There are many debt solutions available to help you. This guide will go through each one and help you find which one might be right for you. If all you need is some debt advice, there is no need to worry – there is no risk to receiving debt advice, as this won’t affect your credit score. Our team is available any time, day or night, to help you in any way we can.
If you’d prefer to go online, our easy-to-use, online tool can also help you weigh up the debt solutions available to you and give you the best recommendations for your unique situation on-screen, instantly.
Debt Management Plans (DMPs)
What is a Debt Management Plan (DMP)?
A Debt Management Plan (DMP) is an informal, flexible agreement between you and the person(s) you owe money to (creditors), which helps you manage your debts and get your finances back on track. This type of debt solution involves using a budget, which includes all of your priority debts – such as rent, mortgage, utilities and the weekly food shop. Any money left over after these bills are paid (disposable income), will be used to pay the creditor(s) that you owe.
If you don’t want to speak to your creditors, a DMP is the perfect debt solution for you, as we will handle all contact for you. You may receive some contact from creditors during the early stages of your plan. However, we will help reduce this by telling your creditor that we are working on your behalf, as soon as you have given us written permission.
A DMP is flexible and not legally binding, which means you can cancel the plan at any time.
How Much Does a Debt Management Plan (DMP) Cost?
If you choose us as your DMP provider, you would only pay one monthly fee to manage the plan on your behalf. For the first six months, the fee is £50 per month. After that initial period, the fee reduces to £39.50 per month.
These fees include:
- Identity checks and documentation reviews
- Initial contact to all of your creditors to arrange a reduced repayment amount for each debt
- Handling all correspondence from you
- Regular updates to keep you in the loop
- Budget check-ins
- Ongoing contact with your creditors and a dedicated account manager throughout the term of your plan
- Monthly creditor payments and statements
- Plan suitability check-ins
- Help & support from our expert customer services team
- 24-hour access to your online account
- All of the repayments you make in accordance with your DMP, as well as our monthly fee, is paid out of your disposable income, meaning you will simply make one single payment to Angel Advance each month
If you are facing money worries, you are not alone. We understand if you need to make a reduced payment towards clearing your DMP, or even if you are unable to pay in at all. That’s why any fee we charge is capped at 49% of your payment, ensuring more than half of your money is paid to your creditors. If you are unable to pay in any month, then no fee is charged.
Debt Management Plan (DMP) Advice
It is not advisable to apply for further credit whilst in a DMP, as you will struggle to demonstrate your ability to make repayments and risk breaching the terms of your plan. Further credit includes the use of any credit cards, which will have to be closed after undertaking a DMP, catalogues and store cards.
If you do choose to apply for further credit, your creditors are within their rights to take action. This could include sending your debt to a collector, adding further interest/charges to your plan, continuing to contact you, instructing bailiffs to visit you, adding information to your credit file, or applying for a County Court Judgement (CCJ).
For more information on Debt Management Plans (DMPs), click here.
Individual Voluntary Agreements (IVAs)
What is an Individual Voluntary Agreement (IVA)?
An Individual Voluntary Agreement (IVA) is a formal, legally binding agreement between you and your creditor. Normally supervised by a licensed Insolvency Practitioner (IP), an IVA allows you to pay back the maximum amount you can afford over a specified period of time (usually 5-6 years). Any money you owe after this period is then written off. We will work alongside you to calculate the amount you are able to comfortably afford each month and assess whether you can offer slightly more to enhance the agreement, e.g. from the sale of an asset, remortgage, or savings.
While undertaking an IVA, you have the option to “freeze” your debt, which means your creditors should stop charging interest and chasing you for repayments.
How Much Does an Individual Voluntary Agreement (IVA) Cost?
Any advice or support with document preparation provided by us will not cost you anything. If you already have a DMP, your plan will carry on as normal until your IVA has been approved.
To avoid financial hardship, the monthly repayments towards clearing your IVA are formally negotiated with your creditors, based on the maximum amount you can comfortably afford each month. These repayments are taken out of the money you pay into the IVA, once the arrangement has been approved. There are no extra fees charged.
Individual Voluntary Agreement (IVA) Advice
If your disposable income increases, you must let us know immediately. This is so we can renegotiate the monthly repayment amount with your creditor, which may clear your IVA sooner than initially planned. It is also not advisable to take out any further credit, such as bank loans, while trying to pay off your IVA.
For more information on Individual Voluntary Agreements (IVAs), click here.
Debt Relief Orders (DROs)
What is a Debt Relief Order (DRO)?
If you only need to repay a relatively low amount of debt and have few assets, a Debt Relief Order (DRO) is the ideal debt solution for you. In fact, DROs are only available to individuals with very little disposable income, little to no assets and a low level of debt owed.
As of 28 June 2024, if you owe less than £30,000 – £50,000 (in total) to your creditors, or have £75 or less of disposable income each month, you may be eligible to apply for a DRO. Alternatively, if you don’t own your own home, if your car is worth less than £2,000, or if your assets don’t exceed the value of £2,000 – you may also qualify for a DRO.
DROs last one year. Once your DRO has ended, you are cleared from all of your debts (in certain circumstances).
How Much Does a Debt Relief Order (DRO) Cost?
There is no fee involved when you sign up for a DRO.
Debt Relief Order (DRO) Advice
You can only make an application for a DRO via an Approved Intermediary (a specialist DRO adviser who has permission to complete forms and give advice on DROs).
For more information on Debt Relief Orders (DROs), click here.
Bankruptcy
What is Bankruptcy?
Bankruptcy is a formal debt solution that involves an insolvency procedure to absolve you of your debts. If the amount of debt you owe exceeds your assets, or you are able to demonstrate your non-capacity to make repayments on-time towards clearing your debt, you can apply for bankruptcy. There is no restricted level of debt you must have to apply.
Our debt services do not include assistance with bankruptcy applications, as these will need to be made via the central government website, GOV.UK, directly. However, our experienced and knowledgeable team is always happy to provide confidential, reliable debt advice at any time. The government will usually send you their decision online within 28 days. If your application is approved, the Official Receiver will contact you to discuss your financial history and make you aware of their supervision over your bankruptcy period.
Bankruptcy solutions typically last for one year. After you have been discharged from your bankruptcy, you are absolved of your debts with no need for any more repayments (under certain circumstances).
How Much Does Bankruptcy Cost?
As of 2024, the fee that the government charges for a bankruptcy application is £680.
For more information on applying for bankruptcy, click here.
Bankruptcy Advice
If you have disposable income leftover after paying your priority debts, you will have to make payments out of this money for up to three years.
Any assets you have will also have to be handed over to the trustee who is overseeing your bankruptcy, to be sold in order to repay your creditors. This does not include day-to-day essential items, but it is likely to include the sale of your house if it can be sold for more than the mortgage outstanding.
Partial Settlements
What is a Partial Settlement?
A Partial Settlement is a considerable repayment to your creditor, in the form of a lump sum, that is less than the total amount of owed debt. If you have recently re-mortgaged your home, received a windfall, redundancy payment or an inherited/gifted lump sum, you may be able to use this as a partial settlement for your debts.
Depending on how long it will take to pay off your debt and the amount of your current repayment, some creditors might be prepared to write off part of your debts, if you can repay them a lump sum.
While the repayment of a lump sum can be directly arranged with your creditor at no extra cost, we recognise that contacting them yourself may be nerve-wracking. This is where we come in.
With your permission, we can contact your creditor for you to negotiate the amount needed to be repaid in order for them to accept a partial settlement of your debt. We can negotiate with your creditors on your behalf to see if they will accept a partial settlement of your debt.
How Much Does a Partial Settlement Cost?
To give you some breathing space, we will make the payments to your creditor on your behalf and take some of what we save you (compared to the full balance) as our fee.
Partial Settlement Advice
If you have a formal debt solution, such as bankruptcy or an IVA, you will need to notify the Official Receiver or Insolvency Practitioner of any extra money you receive during your arrangement.
For more information on Partial Settlements, click here.
Debt Solutions for Scottish Residents
If you require free debt advice, but you live in Scotland, the debt solutions available to you are different.
What is a Debt Payment Programme (DPP)?
A Debt Payment Programme (DPP), which is part of a Debt Arrangement Scheme (DAS), allows you to repay your debts via a single, monthly payment. The amount you pay will be the disposable income you have left each month after paying your priority debts and other personal expenses. You will pay this amount until the debts are cleared, provided this can happen over a reasonable period of time.
A DPP is an ideal debt management option for you if you would prefer zero contact with your creditors, as they cannot contact you about repayments and they must freeze interest/charges on your debts.
Your details will appear on the DAS register and your credit rating will usually be affected for 6 years.
This solution is only available to you if you live in Scotland.
How Much Do Debt Solutions for Scottish Residents Cost?
Under DAS, an individual can set up a DPP for free. As of 2024, money advisers are no longer allowed to charge you a fee for supporting you with your DAS application. There are no extra administration fees included.
Debt Advice for Scottish Residents
A DPP can only be applied for directly through an approved money adviser. We can refer you to an advisor, or you can find a local adviser to you, using this link.
If you would like us to give your details to an adviser, please contact us and we will call you back to obtain the relevant information.
For more information on Debt Solutions for Scottish Residents, click here.
Do you have money worries and need debt advice?
For confidential debt advice you can trust, contact our expert debt advisors who are available any time, day or night, to offer you free*, no-obligation debt advice.
*Our debt advice is free, but if you sign up for a debt solution, a fee will apply for some solutions.
Here at Angel Advance, we understand that needing help with debt is not an easy thing to talk about. That’s why we provide debt advice and support over the phone, email, webchat and text.
Our easy-to-use, online tool can also help you discover which debt solutions you’re eligible for with the click of a few buttons, giving you the most suitable recommendations on-screen, instantly.
