Our Solutions For The Best Ways To Get Out Of Debt – Even With No Money Available

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There are many reasons why people experience difficulties with paying bills and other debt.

This detailed report will cover the following 8 options and will give you a clearer understanding of what solution might be best for your current circumstances.

1. Consolidation loan for unsecured debts.
2. Negotiate an informal agreement with creditors.
3. Equity release either through refinancing a mortgage or via secured loan.
4. No action was taken on your part to resolve your situation.
5. Voluntary action/agreement on individual initiative.
6. Enrol in a certified programme for managing your debts.
7. Order/mandate seeking relief from debts.
8. Receivership (bankruptcy) process for debt relief.

Expanded descriptions for each option are below:

I. Consolidation Loans For Unsecured Debt

This type of loan consolidates multiple or all your debts into one loan. You’ll be able to make one payment each month. However, we would advise against this option unless you’re 100% sure that the new payment will be affordable. If this option appeals to you, do your homework before pursuing it. What you need to do is determine the amount you can comfortably pay each month.

There is some strategy here in that you should ideally try to cover all your existing debts. If you cannot do this, then remember you will have the new consolidation loan payment plus other debts not paid off with the consolidation loan.


The obvious one here is being able to include all unsecured debt into one affordable payment on a monthly basis. Your diligent monthly payment will discharge the debt over time with minimal effect on your credit standing.


As with most financial instruments designed for people in financial difficulties, the overall amount of the loan may cost you more. Several reasons for this might include a longer repayment term, higher interest rates, and other fees.

There is a chance people will lack the discipline to reign in their spending. It’s important to impose self-discipline with finances and spending so the benefit of the consolidation loan can be enjoyed.

II. Negotiate an Informal Agreement With Your Creditors

Pursuing an informal agreement with each creditor for lower payments can work but there is no guarantee. This approach is easiest if your debt is low with just a few creditors. Also, any notification of legal action will negate the chance of this type of agreement.

Keep in mind that for this to work, you’ll need all creditors to be willing to work with you. Any creditor could also commence legal action.

You know your situation best, and you’ll need to make good on any agreement you reach with creditors. Be aware that failure to pay the reduced amounts owed will likely terminate any informal agreement.

III. Equity Release Refinance Mortgage/Secured Loan

This arrangement can be made available to homeowners experiencing difficulty that is not too serious. The intent is to re-mortgage and use those funds to consolidate debts of an unsecured nature. Homeowners will be expected to pay off these debts to decrease overall monthly payments.

Once unsecured debt monthly payments are eliminated, then (potentially) lower interest-secured borrowing can be used. To make this work to your advantage, exact numbers need to be known to ensure all unsecured debt is paid. There is no immediate guarantee that a re-mortgage will be enough to eliminate this debt.


One payment per month can be achieved if all the unsecured debt is paid and discharged.


Due to the extended term of the secured loan, you might expect to pay more out of pocket over time. There are usually long-term repayments with additional interest and associated fees. The various fees and interest are in place for the length of the secured loan.

It’s imperative to make good on payments for the secured loan. The equity and security for the loan is your home. Failure to pay or defaulting may lead to legal options including repossession of your home.

Maintain awareness of the general housing situation in light of home selling prices. Avoid more home loans to prevent creating a situation that results in a negative equity condition. The risk is being unable to sell your property. Depending on the situation, the mortgage company could sell as a mortgagee in possession if you have been repossessed. The result is losing your home, due to repossession, and you will be held accountable and liable for an amount that is unsecured if the sale doesn’t cover the amount due.

IV. No Action Taken By You To Resolve The Situation

We all understand difficult or severe financial problems can be overwhelming. As a result, this can lead to ignoring or avoiding the situation. At some point, these problems will likely be inescapable and much worse. So avoidance, while a temporary patch for you, is never an ideal way to resolve your finances.

You must realize that these problems very seldom fix themselves, and extended durations of neglect will make legal action more likely. Some examples of legal action include bringing debt collectors into the picture, possible court actions, decrees for attaching wages, services from bailiffs, orders for property sales, and possibly bankruptcy.

V. Voluntary Action/Agreement By The Individual (IVA)

This voluntary action is a formal agreement between two parties, the individual and the creditor. The outcome may be an agreement for payments made each month, or grant assets to creditors designating them as available. Another possibility is the combination of both actions; monthly payments and granting of assets.

The creditors may have to discharge (write off) a percentage of the debt. However, they will expect to recover a greater amount of the debt as compared to bankruptcy. There are conditions and terms for the creditors if this arrangement is struck. This arrangement is legally binding on all parties.

An Insolvency Practitioner is a licensed individual who oversees/manages such individual voluntary agreements/arrangements. The person is expected to uphold agreed-upon monthly payments, which are made to the Insolvency Practitioner and typically last five or six years.

In the event of property ownership inclusive of equity, there is a chance of a required sum payment at the time of agreement conclusion/end. This could be made possible by re-mortgaging or sale of the property. This is a workable option just as long as payments and any required actions are made. Any amount existing and owed at the end of the agreed-upon term will be written off by applicable creditors provided that the debtor has met their responsibilities.


This agreement differs from bankruptcy in that there is more flexibility with your assets and the manner in which they are controlled.

If you’re self-employed or a limited business director, you can continue operating your business. This means you’ll not suffer from any form of disqualification, usually of an automatic nature. The difference between the IVA and bankruptcy is that with the latter, your partnership in a business could be terminated.

The IVA process entails a meeting of creditors who collectively vote on the tentative proposal. Conditions such as 75% of creditors voting in favour of the agreement must be met for the IVA to be successful. In this case, your IVA takes effect, and all creditors have to honour and abide by it. This is in contrast to the debt management programme, in which each creditor must provide consent.

One of the primary benefits of the IVA is peace of mind. If your IVA is agreed upon, then you simply adhere to the programme’s requirements. When the term comes to a close, then you will be protected from any further collection attempts for included debts.


Compared with bankruptcy, the terms of the IVA last longer, and you’ll, therefore, maybe need to exert more personal discipline with finances.

The IVA could be changed if creditors deem it necessary. Keep in mind the original document may be amended in a way that exacts more stringent measures, provided that you agree to them. In addition, your assets outlined in the IVA will be maintained in the disposal of the Supervisory oversight for the creditors.

Once your IVA has been agreed upon by creditors and is in full effect, you should not default on your payments. This could be the reason for issuing a petition for bankruptcy. If there are extenuating circumstances that could delay payments, then be sure to obtain consent by the IVA Supervisor.

During the term of the IVA, you will have credit limitations applied and in effect.

You must satisfy the IVA conditions outlined in the original document to complete and be free from them. Your creditors are also required to be notified of satisfactory completion.

Remember that you may need to re-mortgage your home at or near the completion of the IVA term. This re-financing could result in higher mortgage payments. However, your IVA payments will be complete, and thus you’ll theoretically be able to afford the higher monthly mortgage payments.

Once the IVA proposal is submitted, the creditors may refuse to approve it. The primary reason for this action is that they think there is a better chance of greater money being returned to them by forcing bankruptcy or other measures on you.

VI. Debt Management (DMP)

This is a process in which a debt management organization/company negotiates with creditors on your behalf. The desired outcome is to provide relief to you through decreased payments. Since debt management companies are in business for profit, they will charge fees for all they do to help you. The fees are typically for account creation, negotiations, and managing your account and all activities that follow.

The process involves you working closely with the debt management company to accurately create a statement of your finances. This will be a record and reference that outlines your current situation. One other purpose is to determine how much you can comfortably afford to pay each month. Your ability to pay each month will reflect any fees charged by the debt management company. The net result will be presented to your creditors on a pro-rata basis for monthly payments.

Your responsibility is to pay the debt management company each month. These payments can be made through direct deposit or standing order. The company will make payments on your behalf after deducting their management fees each month.

Free debt management plans are provided by some charitable organisations.


The relative ease of creation and management.

Continuous fees, charges, and interest might be frozen by creditors.

Your assets remain within the domain of your control.

In many cases, once you are in a debt management programme, creditors will cease actions and attempts to collect the debt. However, this is not guaranteed and might not be permanent even once it is agreed.


Your creditors are not legally bound to freeze charges, fees, and interest attached to your debt. If they freeze these charges and interest, this action is usually not permanent. They can review your account at any time and change their minds at their discretion.

Much of the terms of debt management programmes will not guarantee any form of protection from courts and legal proceedings initiated by creditors. Any or all of your creditors could decide to engage in the normal legal processes to collect your debt.

Know that there may not be a buy-in from every creditor. In such cases, those who dissent might pursue recovery actions, and they might not stop charging you additional fees. This means they can employ the services of county bailiffs to gain security using your assets if the Court authorizes this. This form of security could include any possessions such as your car, and household items of significant value.

One significant item of note is that creditors will usually not write off any amount of your debt. All creditors will generally expect full payment due.

There is a risk that creditors will disapprove of your offer for decreased payments. They could deem it unsuitably low, and in that event, they will counter with a higher amount on a monthly basis. If this happens, your management programme efforts may fall apart.

As in other countries, entering a debt management programme will negatively impact your credit rating. Creditors may report your use of the programme with appropriate consumer credit agencies. However, this reporting will generally have a less harmful impact if you default entirely on your debts.

VII. Order For Seeking Debt Relief – Debt Relief Order (DRO)

You could be eligible for a Debt Relief Order under the following conditions:

  1. Your amount of unsecured debt is less than £15,000.
  2. Your available disposable income is £50, or less.
  3. No property ownership.
  4. Asset value is less than £400.

If you meet the above requirements, we can provide direction and advice. Please be sure you believe this may be a desirable option.


You can write-off all unsecured debt.

The DRO will be satisfied after 12 months duration.

You have protection from any form of creditor harassment after the DRO is in effect. Creditor harassment is unlawful if you are within the scope of a Debt Relief Order.

No monthly payment is expected from you unless your circumstances dramatically improve. You have shown your inability to make monthly payments. There is no extra amount, and therefore, it’s apparent the debtor cannot make payments.

You can avail yourself of the help of an intermediate person. This is an ideal choice since you can obtain consultations on the finer details of the Debt Relief Order process. So be sure to use this resource to make proceedings smoother.


You will be designated with a bad credit rating with major credit reference agencies. This occurs with all who enter into a Debt Relief Order. The length of time for this is 6 years. While a Debt Relief Order may be the ideal (and only) available course of action, this could be a necessary compromise.

Debt Relief Orders are not available under the following conditions:

  1. You are bankrupt that is not discharged.
  2. You possess a Bankruptcy Restriction Order (BRO).
  3. You are currently in the Individual Voluntary Arrangement (IVA) programme.

Debt Relief Orders are only good for debts up to £15,000. You may want to write off larger debts, as many people desire. If that is the case, then a possible solution is seeking bankruptcy.

Remember that a condition for a DRO is assets cannot be greater than £400. So this makes the DRO unavailable for homeowners. However, the IVA may work if you own a home. One more option for you is a debt management programme.

There are situations in which people receive money from an inheritance or even win a lottery. If that should happen to you, then those funds will be included in the DRO.

If you obtain a Debt Relief Order, be aware that it will be entered into the government insolvency register which is a public register.

The Debt Relief Order application can only be made one time within a rolling period of six years.

VIII. Receivership/Bankruptcy For Debt Relief

Bankruptcy and insolvency are available if the asset valuation and income level are less than what is owed to creditors. If the amount owed to a creditor exceeds £750 in England and Wales, then either the debtor can initiate proceedings or the creditor can take similar action.

Upon bankruptcy order, then a Trustee in Bankruptcy or Official Receiver will assume management of your financial affairs. There are multiple options available to these legal and official entities. For example, your assets will become vested by either entity for valuation determination. Additional actions could involve your home becoming subject to repossession. Which action occurs depends on asset value and the amount of equity existing in your home.

Your overall finances and any investment portfolio will be subject to being sold under the responsibility of the Trustee in Bankruptcy. Any additional windfall-type income, such as lottery winnings and/or inheritance, will normally be paid to the Trustee in Bankruptcy. The purpose of this action is to repay your creditors.

The Trustee in Bankruptcy will evaluate your income versus outgoing monies. The purpose of this is to arrive at a workable schedule for monthly payments and one that can be agreed upon. However, if this is not possible, then it might be imposed upon you. The term of payments, in this instance, will usually be for 36 months from the order date.

Recent legislation pertaining to bankruptcy situations mandates the Trustee in Bankruptcy to investigate each situation. The concern and scope of the investigation focus on the cause of the bankruptcy. In other words, the overall situation and ongoing behaviour that brought about the need for bankruptcy.

What the Trustee is looking for are patterns such as excessive borrowing, loan applications when it was apparent there was no means for repaying, less-than-ideal transactions involving asset sales, improper repayments to some creditors while ignoring others, gambling problems and similar personal issues, etc.

This is significant legislation in that any revelations of improper conduct that adversely affected finances may result in a Bankruptcy Restriction Order. If a BRO is issued against you, then it will remain effective during the term of the bankruptcy and for up to and including 15 15-year extension.


You will have some protection from creditors attempting to collect or file legal proceedings against you. At the end of the bankruptcy period, you will be able to start anew. Additionally, creditors will not be able to legally make demands for repayments.

Any legal processes and proceedings will end as they would concern the debts associated with bankruptcy.

An income payment order could possibly achieve lower payments. If the Trustee in Bankruptcy appeals to the courts for an IPO, it would usually last 36 months.


A bankruptcy application initiated by you is expensive.

You’ll be forbidden from taking on most types of new credit while you remain bankrupt.

During bankruptcy, the Trustee in Bankruptcy shall claim your assets for evaluation and discharge to help reduce your debts.

You must cooperate with the Trustee in Bankruptcy and provide full disclosure of income, spending, liabilities, and assets. If you fail to engage in transparent proceedings with the Trustee in Bankruptcy, then the Trustee can apply to the courts to force this to happen or to impose more serious consequences upon you.

An income payments order could result at the discretion of the Trustee with the result being monthly repayments for 36 months.

Your duties as director of a limited company might well be terminated. Bankruptcy can have adverse effects on employment opportunities in law enforcement, some professions, management positions, and the financial sector.

There are debts that are not recognised in bankruptcy proceedings. You will be required to continue making payments.

These types of debts might include:

  1. child support
  2. fines
  3. arrears of maintenance
  4. student loans

The conditions giving rise to your bankruptcy will be considered and this can have a negative impact. For example, a Bankruptcy Restriction Order (BRO) may be declared and issued to you. This will be the result of an application by the Official Receiver/Trustee in Bankruptcy based on the results of the investigation.

Bankruptcy investigations uncovering illegal activities could bring a prosecution. Common reasons for this include the destruction of evidence of a financial or accounting nature. Other examples are hiding your assets or fraudulent actions against creditors. You may experience social stigmas and limited or unavailable services such as opening a simple bank account.