying future payments manageable. 

7. Council tax arrears

Council tax arrears are considered a priority debt because penalties for not paying them can be severe. In rare cases, you could even be put in prison for refusing to pay. These debts can be included in an IVA and if you are unable to pay, it is important that you seek debt advice as soon as possible.

8. Payday loans

Payday loans should be utilised when you need emergency access to funds, and the balance will be repaid on your next payday. However, this is often not the case, and when this becomes a debt you need to pay on a monthly basis it can be very expensive as they have high interest rates. If you only make the minimum payments, the debt will continue to increase. As with other unsecured loans, payday loans can also be included in an IVA.

9. Store cards

A store card can seem like an attractive way of paying for your instore purchases, particularly where there are discounts being offered, or when you might not have the cash available at the time of purchase. Much like with catalogue debts, this type of borrowing can become difficult to manage if you have many balances spread across multiple creditors. The interest rates can often be high. 

10. Income tax and National Insurance arrears

Self-employed people struggling with debt often find it difficult to pay their end of year tax and National Insurance bills, alongside managing the repayment demands of their other creditors.

If you are self-employed (or have previously been self-employed) historic debts from HMRC, along with your expected debt for the current tax year will be included as a debt in your IVA along with other unsecured creditors. 

11. Tax credits

If you claim tax credits, there is a chance that you can be overpaid. This happens when there are mistakes with the information that the DWP holds about you or your financial circumstances change. Overpayments can be deducted from future tax credits or taken out of your paycheck.  These debts can usually be included in your IVA.

12. Guarantor Loans

If you have struggled to find mainstream credit, then a more accessible option is to take a guarantor loan; where you nominate a friend or family member to guarantee the loan repayments in the event that you are unable to meet them. As an unsecured debt, they are also included in an IVA however the Lender will be entitled to pursue the guarantor for any unpaid balance.

Need more IVA advice? Contact us today

At Swift Debt Help, we can give you guidance when applying for an IVA and answer any questions you may have about what debts can be included. We can also discuss alternative options with you. 

Fill out the contact form, send us an email, or give us a call and we can help you deal with your debt problem today.

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May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

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

House key

4 Reasons to Consider a Remortgage to Clear Debt

Written by Alex Swindells on . Posted in Debt help.

Remortgaging your home can be an effective way to help deal with your debts. If you are unable to pay your debts, there are a number of options available to you including formal debt solutions, but you should consider remortgaging if you have enough equity in your home. 

By remortgaging your property you can release equity, which can then be used to clear your debts. These are some of the key benefits of remortgaging to clear debts.

1. You could save money by paying less interest

Man stacking coins on top of each other on table

Unsecured debts including credit cards, overdrafts, personal loans, and utility bill debts can all be cleared by remortgaging your home. The interest rates on unsecured debts tend to be higher than secured debts because they are not guaranteed by an asset, like your home. So, if you remortgage your home and use the money to pay off those debts, you could save a lot of money on interest.

2. You can remortgage for a better rate

Man collecting keys for a new house from woman with a small model of a house on the table

If you are unable to release cash by way of a remortgage, it may still be worth considering this as an option. Mortgage interest rates fluctuate a lot, so you may be able to get a better rate than you did when you first bought your home. This could allow you to make savings on your monthly mortgage payments, giving you more funds available each month to make your unsecured debt repayments.

However, you are not guaranteed to get a better rate because the deals you are offered are dependent on a number of factors. Lenders will consider your credit score, the value of the property, and how much you want to borrow. If you are in a difficult financial situation already, you may struggle to get a better rate when remortgaging.

3. You can borrow a larger amount if necessary

Loan agreement within a folder with calculator and pen on top

If you have large debts, you may be able to borrow a larger amount to clear them. The amount that you can borrow is calculated based on the loan-to-value (LTV) ratio. For example on a 90% LTV, this means that the total amount you can borrow against a house that is worth £100,000, is £90,000. If you have paid off a portion of your mortgage already, or your home has increased in value, you may be able to borrow a larger amount.

4. It’s an alternative to a formal insolvency solution

Formal insolvency solutions like bankruptcy or an IVA can help when you are unable to pay your debts. A portion of the debt can be written off and you will make regular payments to clear the rest. Remortgaging is an alternative to formal insolvency solutions and it does not have the same negative impact on your credit score.

If you have a lot of debts and you are unsure how to deal with them, Swift Debt Help can give you the support you need. Get in touch today and we can discuss whether remortgaging or other formal debt solutions are right for you.

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.

Summer holiday on beach

8 Tips on Saving Money For Your Summer Holiday

Written by Alex Swindells on . Posted in Debt help.

We all need to get away on holiday from time to time, but our finances don’t always agree. Whether you’re going abroad or staying in the UK, the costs quickly add up. If your budget is already stretched, you may think that you can’t afford a holiday this year, but that might not be the case. 

With a few simple changes to your spending habits and your holiday plans, you can make it a lot more affordable. Here are 8 tips on saving money for your summer holiday.

1. Set a budget

man working out his taxes with a calculator

Having a strict budget in place is the most important thing you can do to save for your next holiday. Setting a clear budget to manage your spending will help you cut out waste, and that extra money can go straight into your holiday fund. 

You also need to set a budget for your holiday. This gives you a saving target to aim for, so you can work out exactly how much you need to save each month to afford the holiday. Be realistic when setting your budget so you can set money aside without missing any bill payments.

2. Consider an all-inclusive holiday

Family on the beach enjoy the waves from the sea

All-inclusive holidays can be a great option when you are on a tight budget. Your flights, accommodation, and most of your food and drink are paid for upfront, usually at a discount rate as they are a package deal. If you tend to overspend while on holiday, all-inclusive deals make it much easier to stick to a budget because you don’t need to buy much while you are there. Many all-inclusive packages also offer free places for young children.

3. Think about when you book

Two women booking a holiday on laptop together

Booking your holiday too late can cost you more. Although last-minute deals can save money if you are flexible enough, you may get a better deal if you book early. Booking early gives you more choice about which dates you travel on, so you can book the cheapest ones before they fill up. You also have more time to save when you start as early as possible.

4. Clear your cookies on online booking sites

Cookies are small pieces of text that are sent by websites that you visit and stored on your computer. They contain information about what pages you looked at and other details about your activities on the website. When you revisit the same website, it will be changed to make your experience smoother and more useful. For example, this is how you get personalised recommendations when you visit a website because it has stored information about which products you looked at before.

When you view flights or hotels online, a record of that search is saved in your cookies. Next time you visit the site, it remembers that you have already looked at this page before. Some people believe that this has an impact in inflating the price of the available flights in your subsequent visits. Whilst it isn’t 100% clear whether or not this is the case, the theory is that by clearing your cookies before re-visiting online booking sites, you might get a lower price.

5. Make sure you are flexible with dates

Calendar on smartphone

Being flexible with dates and times can be very helpful if you want to save money on your holiday. Certain dates will be more expensive than others (school holidays, for example), and flight costs also vary depending on the time of day that you fly. If you are travelling with your family, you are limited to the school holidays, but you can still save money if you travel in the final weeks of the holidays. You could also consider a holiday during the half term rather than the summer holidays.

Flying late at night or very early in the morning is usually cheaper too. Although this does make travel arrangements more difficult, it may be worth it if you can save a lot of money.

6. Save £3 a day

Saving money can be quite daunting, but it’s more manageable when you break it down into small goals. The idea of saving £1,095 in a year sounds like a lot, but £3 a day is not that difficult. Think about some of the small purchases you make every day that you can cut out and you’ll soon be able to save money each day to put in your holiday fund.

7. Weigh your luggage beforehand

Suitcase luggage stacked on top of each other

Airlines charge different fees depending on who you fly with and you can sometimes get caught out at the airport if your luggage is too heavy. You can avoid this if you weigh the luggage before you leave to make sure that you have not exceeded the weight limit. You can buy a set of suitcase scales to keep at home so you can avoid any additional charges in the future.

8. Ensure you get travel insurance

Travel insurance is a must but many people skip it because they are trying to cut costs. However, if something goes wrong while you are away you could be stuck with big medical bills or other fees to pay. You don’t have protection if your holiday is cancelled either, so you may lose all of the money. 

A travel insurance policy can be inexpensive and it can save you a lot of money in difficult situations. Before you take out a policy, check whether you already have one included with other financial services. Many bank accounts, for example, offer some coverage for travel. However, double-check what level of coverage you get because it may not be extensive enough. If you do take out another travel insurance policy, use a comparison site to find the most affordable deals.

These simple tips will help you save money and cut the costs of travel, so you can easily afford an amazing holiday. However, you may find yourself in a position where you are unable to save money because of mounting debts.

At Swift Debt Help, we can give you the advice you need to get your finances back on track. Get in touch today and we will discuss different debt relief options with you so you can regain control of your debts.

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.

Woman at computer on tablet

5 Things To Know Before Declaring Bankruptcy

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

Declaring bankruptcy may be your only option if you have mounting debts that you are unable to pay. However, bankruptcy is not something you should rush into because it has long term effects on your life and your finances. Here are five things you should know before declaring bankruptcy.

1. Bankruptcy can have an impact on your assets

Hand drawing of man in shirt and tie losing his assets to bankruptcy

When you declare bankruptcy, you are required to make a reasonable effort to pay back your debts, and this often includes using your assets. Things that are considered essentials, like clothes, furniture, and cooking appliances are protected. However, other belongings will be passed on to the Official Receiver, the person that deals with your bankruptcy. These will then be sold to raise money to pay your debts. 

Items that you are allowed to keep include:

  • Clothes 
  • Furniture
  • Household appliances
  • Tools required for your job
  • A car that you need for work or other basic needs (if you are disabled, for example)

There are some exemptions and if certain assets on this list are valued very highly, they can still be sold. For example, you may be forced to sell your car and you will be given £1,250 to buy a cheaper replacement, with the rest of the money being paid towards your debts.

Jointly owned assets can also be affected. If they are sold, the money will be split between the Official Receiver and the person that has a shared interest in the asset.

Depending on your situation, you may have to move home when you declare bankruptcy. If you rent your home, you will not be affected and your landlord will not be informed. But if you own your home, you may be required to sell it to raise money to pay your debts. In some cases, you can prevent this. 

The official receiver has three years to decide what to do with your home. If they have not taken steps to sell it in that time, your interest in it is restored and you can keep your home.

It is important that you consider how your assets will be impacted before you declare bankruptcy.

2. If you own a business, bankruptcy will have an impact

Drawing of chart a declining chart with an arrow pointing downwards

When you declare bankruptcy, there are specific rules related to the running of a business. For the 12-month period of your bankruptcy, you are forbidden from acting as the director of a limited company or managing it in any way without the permission of the court. The company itself can continue to operate but you will need to appoint somebody else to manage it for you. 

If you are self-employed and registered as a sole trader, the rules are different. You will be able to continue operating as normal, but if you run a business under a name that’s different to the one in which you were made bankrupt, you must tell everyone you do business with the name under which you were made bankrupt. 

Bankruptcy will also be recorded on your credit reports for six years. This can seriously impact your ability to get credit in the future, which can be a big problem for businesses.

Business owners might want to explore other options like an Individual Voluntary Arrangement to avoid the restrictions on their ability to run their company.

3. Your bank accounts could be frozen

Young woman feeling displeased about debt on her credit card while checking bank account over laptop at home.

The Official Receiver takes control of all of your assets, including your bank account, when you declare bankruptcy. This often means that your bank accounts are frozen and you cannot withdraw any money. If you have money in your account that is required to meet your essential living costs, the Official Receiver will arrange with the bank to release those funds to you. The bank will then decide if you can continue using your account.

4. Bankruptcy doesn’t cover all of your debts

Pound coins stacked on top of each other on a table

Writing off debt is one of the major benefits of bankruptcy but not all debts are covered. You must understand exactly which debts are not covered because you will still be liable for them, even if you file for bankruptcy. Debts not covered include: 

  • Secured debts
  • Child maintenance debts
  • Student loans
  • Court fines 

5. Take the right steps before declaring bankruptcy

Person wearing running shoes taking steps up the stairs

There are some key steps you must take when declaring bankruptcy to minimise the impact.

Ensure bankruptcy is the right debt solution for you

Bankruptcy is not always the right debt management solution. Look into options such as Debt Management Plans (DMP), Debt Relief Orders (DRO) or Individual Voluntary Arrangements (IVA) before declaring bankruptcy. You may be able to limit the impact on your credit reports and avoid financial restrictions by finding a different debt solution.

Apply for bankruptcy

The next step is to fill out the necessary paperwork and pay the fee of £680. This can be paid in instalments, if necessary, with a minimum payment of £5. However a bankruptcy order will not be granted until the fee is paid. You will find the forms on the gov.uk website.

Set a budget from your living costs

As part of your bankruptcy application you will need to write a budget based on your essential expenses. When you declare bankruptcy, you will not be permitted to spend anything else as all additional money will go towards your debts.

Cooperate with the official receiver

The Official Receiver is the person that manages your bankruptcy. They will contact you within two weeks of your application to discuss your bankruptcy. They also take control of your assets. You need to work with them while they distribute your money and assets to pay off a portion of your debts.

Pay back your debts and discharge from bankruptcy

Now that everything is in place, you may need to continue paying towards your debts for up to 3 years – this is dependent upon your circumstances and your disposable income after meeting your essential outgoings. As long as you cooperate with the Official Receiver and meet all of your obligations, you should be discharged from bankruptcy after 12 months. 

Declaring bankruptcy may be the solution to your debt problems but it is not always the only option. If you need advice about managing your debts, fill out the contact form to get in touch with Swift Debt Help today. We can talk through your different options and help you regain your financial freedom.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

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

Drawing of computer screen that shows 'credit score'

6 Ways To Improve Your Credit Score

Written by Alex Swindells on . Posted in Debt help.

Your credit score can dictate how much money you can borrow, what interest rates you will pay on loans, and even your job prospects in some cases. Unfortunately, if you find yourself in financial difficulty and you miss payments, your credit score will suffer.

If you are concerned about your credit score, here are 6 ways to improve it.

1. Make all outgoing payments on time

man looking at credit check document

One way to improve your credit score is to make all of your outgoing credit payments on time. If you can get into the habit of paying everything on time, it will show lenders that you are reliable and trustworthy.

If you are regularly missing payments, there are a few things you can do to make paying easier. Set up Direct Debits so that the payments are automatically taken from your account, and write a clear budget to make sure that you don’t miss payments.

2. Register on the electoral roll

Drawing of person putting polling card in ballot for election vote

One of the easiest ways to improve your credit score is to make sure you are registered on the electoral roll. Many people don’t realise that it can actually have a big impact on your credit score. If you are not registered, lenders have a harder time verifying your identity and this could lead to your application being declined.

Registering is easy. You can register online, and all you need to do is follow the on-screen instructions. If you are already registered, check that all of your details are correct and up-to-date. If not, update them as soon as possible.

It only takes a few minutes to register, so this is one of the easiest ways to improve your score.

3. Keep credit card debt below 30%

Young concentrated businesswoman in glasses and striped shirt working with papers at home

Your debt utilisation ratio is the amount of credit you are using compared to the amount of credit you have available.

It is best to keep your debt utilisation ratio below 30%. This means that if you have a credit card with a limit of £1000, you should not have debts of more than £300 on that card.

If your debt utilisation ratio is higher, it shows that you are reliant on borrowing to pay expenses or you are irresponsible with your credit cards. This could lead to your credit score being lowered.

It is a common misconception that not having a credit card at all is better for your credit score. Borrowing small amounts and paying them back on time will improve your score, but you must avoid borrowing too much. That’s why credit card debts of around 30% or lower are best for your credit score.

4. Develop your credit history

Woman using a credit card whilst on her laptop

If you don’t have much of a credit history, it can be difficult to get a loan or a mortgage. This is because lenders don’t have much to go on when they are assessing your application. This is a common issue for young people who have not borrowed money in the past.

There are a few things you can do to develop your credit history and improve your score. Many lenders offer credit cards specifically designed for building credit. Using these on a regular basis and paying the balance off in full will increase your score. 

5. Report mistakes on your credit report

Woman on phone to bank to report mistakes on credit report

If you have ever been refused credit, it’s important to check your credit report. Your credit score can be lowered if there are mistakes on your report. These errors can range from incorrect information about your address or date of birth to missed payments that you have already paid.

If you find an error on your credit report, it is important to report it straight away. You can do this by contacting the company to which the credit relates, and ask them to update their records. You could also contact the credit reference agencies (Experian, Equifax, and Callcredit) directly and raise a dispute, they will then contact the Lender on your behalf. The issue will be investigated and, if appropriate, will be rectified. Your score will then be adjusted accordingly.

6. Ensure your credit file has no fraudulent activity

fraudulent activity

If you suspect that someone has fraudulently opened a credit account in your name, it is important to take action straight away. This can be done by contacting the police and the credit reference agencies. You should also check your bank and credit card statements regularly for any fraudulent activity.

Fraudsters taking out credit in your name can seriously damage your score, so it must be rectified immediately. Just bear in mind that you may have to prove that you did not apply for the credit if it is not immediately obvious that you are a victim of fraud.

Struggling with your debts?

If you are looking to improve your credit score as a result of being declined for credit; or you are seeking credit in order to be able to meet your essential outgoings it may be the time to consider other debt repayment options. At Swift Debt Help we can talk to you about debt solutions based on your affordability. It is important to note that most debt restructuring options will be recorded on your credit file, and could have an impact on it. Call us on 0161 843 1516 to find out if another solution could be right for you.

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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.

Creditor repayment

Can a Creditor Refuse a Payment Plan?

Written by Alex Swindells on . Posted in Debt help.

If you are unable to afford to make the full contractual repayments to your creditors, you can suggest a reduced payment plan. You offer to pay a reduced amount each month until the debts are cleared. If your creditors accept, this makes your debts a lot more manageable. But what happens if creditors do not accept your payment plan?

Speak To Your Creditors

creditors meeting together and looking through paperwork

If one or more of your creditors haven’t agreed to accept the monthly amount you have offered, this could be because they believe the offer is too low based on your circumstances. It is beneficial for them to understand your situation in full, so discuss this with them; they may carry out a full review of your income and expenditure. If you can prove to their satisfaction that this is the best offer of repayment that you can make, then they may be more inclined to accept your offer.

Are Creditors Obligated To Accept A Payment Plan?

Your creditors are under no legal obligation to accept a payment plan however they may be willing to engage with customers, and agree a plan, if they have a full understanding of their circumstances. For many individuals, requesting a reduced payment plan is a final step before having to seek alternative debt solutions such as a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA) or Bankruptcy. A creditor may be keen to accept the offer in order to avoid being subject to one of these procedures through which debt write off is likely to occur. Within a reduced payment plan, your creditors will still ultimately expect to be paid in full.

Even if you are not reasonably able to afford your payments, your creditors can still refuse the payment plan and take further action to collect the debt, like sending bailiffs, for example. By agreeing to a payment plan and accepting lower payments, it takes creditors longer to recoup their investment, so they may be reluctant to do so.

What if a creditor refuses my offer?

man giving a thumbs down

If your creditors will not agree to a payment plan, you need to look into other options for dealing with the debt. You could look at utilising a company or charity to negotiate a Debt Management Plan on your behalf. This is similar to what you have been trying to do yourself; however, the company will have experience in dealing with creditors and will take the stress of having to deal with multiple creditors away from you. If your creditors reject the offer of repayment, then further collections activity can continue including the application of fees and charges or legal action.

If you are unable to pay back the debt, you should consider options like an IVA (Individual Voluntary Arrangement), DRO (Debt Relief Order), and Bankruptcy. These are formal debt solutions that, in some cases, allow you to reduce the total amount of debt that you owe. They also give you legal protection against creditors so they cannot continue pursuing you for debt payments.

What should I do if a creditor sends me a default notice?

Being issued with a default notice doesn’t necessarily mean that you will be taken to court. It is a standard document that a creditor must send if you are not meeting your contractual repayments. Legal action is usually a last resort for creditors, so they may still be willing to work with you. 

Contact Swift Debt Help for expert advice

If you are having difficulty paying your debts and your creditors are unwilling to accept a payment plan, get in touch today for some expert advice. Our team can take you through alternative debt solution options and find one that works for you.

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.

Writing Debt Settlement Proposal letter

How To Write A Debt Settlement Proposal Letter

Written by Alex Swindells on . Posted in Debt help.

Debt Settlement can be an excellent way to clear your debts quickly if you have the funds available. You can offer to pay a reduced amount to your creditors in one lump sum. They will often accept less than you owe because they can get all of the money immediately and close the account. This is a good option if you receive a lump sum from a lottery win or inheritance, for example.

Different creditors may have their own preferred method through which they prefer to receive a Debt Settlement offer. You should contact your creditors to find out how they want you to correspond with them. If your creditors say that they would like to receive your offer in writing, here are some tips on how to write a Debt Settlement proposal letter.

What to consider when writing a proposal letter

letter and brown envelope
  • Write clearly and professionally – The way that you write your letter is very important. It must be well written and clear, and you also need to be specific about the wording. Be clear that this is an offer of a full and final settlement and if accepted, the creditors agree not to pursue the debt in the future.
  • Provide account information – Your creditors need details about which account the letter is referring to, so include all account numbers and reference numbers you have that particular debt. These can be found on any letters you have from creditors. If you hold more than one account with a single creditor, let them know. They need to be clear about which debts you are offering to clear.
  • Give your personal details – Creditors need your personal details to be able to locate your account. Useful details to provide are your address, telephone number, email address and date of birth. If you have recently moved, you should also provide your previous address in case your creditors have not updated their records.
  • Explain your situation – Providing your creditors with information as to why you want to make an offer may be beneficial to them when considering whether or not to accept it. For example, if you believe you may otherwise be unable to honour the future contractual repayments in full this is likely to encourage them to accept a reduced settlement now.
  • A statement of your proposed amount – State clearly how much you are offering to repay. 
  • Debt settlement date – You also need to tell creditors when you expect to pay the money you owe. Make sure that this is a reasonable date.
  • Source of funds – Let the creditor know where you have obtained the funds to make the settlement. Your creditors may want proof of this before they agree to the proposal.

Pros of writing a debt settlement letter

There are several benefits of writing a debt settlement letter to your creditors and clearing your debts in a lump sum. 

  • Helps you out of financial hardship – If you are unable to pay your monthly repayments, a debt settlement can give you a clean slate. As long as it is accepted, your creditors will get a lump sum and you will no longer be stuck with monthly payments you cannot afford.
  • Improves your finances – Clearing your debt quickly takes the pressure off and makes it much easier to establish a monthly budget. By dealing with debt right away, you can get your finances back on track.
  • Pay less than what you owe – You may be able to save a significant amount of money by writing a debt settlement letter to your creditors, if they agree to the offer you have proposed.

Cons of a debt settlement letter

Although it can be a good way out of debt, there are some potential downsides to writing a debt settlement letter that you should consider.

  • Creditors are not guaranteed to accept – If creditors refuse your proposal, you are in the same position as before. 
  • Negative impact on your credit file – A debt settlement can be marked on your credit reports in a specific way. If your creditors report it as such, future creditors can see that you settled the debt and did not repay it in full. This can affect your credit score and may have an impact on your ability to borrow in the future.

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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.

man on laptop and phone in cafe

How To Apply For An IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An IVA is a debt management solution that can allow you to make affordable payments over a fixed period, typically 5 or 6 years. At the end of your IVA, the outstanding balances are written off and you will be debt free. This page will give you an overview of what an IVA is, how it works, and how you can apply for one.

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a legal agreement between you and your creditors. It’s a way of paying back some or all of what you owe over a fixed period, usually 5 years. You pay back a certain percentage of your debt in monthly instalments. Your creditors then write off the rest at the end of the agreed period.

Once your IVA is in place, your creditors can’t take any further action to recover money from you, so you are protected against bailiffs. Interest and charges on the debts will also be frozen.

At the end of the IVA, your debts will be paid off and your creditors cannot chase you for the remaining balance.

How does an IVA work?

An IVA allows you to pay back your debts in affordable, usually monthly, instalments. When you apply for an IVA, you will work with an Insolvency Practitioner and they will start by assessing your finances. Once they have calculated what your disposable income is and what you can realistically afford to pay back (usually over the course of five years), they will help you draft an IVA proposal for your creditors. 

This proposal offers to pay back a certain percentage of the debts in monthly instalments. It is then up to your creditors to vote on whether they accept the offer or not. If at least 75% (by value) of voting creditors agree, the IVA is approved and you start making payments to your Insolvency Practitioner. You typically make a single payment each month. Your Insolvency Practitioner is then responsible for making payment to your creditors on your behalf. This is a lot easier to manage than multiple debts that are payable at different times of the month. The fees and associated costs of an IVA are incorporated into your affordable monthly repayment, and they are agreed with your creditors at the time the IVA is approved.

During the IVA, you will be subject to certain restrictions. For example, you cannot borrow more than £500 without permission from your Insolvency Practitioner. You must also agree to keep your Insolvency Practitioner up to date with any changes to your circumstances and understand that it is possible that your repayment could go up or down as a result of this.

As long as you make your IVA repayments on time every month, it will end after the agreed term and the remaining debt will be written off. However, if you miss payments, it can be extended. 

What debts are covered by an IVA?

Tipped over money jar with coins pouring out of it

The majority of unsecured debts are covered by an IVA. Debts that are covered include:

  • Personal loans (including payday loans)
  • Credit cards
  • Overdrafts
  • Utility bill arrears
  • Council tax arrears
  • Income tax and national insurance arrears

Although most debts are covered by an IVA, there are some exceptions. Debts that are not covered by an IVA include: 

  • Student loans 
  • Child support arrears
  • TV licence arrears
  • Magistrates’ court fines
  • Social fund loans
  • Court ordered maintenance arrears

How do I apply for an IVA?

If you want to apply for an IVA, you need to get some expert advice first. In some cases, it can be an effective method for writing off debt and helping you manage your finances but it is not always suitable. Depending on your personal financial situation, you may need to consider alternatives. At Swift Debt Help, we can advise you on whether an IVA is the right choice for you. 

The next step, if you decide to go ahead with an IVA, is to contact an Insolvency Practitioner. Your application must be submitted via an Insolvency Practitioner that has been authorised to set up IVA’s. They will talk through your finances with you and assess your situation before creating a proposal with you for your creditors.

What is the IVA application process?

IVA process - 'steps' highlighted with circle

Assessing your finances

The first step in the IVA application process is an assessment of your finances by your Insolvency Practitioner. They will need to see as many details as possible including bank statements, payslips, and bills. They also need information about your assets. 

This gives them a full picture of your financial situation and how much disposable income you have available to pay your debts.

Writing a proposal for creditors

Using all of the information that you have given them, your Insolvency Practitioner will help you to create a proposal for your creditors. The proposal will offer to pay back a certain amount of your debt in monthly instalments. The figure will be based on what you can afford to pay each month.

The proposal also outlines what is to be done with your assets. If you own a property you will not be required to sell it, however there may be a requirement to attempt to release equity if you are able to towards the end of the term of the IVA.

As well as the proposal, your Insolvency Practitioner will create a report for the creditors giving detailed information about your finances, details of the IVA and reasons why they believe that an IVA is beneficial for all parties involved.

Creditors make their decision

Once the proposal is ready, your Insolvency Practitioner will invite your creditors to attend a virtual meeting, providing them with an opportunity to review the terms of the proposal before voting on it. You may also attend this meeting if you wish, but this is not necessary.

At least 75% (by value) of voting creditors must vote in favour of the IVA for it to be approved. If you get enough votes, all creditors will be legally bound by the IVA, including those that voted to reject it. The value of the debt that you owe to each creditor determines their influence in the vote. For example, if all your creditors voted, and you owe 50% of your debt to a single creditor, their vote counts as 50% of the overall vote.

In some cases, creditors may ask for changes to be made to the terms of the IVA as a condition of them accepting your proposal. These are known as “modifications”. If this happens, you will be asked to confirm your agreement to the changes before the IVA goes ahead. You do not have to accept any proposed modifications, but it may result in the IVA not being approved if you don’t. 

The entire IVA application process usually takes around three weeks. Hopefully, the creditors vote in favour of the IVA and you can start making your monthly payments.

How do I qualify for an IVA?

An Insolvency Practitioner will determine whether an IVA is an appropriate option for you based on your circumstances, but ultimately it is your creditors’ decision whether or not your IVA will be approved. Typically, you must owe over £5000 to at least 2 creditors. Crucially, you must be insolvent, meaning that you are unable to make the monthly repayments on your debts even though you have a regular income.

As long as you meet these criteria, you can start an application for an IVA. However, your Insolvency Practitioner will discuss other options with you as well. Once the proposal has been submitted, it is down to your creditors to decide whether they accept it or not.

What if my IVA is rejected?

rusty no entry sign

If your IVA is rejected, in simple terms your situation remains the same as it did before you put the application in. You still owe money to your creditors and if you stalled contractual repayments to your creditors while you were making your application, you may have additional charges to pay. 

You can put another application in, but this is not advisable unless your situation has changed. When an IVA proposal is rejected, the reasons for the rejection are usually provided. So you should bear these in mind when considering another application. If it is still likely to be rejected, it is unlikely your Insolvency Practitioner will agree to put a further proposal forward on your behalf. There are however no restrictions on how many IVA applications you can make, and it is possible to get an IVA approved in the future even if you have had one rejected in the past. The Insolvency Practitioner will always make an assessment as to the likelihood of creditors accepting your proposal, they will advise whether they recommend making another application. 

If you aren’t able to get your IVA approved, you may need to consider your alternative options, such as bankruptcy or a debt management plan.

Alternative solutions

There are a number of alternative debt solutions available to you if your IVA is rejected. At Swift Debt Help, we can provide you with useful information on these alternative solutions.

Bankruptcy

Declaring bankruptcy can be an effective way to achieve debt write off. Your non-essential assets and disposable income are used to pay off as much of the debt as possible. Typically you will be automatically discharged from the bankruptcy after a year, however if you are required to make payments out of your income (known as an “Income Payments Agreement” or “Income Payments Order”), then this obligation can remain for up to three years. After the bankruptcy is finished, the remainder of your debts will be written off. You have less protection for your assets than you would with an IVA. It costs £680 to petition for your own bankruptcy.

DRO

A DRO (Debt Relief Order) pauses all of your debt repayments and interest for 12 months. It is only appropriate for individuals with very low disposable income, and has other strict criteria that must also be met in order to qualify. To apply for a DRO you must submit your application via an authorised debt advisor. It involves a one off cost of £90 to have your application considered by the Official Receiver. If a DRO is granted, if your situation has not improved at the end of the 12 months, your debts will be written off.

Debt Management Plan

A Debt Management Plan is an informal debt solution, meaning that it is not legally binding. If you are unable to afford your current repayments, you can negotiate a reduced rate with your creditors. You will not write off any of the debt, but it does make it more manageable. This option could help you avoid some of the negative effects that formal solutions have on your ability to borrow money in the future.

Need further help?

If you are struggling with debts that you cannot pay and you don’t know what to do, get in touch with Swift Debt Help today. Our expert advisors can talk you through IVA’s and other debt management solutions to help you find a way to regain control of your finances.

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.

Pay debt sticky note

How To Clear Council Tax Debt

Written by Alex Swindells on . Posted in Debt help.

If you are in a difficult financial position and you are unable to make your council tax payments on time, you will end up in arrears. You still owe the money for the missed payments to the council on top of any future payments. So, it is easy to quickly build up significant council tax debts if you cannot afford to pay. There comes a point when the council will take action to collect the debt and if you fail to pay, there could be serious consequences, including criminal prosecution in some cases.

Fortunately, there are ways to manage the situation and either clear the debt or have a portion of it written off so you can pay the rest. This guide will outline the different options available to you and help you clear council tax debt before it gets worse.

Dealing With Council Tax Debt

Row of credit cards

What Are The Consequences Of Not Paying Council Tax?

Failing to pay your council tax debts can lead to serious consequences. The severity of the action that the council takes depends on how much you owe and how long you have held the debt for. Potential consequences include:

  • County Court Judgements
  • Bailiffs arriving at your home
  • Repossession of your assets
  • Prison sentences in the case of continuous missed payments

These are the most drastic consequences of failing to pay council tax, but you will be given options before these steps are taken. When you first miss a payment, the council will send you a reminder within two weeks. You will be given seven days to pay and if you make the payment on time, no further action will be taken.

However, if you fail to pay after being sent a reminder, you will then receive a final notice. This gives you another seven days to pay. If this is your third missed payment within a year, you will get a final notice immediately without a reminder first.

Continued failure to pay will lead to more serious consequences like those discussed above. At this stage, the council may take you to court and take out a Council Tax Liability Order against you. The court will order you to pay the full amount and give the council the right to apply to send bailiffs who can seek to take control of your assets to repay the debt. You will also have to pay the court fees, so your debt is increased. But you can avoid this if you settle the debt before your court date.

As well as sending bailiffs to collect the debt, the council can also take money from your paycheck or benefits including:

  • Universal Credit
  • Employment and Support Allowance
  • Pension Credit
  • Jobseeker’s Allowance
  • Income Support

The money will be deducted automatically and you will be unable to avoid this unless you can find another way to pay. If the deductions will make it difficult to pay other bills, you can discuss this with the council and they may agree to take a reduced amount so you can avoid further financial difficulty.

In certain circumstances, you can be sent to prison for not paying your council tax. If you are in legitimate financial difficulty and there is no way that you can afford to pay the debt, it is very unlikely that you will be sent to prison. However, if you refuse to pay and the court decides that you do not have a good reason for failing to pay, you can be put in prison for up to three months.

A single missed payment can usually be dealt with easily, but if you are in a difficult financial position and you build up significant council tax arrears, the situation can quickly spiral out of control. That’s why it’s important to take action sooner rather than later.

How To Deal With Council Tax Arrears

Person using ATM machine

1. Do not ignore your debt

The worst thing you can do is ignore your debt and hope that it goes away because it won’t. When you miss a payment, you should contact the council immediately, before they’ve even sent you a reminder. There are options to help you manage your council tax bill and avoid further missed payments in the future and the quicker you put measures in place, the easier it is to avoid council tax arrears. 

Call your council and inform them that you have missed the payment as you are unable to afford it. Ask them about payment holidays or payment plans. Many councils will give you a break from payments or agree to a reduced monthly payment with you if you cannot afford to pay. This allows you to continue paying, and the council are aware of the situation so they will not take further action against you.

There is also additional help available to you and it’s important to claim everything you are entitled to. We will discuss this in more detail later.

2. Figure out what you can repay

When you are already in arrears and you cannot afford to repay the full amount, you should still offer to pay a percentage of the debt. By paying off a portion of the debt, you can delay further action and give yourself more time to get your finances in order. So, you need to figure out what you can realistically afford to repay. This is also important if you are trying to negotiate a reduced monthly payment with the council.

Make a detailed budget with your income and all of your outgoings. Make sure that you include all small bills like subscriptions as well as your main utility bills. This will give you a clear idea of how much money you have left each month after making all of your essential payments. You can then use this figure to make an offer to the council. When determining how much you can afford to pay, make sure that you have accounted for all outgoings and don’t put yourself in more financial difficulty by offering to pay too much.

The aim is to be able to pay off as much of the council tax debt as possible while also maintaining your other financial responsibilities and avoiding further missed payments in the future.

3. Apply for everything that you are entitled to

You can apply for assistance if you are having difficulty with your council tax bills. As discussed earlier, you can ask the council for a payment holiday or reduced payment plan. If you are on a low income, you can also apply for a council tax reduction (CTR). This is a long-term reduction in your council tax bill so it is more affordable. Every council has their own system for taking applications and granting reductions, so you will need to get in touch with your council and find out about the process. However, they usually consider the same factors when making their decision:

  • Your household income – this includes every adult in the household and all benefits you claim.
  • Your circumstances – whether you rent or own the house, if you have children, etc.
  • The area that you live in.

You are not guaranteed to be granted a CTR, but you should always apply because it can make things more manageable. Depending on your income, you may be entitled to up to 100% off your council tax.

Certain groups are exempt from council tax in the first place, so make sure to check this too. Exempt groups include: 

  • Under 18s
  • Students (including apprentices and nurses)
  • People with a severe mental impairment
  • Live-in carers (as long as the person you care for is not a spouse, partner, or child under 18)
  • Diplomats
  • Recipients of money from the Education and Skills Funding Agency (as long as they are under 25)

If you or somebody in your household falls into one of these categories, you may not have to pay council tax at all, or you may be eligible for a partial reduction.

There are also income support programmes in place for people that are struggling financially. If you are unable to afford your bills, see whether you are eligible for Universal Credit, Child Benefit, Child Tax Credit, and Housing Benefit, as well as a CTR.

Many people find themselves in council tax arrears because they have not claimed all of the financial assistance that they are entitled to. With a bit of extra help, you may be able to avoid the situation in the first place.

4. Apply for an IVA

Council tax arrears can quickly build up and if you are unable to repay them, you need to explore debt management solutions. An IVA (Individual Voluntary Arrangement) is one of the options for dealing with council tax debt. 

An Insolvency Practitioner will assess your finances and determine how much you can afford to pay each month. They will then make an offer to your creditors and, in most cases, negotiate a portion of the debt to be written off. If your creditors agree to the IVA, you can start making monthly payments. Ordinarily, you will pay the debt over a period of five to six years, after which you will be debt free. During your IVA, you are also protected against further action, including bailiffs.

Still Need Help With Council Tax Arrears?

If you are having difficulty with council tax arrears, Swift Debt Help can give you the advice you need. Our experts will discuss different debt management solutions with you and guide you through the process, so you can be debt free. Fill out the contact form below and we will get back to you soon. 

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.

Heating thermostat

How To Deal With Fuel Poverty

Written by Alex Swindells on . Posted in Debt help.

Ofgem, the UK’s energy regulator raised the fuel price cap to unprecedented levels in recent weeks. This cap determines the maximum amount that energy companies can charge for gas and electricity and now that it has been raised, households across the UK are expecting a significant increase in their energy bills in the coming months. 

As the government continues to look for ways to manage this crisis, experts are concerned about families being pushed into fuel poverty and facing mounting utility bills debt. This article will explain what fuel poverty is and how you can avoid it.

What is fuel poverty?

Electricity towers

Fuel poverty describes a situation when a household has above-average energy costs that are pushing them below the poverty line. When a household cannot purchase all of the energy that they need without their remaining disposable income being below the poverty line, this is considered fuel poverty. For a couple of working age, the poverty line is set at £244 per week after housing costs. So, if you are left with less than this once you have paid for energy, you are experiencing fuel poverty.

In recent years, there has been a sharp rise in fuel poverty in the UK. After the latest energy cap increase, it is estimated that 1 in 4 households (more than 15 million people) will be living in fuel poverty and may also have water arrears debt too. This figure will only increase as long as energy prices are still rising.

Why are energy prices rising?

gas cooker

The main reason for rising energy prices is a sharp rise in wholesale gas prices. This increase is passed on to the energy companies and, ultimately, the customer, which is why we are now seeing a big jump in energy prices. This problem is not limited to the UK, it is happening across Europe too. 

The rise in wholesale prices is caused by a number of factors. As we come out of the pandemic, businesses are reopening and more people are driving again, which is one reason why there is a much higher demand for fuel. This coincides with the onset of winter when demand is already much greater, meaning that we cannot produce as much gas as we need and the prices have spiked as a result.

How can I save on energy costs?

  • Switch to a cheaper energy supplier – Most introductory offers with energy companies give good prices. But when your policy renews and you are switched onto a default tariff, the prices can increase significantly. However, switching regularly allows you to take advantage of the best prices available. Tariffs are always changing so do not assume that your current provider is the cheapest option, even if they were when you first signed up. Energy comparison sites make it easy to find better deals and switch.
  • Install a smart meter in your home – Smart meters are now provided for free and they are an excellent way to monitor your energy use. By tracking how much gas and electricity you are using, you can make small changes to your lifestyle to bring your bills down. Your smart meter will also send automatic meter readings to your energy company so you get more accurate bills.
  • Switch to energy-saving lightbulbs – It is estimated that the average UK household would save £40 per year on their energy bills by switching traditional halogen light bulbs for LED ones. They also have a much longer lifespan, so you save on replacements in the future too.
  • Buy energy-efficient appliances and electronics – Large appliances and electronics are the biggest energy consumers in your home. Old appliances are likely to use a lot more energy than new, energy-efficient options. For example, an energy-efficient fridge freezer can save you up to £104 per year. All appliances come with an energy rating from A to G, with A being the most efficient. Check this before purchasing any appliances because, even though they are more expensive, an A-rated appliance will save a lot of money on bills.
  • Turn down your thermostat when possible – Small adjustments to your thermostat will save a lot of money on gas bills. Reducing the temperature by just one degree can save up to £128 per year, and you will not notice the difference.
  • Wash your clothes at a lower temperature – You can wash your clothes at a lower temperature to save money and they will still wash just as well. Setting the temperature to 30 degrees or lower will reduce energy consumption by roughly 60% compared with washing at 40 degrees.
  • Install double-glazed windows – Double-glazed windows provide excellent insulation to stop heat loss. This makes it much easier to keep the house warm without constantly running the heating. In a typical detached home, you can expect to save £110-£140 per year. The cost of installing double glazing ranges from £3000-£7000, on average. In 2020, the government launched the Green Homes Grant Scheme, which offers homeowners and landlords vouchers worth up to £10,000 to make energy-efficient upgrades to their homes, including double glazing.
  • Install roof insulation – The roof is the biggest source of heat loss in the home. By installing more insulation, you can trap heat in the home and reduce your energy bills. Insulation panels cost around £25 per square metre you want to cover, and you can save up to £225 per year in a detached house or £135 in a semi-detached property.
  • Research and apply discounts – There are a number of discounts and grants available to help people who are having difficulty with energy bills. The Warm Home Discount Scheme, for people on a low income or claiming Pension Credit, gives you a £140 discount on your electricity bill or a voucher for a prepayment meter.

The Winter Fuel Payment is an annual payment given to anybody born on or before 26th September 1955. The amount you are eligible for may vary.

Cold Weather Payments are given when the temperature drops below a certain level. You may be eligible for this benefit if you claim benefits like Universal Credit, Income Support, or Pension Credit. 

Researching these discounts and applying them can make your energy bills a lot more manageable.

Are you in debt from fuel poverty?

If you have already missed payments due to fuel poverty and you are struggling with utility bills debt, get in touch with Swift Debt Help today. We can advise you on debt management solutions, including an IVA or bankruptcy, to help you clear your debts. 

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.