Debt Management

What to consider when deciding which option is best for you

Does it free you (when completed) from all or part of your debts so that your creditors will have no further claim against you?
Is it binding on all your creditors? ie. does it protect you from further recovery action or extra charges (or both) by your creditors during the proceedure?
How long will it last?
Will it affect your employment or ability to gain employment?
Will it affect your credit rating?
Will your home be at risk?
If you have to pay a fee, it may come out of payments you make to your creditors, or you may have to pay it separately, before or after the option you choose is put in place.
Some of the options will involve you putting certain types of debt (called 'priority debts') before others. It may be difficult or impossible to negotiate reduced payments or write-offs for the other debts. Priority debts are, for example; utilities, rent, court fines, council tax, maintenance payments, and income tax.
Are you confident you can keep up the repayments to your creditors, for the time required, under the option you are considering?

Whatever option you choose, the following points apply

None of the options can affect the rights of secured creditors, eg. a bank or building society that has a mortgage or legal charge* over your home. They continue to have the right to take possession of your home if you don't keep up your payments.
Most debts involving credit and loans are unsecured, eg. credit and store cards, and bank overdrafts. This means that if you don't pay the debt, the creditor is not automatically entitled to take something of yours, such as your home. However, in some circumstances they may go to court if you fall behind with your payments. If they then get a court judgement, they may be able to ask kthe court to secure the debt on your home via a charging order.
All these options may affect your credit rating and will usually show up on your credit record for at least 6 years. This could have very serious career consequences for anyone seeking to be a commercial airline pilot as many airlines expect you to fund and obtain the appropriate 'type rating' as a pre-condition to employment.
Using any of the options to help with your debt may occasionally affect your employment. Under the terms of your employment, you may have to inform your employer about it.

In some circumstances, you may be able to get help from a charity or trust fund to pay off some types of urgent debt. However, this is unlikely to be the answer to the whole problem - charities are unlikely to help with large credit-card and similar debts. To get this kind of help, you will normally have to fill in a detailed application form, and each application is assessed on its own merits and the availability of funds. One charity that may be able to assist is The BALPA Benevolent Fund.

*Having a charge on your home means that if you don't repay the debt, the creditor has a claim on the proceeds if the property is sold.

What is your best option? .............. for further information please download our notes on Debt Management along with the other important documents listed below.