Different ways to deal with debt

In dealing with debt, an individual will find themselves in one of two groups - those who need debt management or those who need debt relief.  

Debt management

Debt management is appropriate for those who can pay their debt - but need a bit more time and perhaps protection from creditors as well.  In most plans the creditor may agree to waive charges or freeze interest, but isn't forced to do so.  The debtor will keep control of their assets, most importantly, they will keep their home and their credit rating will not be affected too much.   Under the DAS all interest, fees and charges on debt  included will be frozen from the date the DAS debt payment plan is approved.  

Debt relief

Debt relief is appropriate for those who can't pay their debt.  Creditors are unlikely to be paid in full and may have little choice (trust deeds) or no choice at all (bankruptcy) in how much they get.  The debtor will lose control of their assets, possibly including their home and their credit rating will be greatly affected.  

Debt management is always the better option, where possible and debt relief is a last resort with the most serious consequences. 

What are the Options? 

there are many options available to those in debt but it is always advisable for the debtor to seek money advise before making any decision.

Self help

An individual may be able to find their own way out of a debt problem, but they should still get proper money advice.  Self-help is likely to work best for people with a handful of debts who can reach a voluntary agreement with their creditors.    

Informal Debt Management Programmes

This is an agreement between a debtor and their creditors to pay off  debts over an extended period.  A debtor should be aware of two things when entering into a debt payment programme (DPP)   

• This is an informal arrangement with the creditors who can, at any time, decide that they no longer wish to accept the payments offered 
• They do not offer the same protection as DAS  

DAS

DAS is a government-run debt management tool which allows people to repay their debts through a DPP.  

• Full information on how DAS works.

Trust deeds

DAS is not the only way of dealing with debt problems. For some, a voluntary trust deed might be the answer to serious debt problems.   

• Full information on Trust Deeds

Bankruptcy 

Bankruptcy is a formal method of dealing with debts if other options have failed or are inappropriate. Bankruptcy is a last resort. Going bankrupt is a very serious step as a debtor  could lose their home and other valuable assets.  No one should make an application for bankruptcy without seeking advice. 

• Further information on Bankruptcy