There are two main reasons why people get into a situation where they are unable to service their debts.

1. Loss or reduction in income due to unemployment, divorce or separation from partner, unexpected increase in outgoings (interest rate increases, increase in the cost of utilities etc) whilst wages / income stay the same.
2. Using credit /store cards or other lending over a period to make purchases and thus building up the amount of debt until it reaches the stage where monthly outgoings are greater than the monthly income.

Whatever the reason, once you reach the stage where you are unable to keep repayments on your unsecured debts you need to get advice and not to ignore the issue - as there are several solutions available to you.

Before you decide what solution is best for you, it's a good idea to get further advice from a debt advisor. We can offer you free, honest and impartial advice.

We can let you know what is the best option based on your individual circumstances. That way you can get advice that's catered for your individual debt problem and use our  advice to help you decide what to do.

If you wish, we can manage the whole process for you, without you paying any extra money.

A few of the options we can discuss with you are listed below:-

Debt Consolidation

Further borrowing can make sense for someone who has multiple high interest debts which are causing them to pay significant amounts in monthly payments. If they can afford to consolidate, and if the lenders are satisfied that they will reliably make the monthly payments, then this is often a suitable approach to resolving a debt problem.

This is where the borrower takes out a new unsecured loan, secured loan or a remortgage to pay off all of the existing loans. This loan is at a lower interest rate than credit cards, for example, and is paid off over a long period of time; hence the monthly payments are lower. Please note that if you opt for secured borrowing, it will be secured on your property and your home will be put at risk if you are unable to keep up repayments on debts secured on it. Although the interest rates on secured lending are going to be lower, you will pay more in interest if you borrow the money over a long period.

Full and Final Settlement

This means that we negotiate with your creditors on your behalf to let you pay a lump sum which is less than the full balance you owe on the debt. In return for having a lump sum payment (of agreed amount) the creditor agrees to write off the rest of the debt.

You may be able to do this because you have come in to some money or have some savings / investments you can use. Sometimes a friend or relative offers to put forward a lump sum to help you pay off the creditors.

You can also use other options like remortgage or secured loan (if you own a property) to borrow the agreed amount and pay off the creditors.

It is not possible to say what amount the lenders will agree on, and every case is dealt with on individual basis.

Debt Management
Our Debt Management plans will reduce and eventually clear all outstanding debt by management of your disposable income (after all the essential expenses are taken into account) and dealing with your creditors. This option, unlike an IVA, does not clear the debt over a specified period and it could take many years before the debt is cleared. The primary aim of this option is to take the pressure off you immediately and reduce your payments to creditors to an affordable level. Debt Management means that we negotiate an agreement with all your creditors and offer to pay them a sum of money every month. With debt management we may be able to reduce or freeze interest and charges on your unsecured debts. We will be the dedicated point of contact for all your creditors. We will review your circumstances on regular intervals and you just make one affordable monthly payment to us and we pay your creditors.
Individual Voluntary Arrangement (IVA)
If you owe £15,000 or more, an IVA allows you to avoid the trauma of bankruptcy. We provide IVA advice and IVA information. Once in place, an IVA will help clear your debts at an affordable monthly payment over a fixed period, usually 60 months. Any interest that is owing is frozen. At the end of the fixed period, your IVA is complete, all outstanding balances are permanently written off and you will be completely debt free. An IVA is a piece of government legislation. Due to its formal nature, we will arrange for it to be prepared and supervised by a licensed insolvency practitioner.  Sale and Rent Back If you are struggling to sell your property, we can arrange for it to be purchased in as little as seven days. This will enable you to release equity to repay your creditors and stop re-possession or pending eviction. You have the option to remain living in the property and the first year's rent is deducted from the sale price so you do not have to make regular monthly rent payments. You do get the option to buy the property back after 12 months. If you wish, you can sell the property and move on without renting it. This option saves you time and money as you will not deal with lengthy chains and you do not pay estate agent fees. Nothing stated here should be taken as professional advice or recommendation. Please contact us to receive free personalised advice.

MK Financial Solutions is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.

HL Partnership Ltd is entered on the FSA register (www.fsa.gov.uk/register) under reference 303397.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBT SECURED ON IT.

The guidance and/or information contained within this web site is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.