Individuals whether they are self-employed or have just used their credit cards liberally frequently need help with debts.  Debt help advice can be obtained from a variety of sources but the Citizens Advice Bureau (CAB) is often a good place to start, or even immediately talk to an Insolvency Practitioner directly. 

For business debt help the Insolvency Practitioner is normally the best place to start and if it is appropriate they can help you to put together an Individual Voluntary Arrangement which could help the individual write off debts. 

Other situations involve an individual who has over borrowed and needs debt management help.  The first thing to do is to make a list of the total sum owed to each one of your creditors even if you are managing to keep up with the repayments that are being demanded and then also work out how much you have available each month after you have dealt with all necessary expenditure (rent, food etc. and priority debts) and see what is left.  This will help the individual to assess the situation and they can decide whether there are priority debts there, e.g. paying the Council Tax and rent to enable you to stay in your property.  They next stage would be to communicate with all the lenders to ensure they know what your situation is and how you propose to resolve it.

The potential resolutions could be:

- Reduce your expenditure to the bare essentials and then use your income to repay your debts (this would be if your situation is not too serious and you do not need a great deal of debt help advice)

- Having calculated how much you need to clear all your debts it may be practical to take out a consolidation loan which you can afford to pay off out of the surplus of your monthly income (beware of loan sharks who charge huge interest payments or very high early redemption charges on loans)

- If your income is reasonable it may be possible to do an Individual Voluntary Arrangement using the services of an Insolvency Practitioner

- If you have no assets or your debts are too high to pay off, you should consider Bankruptcy.  Bankruptcy is not a punishment, but an opportunity to allow you to start again, and too many people enter into arrangements with certain debt advice companies which can have them under pressure for many years and not clear all their debts, whereas Bankruptcy will get rid of them all.  Your future credit rating for the next couple of years will be damaged by Bankruptcy but many people who need to go down this avenue would like to be able to steer away from credit in the future! 

- If you need tax debt help you should always speak to H M Revenue & Customs at your earliest opportunity.  If your business is sound but you have just fallen a couple of months behind on payment and need help with debts they are prepared to accept a ‘time to pay’ arrangement over a few months.  They would want to ensure that your business is viable for the future also.

Article written by Anthony Harris FCCA
Licensed Insolvency Practitioner (aharris@critchleys.co.uk)