4 Things to Keep in Mind to Avoid Personal Insolvency

Surge in people in the UK unable to pay back their debts has cast doubts over the financial future of the country.

07:13 05 August 2021

Surge in people in the UK unable to pay back their debts has cast doubts over the financial future of the country as it attempts to recover from the pandemic.

 

A few people had it worst during the pandemic. Stories showing how COVID-19 pandemic wreaked financial havoc on people from all walks of life are emerging thick and fast from all across the country.

 

Reportedly, these people are all a bit stretched and awfully close to becoming insolvent, as the precarious state of their financial standing are laid bare by new reports.

 

• With as many as one in four mortgage holders reportedly struggling with payments, a personal insolvency storm could be brewing for a lot of people. 
• The average household debt has soared up significantly in the past decade and continues to go up at an alarming rate.  
• It’s the same story with the average individual debt which seemingly increases by nearly £1000 each year.

 

The number of people applying for insolvency has rocketed up, further confirming that there’s growing financial pressure facing several UK households. It’s worrying to see such a drastic increase in the number of people going insolvent and the financial hardship many people have gotten into during the pandemic.

 

If you’re starting to realise that you’re not really on top of things in terms of managing your debt repayments anymore and are struggling to stay afloat, here are a few steps you can take to rein in and take back control. Let’s get to it.

 

1)     Deal with It. Don’t ignore or avoid: If you’re dealing with a big creditor and are unsure how to get them to understand your plight or ask them to consider your new repayment plan, stop thinking too much. Don’t go into panic mode trying to tackle the problem head on. Take stock of the situation: figure out how much cash comes in and goes out of your bank account. Work out a budget in such a way you have some additional income left over after your monthly expenses from which to make payments. Propose a new repayment schedule in line with the little financial situation you find yourself in. The key is to not ignore the problem and avoid the creditors. Get cracking early on and try to get ahead of the situation, as creditors usually are not very amenable and fail to cooperate when the debt racks up into larger figures.

 

2)     Always communicate: Keep that line of communication with the creditors open all the time. Figure out what comes in and goes out and set out a working plan. Tell your creditors that you’re in a bit of a bind and might not be able to stick to your original repayment schedule. Work with them on pacing your repayments and get their consent on it. Determine an amount that you can commit to paying your creditors and let them know what to expect from you. 

 

3)     Opting for debt solutions: IRA vs DRO Individual Voluntary Arrangement (IVA) and Debt Relief Order (DRO) are two of the proven debt solutions recommended to most people grappling with personal insolvency.  Each one has its own share of pros and cons, so it’s up to you to figure out what would work best for you. Consider the one that’s likely to get you out of your financial hardship quickly and keeps you from falling back into trouble as you go about making agreed repayments. Having a clear idea of your current financial position and where and how you want to go from here is key to choosing the right one for you. Other key factors include duration, the degree of asset protection you want, your new repayment plan, debt write-off, getting help from debt management service for making proper arrangement with the creditors and communication and the fees and frozen charges you’d incur with each option. When you go ahead with either of these options, not only will  your credit rating take a hit negatively impacting your ability to take on new credit, your case will be added to a public register when you pursue either of these options.

 

 4)     Seek professional help: Anyone who is in a bit of a bother should seek financial advice immediately before it’s too late. Consult with people you can rely on and take recommendations about debt management services that assist provide professional assistance to their clients with insolvency cases. If you’re looking for one, consult with licensed practitioners from Irwin Insolvency today to see how they can help you sort out your debt situation. With years of experience under their belt and plenty of expertise in the field, their professional debt solution can help you solve your debt problem and get you back on track sooner than later. They provide practical solutions to your financial woes from a short-term and a long-term perspective and give you solid guidance right from the word go so you know exactly what you need to do to be able to get over the obstacles and start wading through with confidence. In addition to that, your insolvency practitioner from Irwin will always be there with you every step of the way and make sure your debt management solution goes to plan.

 

Maybe you’re having a rough patch money-wise and cannot figure out how to get out of this situation by yourself? Or perhaps you’re concerned that you’re only one bill away from finding yourself in deep trouble. We urge anyone to seek advice early on and give yourself the best chance to avoid any potential complications. As you know, with mounting debt, things escalate pretty quickly so you’re better off having an expert by your side you can take advice from. Act early and give yourself a good chance to shave off your debt and ease your financial burden.