1. Debt Consolidation Loan

If you are having difficulty keeping up with the monthly repayments because they are too high then a debt consolidation loan can reduce the monthly payments to a more affordable level. This is with a new loan which is taken out to pay off all or some of your existing debts.

Reducing debt stress can be the main benefit with the right consolidation loan because the single lower payment each month can make it easier for you to cope with the monthly outgoings. Another advantage of this type of debt solution is that it can prevent you damaging or making worse your credit rating if you are in danger of being in arrears with your existing credit agreements. Paying off these debts can prevent arrears records being added to your credit report.

2. Individual Voluntary Arrangement (IVA)

An IVA or Individual Voluntary Arrangement is a powerful debt solution created by the government to help people in debt and has become one of the most effective ways to solve debt problems. It is also a key alternative to bankruptcy.

If you have a regular income but have difficulty repaying the full amount of your debts each month then you may qualify for an IVA. It is set up through the county court and is a formal arrangement or contract between you and your creditors to pay off a portion of your debts, usually over five years.

3. Debt Management Plan (DMP)

A debt management plan (DMP) is a way to repay your debts by making a payment each month to a Debt Management Company (DMC) which then distributes the payment among your creditors on your behalf. The primary objective of a DMP is to reduce your monthly repayments. As a debt solution a DMP does not, necessarily, reduce the total debt. If interest and other charges are not frozen, you may have to settle a much larger debt. It reduces the monthly repayments that you make and will usually extend the time you need to settle your debts.

4. Debt Relief Order (DRO)

A debt relief order (DRO) is a formal procedure to provide financial relief for some or all of your debts. It is one of the alternatives to bankruptcy.

During the DRO you don't need to make any payments for the debts included in the DRO and your creditors cannot take legal action against you for these debts.

A DRO usually lasts for just twelve months and at the end of the period the debts included in the DRO are written off.

5. Administration Order (AO)

An administration order is made by the county court where, usually, at weekly or monthly intervals you make payments to the court which then distributes the payments among your creditors.

You may be eligible for an administration order if:

1. You have at least one county court judgement against you.
2. You cannot afford to make the contractual repayments but you can make regular repayments.
3. Your debts don't exceed £5,000
4. You have at least two creditors.

6. Fast Track Voluntary Arrangement (FTVA)

A Fast Track Voluntary Arrangement is a formal procedure (legally binding) to pay off some or all of your debts if you have been made bankrupt. The usual reason for an FTVA is to have a bankruptcy annulled.

The official receiver will consider your proposal and, if it is suitable and there is a chance of success, may agree to nominate you for an FTVA. Only the official receiver can be your Nominee. The nominee fee (which may be refunded if you are not nominated) is payable to the official receiver before the proposal can be considered.

7. Bankruptcy

Bankruptcy is generally considered to be the most drastic solution to debt because, of the various forms of insolvency, it is regarded as having the most severe restrictions and consequences for the debtor.

It is a formal procedure to handle the debts that you are unable to repay and because of the consequences of bankruptcy, petitioning for your own bankruptcy should only be considered after you have sought expert advice.