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Dealing With Debt – Your Options

This guide explains your options, how they work and some of the pros and cons of each.

Do not use the information here as a substitute for getting personal advice on which option is best for you. Always seek independent advice early. Doing nothing is the worst choice to take.

Debt Arrangement Scheme (DAS)

There is no one size fits all debt solution – it is vital to research your options – pick the right one and then to take action quickly.

Swift currently only offers some of the solutions described here, which is denoted as follows:-

Solution is offered or supported by Swift
Solution not currently offered by Swift, but where appropriate we can guide and support you.

Formal Solutions

Formal, also known as statutory solutions, use Government legislation to reach a legally binding agreement with the people you owe money to.

As long as you keep the terms of the agreement you will be legally protected from further collection activity or legal action. Formal solutions usually involve a portion of the debt you owe being written off. Typically people completing an IVA will have some debt written off – but this depends on personal circumstances.

Individual Voluntary Arrangement (IVA) »

For people with little prospect of repaying their debts in full, but able to commit to regular payments to repay them in part, in exchange for the rest being written off.

Bankruptcy »

A type of insolvency giving you a fresh start from overwhelming debts in normally 12 months – but you lose control of your assets.

Debt Relief Order (DRO) »

A form of insolvency designed to help people who have relatively low debt, little surplus income and few valuable assets.

County Court Administration Order (CCAO) »

A solution for multiple debts if one or more is subject to a court judgement – but you can’t afford all your required repayments.

Informal Solutions

Informal Solutions are just that, informal not legally binding agreements between you and your creditors. To that end, they offer a more flexible solution than a formal solution but do not provide any guarantees nor protection from legal action.

With an informal solution you will usually be required to repay the full amount you owe, although some of your creditors may agree to stop charging any further interest and charges for a period of time. As such it is likely that an informal solution may take many years to complete.

Debt Management Plans »

An arrangement with your creditors which allows you to repay debts at an affordable level – setup and administered by a debt management company.

Negotiated Agreement »

A do-it-yourself debt management plan. You explain your situation to creditors, making your best payment offer.

Refinancing solutions

Only open to those able to re-arrange their credit facilities to free up more money to pay towards their unsecured debts. Generally, you’d need a good credit record and some equity to do this.

Debt Consolidation Loan »

Suited to people financially mature enough to know that further borrowing should only be used as a route to repaying what’s currently owed.

Remortgage »

Also known as “equity release”, a remortgage allows money tied up in a property or other asset to be made available to pay unsecured creditors.

What to consider when deciding which option is best for you

Debt Solutions - What To Consider

You can Trust Swift to help you to find the best solution for your personal situation.

Take a look at some of the overwhelming positive feedback from people we have helped.

  • Are all my debts legally written off upon the completion of the solution?
  • Is it binding on all my creditors? In other words, does it protect me from further recovery action or extra charges (or both) during the procedure?
  • How long will it last?
  • Will it affect my employment?
  • Will it affect my credit rating?
  • Will my home be at risk?
  • Are fees taken from the money I pay to creditors or must I pay these separately ?
  • How stable are my financial circumstances to maintain payments until the completion of the solution.

Whatever option you choose, the following applies:

Unsecured debts only

None of the options affect the rights of secured creditors, for example a bank or building society that has a mortgage or legal charge over your home. They continue to have the right to take possession of your home if you don’t keep up payments. Having a charge on your home means that if you don’t repay the debt, the creditor has a claim on the proceeds if the property is sold.

Your credit rating

Debt Solutions - What To Consider

We provide you with a free copy of your credit file as part of our free initial consultation.

This shows all your accounts with balances – so you can accurately see all your debts in one place.

Formal solutions affect your credit rating and show up on your credit record. It is advisable to obtain a copy of your credit record before making your final decision to see how you may be affected.

Many considering a debt solution find that their credit rating has already been damaged by missed payments, arrears, accounts in default, or court judgments.

Where entering into an informal solution such as debt management; you are making reduced payments to creditors and in doing so breaking the term of credit agreements. This can result in defaults being recorded on your credit report.

Shortfall on repossessed items

If your home has already been repossessed, or you want to voluntarily surrender your home, then any mortgage or secured loan shortfall can be included in these solutions.

Creditors can make unsecured debt secured

Most debts involving credit and loans are unsecured such as credit cards and bank overdrafts. This means that if you don’t pay the debt, the creditor is not automatically entitled to take something of yours, such as your home. However, in some circumstances they may go to court if you fall behind with your payments. If they then get a court judgment, they may be able to get the court to secure the debt on your home.

Employment implications

Using any of the formal options to help with your debt may occasionally affect your employment. Under the terms of your employment, you may have to inform your employer about it. You should seek advice from your employer or a Trade Union to see if your employment may be affected.

Some debts still must be paid

Not all type of debts can be included in formal and informal solutions so you will remain liable to pay certain debts – in particular:

  • Student loans;
  • Court fines;
  • Debts arising from family proceedings (child maintenance);
  • Budgeting loans and crisis loans owed to the Social Fund;
  • Debts arising from fraud;
  • Secured debts.

Failure to complete a debt solution

Ultimately if you take steps to enter into any solution, and do not pursue a solution fully, or if it is unsuccessful for any reason then you may end up in a worse position than you were when you started.

What’s my best option?

Your best option depends on your circumstances; the stability of your financial situation; and your own preferences. What you decide to do will also depend on how much you owe and how much you can repay from your income and/or assets.

Be prepared to give all the details of your debts and your finances to whoever you seek advice from, and to your creditors. It is essential you give everyone the complete picture.

When making any offer to your creditors, be accurate about your income and spending and realistic about your ability to make payments into a solution.

Get Trusted Support

Always check you are dealing with a licensed Insolvency Practitioner, Solicitor, company regulated by the Financial Conduct Authority, or other reputable organisation.

Ask to see testimonials from previous customers. Swift has many testimonials available on the independent customer review site TrustPilot.