UK Finance News

The ripple effects of sub prime mortgage crisis that originated in United States sent tentacles worldwide and United Kingdom wasn’t spared either. The UK economy sunk into recession and it is currently facing a “tough recovery”. The consumers in UK were affected but not as severely as consumers in the United States. However, consumers in UK had to flock to debt help centres to get debt relief.

Statistical data showing debts in UK –
•    Total personal debt in United Kingdom during July 2009 end was £1,457 billion.

•    Total secured lending(dwellings) at the end of the 7th month 2009 stood at £1,226 billion

•    Household debt (average) in UK is approximately £9,226. This however doesn’t include mortgages. And this figure (£9,226) escalates to £21,457 if the average is calculated on the basis of households that have unsecured loans in some form or another.

•    During the same period (end of July 2009), consumer credit lending was recorded as £231 billion.

•    If we include mortgage, the average household debts in UK stands at £58,280.

Some of the commonly availed debt help options in UK include the following –

1.    Debt Relief Order (DRO)
Earlier if you had huge debt load to wrap up, you could so by filing bankruptcy. This was till early 2009 and especially if you had no cash back up and had a huge debt load of unsecured debts. But that wasn’t a cost effective method of debt help. So, the DRO or Debt Relief Order was introduced in April 2009 that works in a similar manner as bankruptcy but is meant for debtors having “limited financial means”. Debtors from Wales and England are eligible for DRO.

2.    Debt consolidation
When you opt for debt consolidation, you merge all your debts into one loan. You can either opt for an unsecured or a secured loan to make payments for your debts.

3.    Bankruptcy
Bankruptcy is a debt help option that can allow you to start managing your finances afresh. In this a trustee will sell off the “permitted” assets so that the creditors can be paid off.

4.    Administration Order
This is similar to debt consolidation in which you consolidate all your debts into a single debt account. The only difference between debt consolidation and Administration Order is that in the latter, you are required to pay the court which in turn pays off your creditors.

5.    IVA or Individual Voluntary Agreement
Enforced by the Insolvency Act 1986 in UK, Individual Voluntary Agreement or IVA is a debt help option that allows debtors to stay away from bankruptcy. In this the debtor shells out an amount that he can afford to pay every month. This is done for a stipulated time period within which the debtor has to pay his debts (the amount that has been agreed upon) in full.

6.    Debt management
This form of debt help will allow you to pay off your debts as per a repayment schedule that is worked out between you and your creditor. You can get rid of your unsecured loans with a DMP. You have to make monthly payments.

7.    Trust Deed
A voluntary agreement between you and your creditors, it is a bankruptcy alternative and works similar to an IVA. But this is restricted to residents of Scotland. Hence, it is also referred to as Scottish Trust Deed.

The above debt help options have many debtors get out of debt and enjoy financial freedom. Choose the one that suits your need best and regain your financial stability.