It’s time to get your finances back on track
Getting into debt is easy; the hard part is getting out. At Baines & Ernst, we have a number of solutions available that can help you get there.
Clearing debt takes time, organisation and realistic planning, and we’re here to provide the support you need as you work towards a future free from debt.
Three ways to clear debts:
1. Repayment
If your finances have changed since you took out credit and you are now struggling to meet the repayments, careful budgeting and disciplined living can help you streamline your finances. However, many households are already cutting back on cash to make ends meet.
A Debt Management Plan is an effective way to deal with financial problems because:
| It’s affordable: | We build plans around you – taking your current financial commitments into consideration so that your DMP is as affordable as possible. |
| We take control: | We will contact your creditors and negotiate lower repayment rates on your behalf. We’ll also request that interest rates and charges are frozen – giving you a better chance of repaying your debts without incurring additional fees. Of 84% of debts managed we freeze interest and charges. |
| We handle payments: | You pay once a month and we’ll distribute money to the creditors included in the DMP. |
| We handle creditors: | Once a DMP is in place, we’re happy to deal with creditor phone calls and letters – helping to alleviate stress associated with debt. |
| Clear debts: | You can expect to become free from debt included in your Debt Management plan on successful completion. |
DMPs are suitable for people who have:
- Unsecured debts over £2,000
- A minimum disposable income of £80 a month
- Proof of income
Creditors are not obliged to freeze interest and charges and by choosing to repay your debts at a reduced rate, you could increase the amount owed and the period in which you repay your debts. – this means the companies you owe money to could continue to add to your debt. To counteract this in of 84% of debts managed we freeze interest and charges.
2. Reduced repayment and write-off
If you have debts of £15,000 or more and are finding it increasingly hard to repay debts and meet your day-to-day living costs, you may find that a formal agreement, such as an Individual Voluntary Arrangement, could be the best solution for you.
| Pay what you can afford: | Repayments are based on what you can realistically afford over a five year period. |
| Debts written off: | Debts included in the IVA that still exist at the end of the term will be written off – leaving you free from unsecured debts. |
| Interest rates & charges frozen: | Creditors included in the IVA must freeze all interest and charges. |
IVAs are suitable for people who have:
- Three or more creditors
- Over £15,000 worth of unsecured debt
- Problems meeting repayments
- Proof of income
- An IVA is subject to creditor agreement which is not always guaranteed.
For an IVA to be approved and interest and charges to be frozen it needs to be accepted by 75% of the creditors (by value). Homeowners may be required to re-mortgage after 4 years and release available equity to pay off some or all of the debt. Failure to adhere to an IVA could result in bankruptcy.
3. Can’t repay debts
If you find yourself in a position where you are unable to repay your debts and would not benefit from an IVA or a Debt Management Plan, then a Debt Relief Order or Bankruptcy could be the most suitable option for you.
Bankruptcy is not an easy way out of debt due to the repercussions involved. However, if this is the route you wish to take, we can guide you in the initial stages and then transfer your case to our sister company, Baker Evans, for successful completion through their Bankruptcy support service.
A Debt Relief Order is available to those with a very low disposable income. A DRO costs significantly less to process as you only pay a one-off fee of £90 which is paid directly to the Insolvency Service. Baines & Ernst do not charge a management fee for issuing this service.
If you would like to discuss your financial situation with a member of our team and find out which debt solution would be most suitable for your situation, please contact us on 0800 096 1331.
Baines and Ernst Ltd