Your Personal Action Plan

Here’s your personal action plan. It contains key information about the debt solutions we believe are
appropriate to your circumstances. Please take the time to read it as it will help you decide how to deal
with your debt.

The advice is specifically tailored; it is based on what you’ve told us and the figures you’ve given us for
your income and spending. If any of this is incorrect or changes, please log back into StepChange Debt
Remedy, make any changes and download a new personal action plan, as this may change your
advice.

To determine which debt solutions are best for you, and which to recommend, we:

● take your individual circumstances into account and

● use our experience and expertise to assess the likelihood of success of the debt solutions available
to you.

We’ll tell you about all the debt solutions which are available to you. We’ll support you with any of these
debt solutions where they have a reasonable chance of resolving your debt problem. Where you can
afford to repay your debt in a reasonable period of time, we’ll recommend a repayment solution. If it’s
not possible for you to repay in a reasonable period of time, we’ll recommend an insolvency option.

Please get back to us if you wish to discuss our recommendation or suitable alternatives further.

We’ve also included a debt advice guide. It has lots of useful information on what to expect from your
creditors and ways to improve your situation. The guide to dealing with your debts summarises the
advantages, risks and consequences of each debt solution to help you understand all options. If you
can’t find the answer to your questions here, visit www.stepchange.org/clients for more information.

If you’ve any further questions, call us on 0800 197 1704. We’re open Monday to Friday 8am to 8pm
and Saturday 9am to 2pm. You’ll need to quote your web number, which is W91995576, when you call.
To protect your personal information, please don’t give your web number to anyone else, including your
creditors.

From 1 April 2018, any of your money we hold will be covered by the Financial Services Compensation
Scheme, which can pay compensation if we're unable to meet our financial obligations. You can find out
more on the FSCS website, www.fscs.org.uk.

Foundation for Credit Counselling, Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A
registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no.2757055). Authorised and regulated by the
Financial Conduct Authority.
www.stepchange.org
Section 1   Your financial situation 
This shows all the information you have given us

Section 2   Your debt solution 
Everything you need to know about making your monthly payment

  Your guide to dealing with your debts 
This guide provides details about debt solutions available to you.

  Your debt advice guide 
This guide provides practical advice that will give you useful ideas on how to
improve your situation and how to handle your creditors.
Section 1 Your financial situation  

Your financial summary 

Monthly income
The total of all money you receive in a 'calendar
£ 1,150
month'*.

Monthly outgoings
The total of all household spending in a 'calendar £ 530
month' including payments to any 'secured' debts and
all priority household bills.

Monthly contractual payments

The balances on your unsecured debts have been £ 286
used to work out the amount of money you’d need to
make your minimum payments each month.

Total number of creditors

The number of unsecured debts you need to pay each
2
month.

Total unsecured debt

The amount you owe your creditors for all unsecured
£ 4,859
debt.

Once you have paid your priority household bills, you have £ 620 available each month.

*Calendar monthly means that we have calculated the amount into a yearly figure and then divided by
twelve.
Section 1 Your financial situation  

Your budget 
Housing Amount Comments About You Details
Rent £350 Date budget created 17 Dec 2018
Mortgage
Secured loans No of adults 1
Charging / Inhibition order No of dependants 0
Mortgage endowment premium
Service charge/ground rent Your Income Amount

Water Take home pay £800

Council tax Partner's take home pay

Gas Rent/board received £350

Electricity Pension received

Other household fuels Any other income received

Amount Comments Income Support / Universal

Household Services
Credit
Building/contents insurance
Jobseekers Allowance
Telephone/mobile/internet
Incapacity Benefit/ESA
TV licence
DLA/PIP
Satellite/cable television
Working Tax Credit
Repairs/maintenance
Child Benefit
Household appliance rental
Child Tax Credit
Child maintenance
Child Support
Childcare
Fines/CCJs/decrees
Life insurance/pensions
Medical/accident insurance
Hire purchase / logbook loan
Total Income £ 1,150
Transport Amount Comments
Total Expenditure £ 530
Spares/servicing
Surplus (Deficit) £620
Road tax
Insurance
Breakdown cover
Fuel/parking
Public transport
Budget Comments
Food & Housekeeping Amount Comments Please note: Payments are not being
Food, toiletries, cleaning £100 administered by StepChange Debt Charity.
School meals/meals at work
Pets/pet foods/insurance
Tobacco
Misc. Goods & Services Amount Comments
School trips/activities
Medicine/prescriptions £10
Dentist/opticians
Hairdressing
Union/professional fees
Laundry/cleaning
Education fees
Personal & Leisure Amount Comments
Clothing/footwear £30
Newspaper/magazines
Sports/hobbies/entertainment £40
Children's pocket money
Religious contributions
Sundries & Emergencies Amount Comments
Sundries/emergencies
Loan from family/friends

This budget was created online using StepChange Debt Remedy

Section 1 Your financial situation  

List of creditors 
Outstanding Contractual Ownership of
Creditor Name Debt Type
Balance Payment Debt

Daniels Silverman Proactive Debt Personal

£ 1,940 £ 140 Me
Recovery Loan
Plan/com Other £ 2,919 £ 146 Me
TOTAL TOTAL
£ 4,859 £ 286
Section 2 Your debt solution 

Monthly payment arrangement 
Your financial summary shows that you can afford to make your payments to your unsecured debts
(loans, credit cards etc). These add up to a total of £ 4,859 and you can afford to pay them £ 620 each
month.

About making a monthly payment arrangement 
It may mean a few changes to your spending, but the amount you have left over after paying your
household priorities means that you can make the contractual payment to your creditors, even if you’re
unable to clear the arrears.

In most cases, if you’re able to at least make the contractual payment it prevents further legal action
being taken to recover the debt.

The creditor may still close the account or terminate the credit agreement.

If you have extra money available you should try to clear any arrears or bring any accounts which are
over the agreed borrowing limit, within the limit. This will help avoid over limit and late payment charges
if they’re still being applied to the account.

How this works 
Contact each creditor to find out if they’ll accept the monthly payment you can afford and if they’ll
consider freezing interest and charges until your account is back on track.

Never make an offer you can’t keep to and once you have an arrangement in place, stick to it. Never use
money you’ve set aside for household bills to pay your unsecured debts.

If your creditors agree to freeze interest or charges and allow you breathing space to bring your
accounts up to date, then continue to reduce your debts as much as possible by paying your creditors
extra with whatever you can afford each month.

If your creditors won't freeze interest or charges and your debt is increasing or staying the same, then
you can consider other ways to make your debt more affordable. There may be loans and credit cards
which offer cheaper rates of interest.

If you do consolidate or restructure your debt, don’t be tempted to borrow more money and always
carefully check the terms of the new agreement before accepting the finance.

To help you find the best way of reducing or paying your debts off, take a look at some trusted
comparison websites such as www.moneysavingexpert.com or speak to an independent financial
advisor.

If your credit rating is already affected, you may not be able to get cheaper credit so just continue
making the extra monthly payments.
Section 2 Your debt solution 

The only way to avoid a poor credit rating is to pay all your bills on time and clear any arrears you have
immediately.

You should consider how important your credit score is to you. Do you need to take out any further
credit? Are you planning to borrow more money and why?

But if you’re struggling to make payments to your creditors, borrowing more money will make your
situation worse.

If your situation changes, you can revisit Debt Remedy for further advice.
Section 2 Your debt solution 

What to do next 

Contact all of your creditors and let them know that you've had advice from us
on how to deal with your debts.

Visit www.stepchange.org/benefits-check as we've identified that you may be

entitled to additional benefits that you're not currently receiving.

Resume paying the monthly contractual payment to your creditors. Check

that the information in your budget and creditors list is accurate. Make life easier
for yourself by paying your creditors using the best available method, for example
set up a Direct Debit.

Contact your creditors. If you are behind with your payments, clear arrears by
paying more than your normal monthly amount. You need to tell your creditors how
you intend to deal with any arrears. Stick to the arrangement by paying the extra
money at the same time as your normal payment each month and don't be
pressured into giving them more than you can afford.

Clear your remaining debt by paying extra money to each of your creditors every
month. As you pay each debt off, use the money which you used to pay them to
clear all your other remaining creditors more quickly.

Check the other information in 'Your debt advice guide' for other ideas on
how to improve your situation by reducing your expenditure and increasing your
income.
Section 2 Your debt solution 

Contact your bank if you owe money to them (e.g. credit card, loan or overdraft),
to let them know you’re speaking to us about your situation. You can give your bank
your client reference number if they ask for it. Once they have this, the majority of
banks will give you four to six weeks to get a solution in place.

Ask your bank how they can help - they may:

● Separate any overdraft from your existing account and allow you to reduce any
overdraft at an affordable rate and in line with your other debts
● Set up a new 'clean' basic bank account for you, or
● Allow you to continue banking with them while you repay any debts you owe
them

If you don’t want to stay with your current provider, or they’re unable to offer you any
help with your accounts, you can change your bank account to a provider you don’t
owe money to. Remember to switch your essential direct debits for household bills.

Find more about bank accounts at www.stepchange.org/clients

We also recommend you 
The information you’ve just read advises you on the best way to deal with your debts. We also
recommend you look at ways to increase your income and reduce your spending.

Please read 'Your debt advice guide' for ideas on this.

As well as your debt advice guide, we have lots of helpful information on our website, which is specific
to the advice we’ve already given. Click here www.stepchange.org/clients and you’ll find all the answers
you need following your advice session with us.

Keep up with payments to your priority household bills such as your mortgage or rent, council tax,
and utilities (gas, electric and water). If you do not, there are consequences. These are listed in 'Your
debt advice guide'. Please refer to the section titled, 'What to pay first' to find out more.

If you're able to access any pension savings now or in the next 12 months, we strongly recommend you
get advice from a regulated independent financial advisor (IFA) before deciding what to do with them.

Contact the Money Advice Service on 0800 138 7777 or visit their website at
www.moneyadviceservice.org.uk for advice on how to find a suitable IFA.

Alternatively, contact The Pensions Advisory Service on 0300 123 1047 or visit their website at
www.pensionsadvisoryservice.org.uk for general information about pensions.

Tell your partner about your financial difficulties if you feel able to. This may avoid future problems or
relieve stress by sharing your worries.
Section 2 Your debt solution 

Visit our benefit checker at www.stepchange.org/benefits-check because:

You may be entitled to receive Working Tax Credit (WTC). WTC is a payment to top up the earnings of
people in employment who are paid below a minimum salary, including those who do not have children.

To qualify you must be:

● Aged 25 and over without children and working at least 30 hours a week, or
● Aged 60 and over working at least 16 hours per week, or
● Aged 16 or over, single with a child and working at least 16 hours per week, or
● Aged 16 or over, in a couple with a child and working a total of 24 hours per week.
A guide to dealing with your debts
Introduction

If you find you’re unable to pay your debts, or you’re missing payments regularly
and struggling to manage your money, then you may need help to work out how to
solve your financial problems.

If you’re reading this, then you’ve already started to get the help you need. Taking
the first step is usually the hardest.

This guide summarises the main points you need to understand when you have debts
you can’t pay, and it tells you the different ways you can manage them.

What happens if I can’t afford to pay my debts?

It’s very important that you don’t ignore any correspondence from your
creditors or any debt collection agency or other person acting on their behalf. If
you do, then your creditors will continue to add interest and charges to your
debts. This will increase your total outstanding debt amount and the time it’ll
take you to repay it.

They may also continue, or start, to take further action against you including passing or
selling your debt to a debt collection agency or commencing legal action. If you’re a
homeowner, and live in England, Wales or Northern Ireland this could ultimately put
your home at risk if a creditor obtains a charging order and successfully applies for an
order for sale against your home. If you live in Scotland unsecured creditors cannot
ask the court to order a sale of your home.

Information about what action your creditors can take, and the impact that it will have
on you if they do, is dependent on where you live. The way creditors can enforce
payment of debt is different in England and Wales compared with Scotland and
Northern Ireland. If you need any further information on the risks and what’s involved,
please contact us.

If you can’t afford to pay your debts, there are consequences which are relevant to all
countries in the United Kingdom and you need to know what these are.

If any of your debts are secured against your home, for example a mortgage or a
secured loan, the secured creditor may repossess your home if you don’t keep your
payments up to date. All secured debt should always be paid as a priority before you
pay any unsecured debt. Credit cards, personal loans, overdrafts, and catalogues are
all examples of unsecured debt.
1
 Don’t use the money set aside for your priority household bills
to pay your non-priority creditors. Falling behind with your
mortgage has far more serious consequences than falling behind
with unsecured debts like credit cards, as your home may be at
risk.
There are other debts that are also a priority over your unsecured creditors. These include
things like taxes (including council tax or rates), fines, child support payments and utility bills.
If you don’t pay these, your priority creditors can take action against you to make payments.
This may include withholding essential services, deducting money directly from your
earnings, or sending bailiffs (known as sheriff officers in Scotland) to your home. In extreme
cases, you can be imprisoned if you’re behind with fines, child support and tax payments.

Consumer hire agreements, most commonly known as Hire Purchase (HP) agreements and
sometimes conditional sale agreements, will also take priority over your unsecured debts if
you want to keep the goods you’ve bought. If you fall behind with these payments, the HP
lender may be able to repossess the goods by taking court action to recover the goods. And if
you live in England, Wales or Northern Ireland, they can repossess without a court order if
you have paid less than a third of the total amount owed under the contract.

If you’re unable to pay your unsecured or HP debts, you can expect your creditors to contact
you to ask why you’re behind and if you can catch up with the payments. Lenders of
unsecured debts, unlike secured lenders, don’t have an automatic right to take away items
you own as payment for that debt.

Non-payment of your contractual payments over a certain period will usually result in your
creditors cancelling or ‘terminating’ the credit agreement you have with them, including HP
agreements. Creditors record all missed or reduced payments and can register a default on
your credit file. A default on your file is a record showing that the credit facility was cancelled
by the creditor, usually for non-payment of the contractual payments. A default stays on your
credit file for six years. This affects your credit rating and ability to borrow money in the
future.

After a credit or HP agreement is cancelled, your creditors may pass your debt onto a debt
collection agency who will also try to contact you for payment. Again, debt collectors do not
have an automatic right to take anything you own to pay for the unsecured debt. They also
don’t have the right to force you to pay more than you can afford.

Finally, your unsecured creditors or HP provider may decide to take legal action to recover
the debt. To do this they’ll require a court to decide the amount you’re able to afford. You will
always receive a letter to tell you this is happening and what to do. Receiving the court form
allows you to make the court aware of how much you can afford so the amount you’re
ordered to pay is affordable.

You are usually given a set time to make the court aware of what you can afford. If you
ignore the letter, the creditor can obtain a court order against you and ask the court to set the
repayment amount at a rate they want, or even ask for an order against you to pay the
amount in full immediately.
2
This action is more commonly known as a County Court Judgment (CCJ) in England and
Wales, a Decision or Decree in Scotland or a Money Judgment in Northern Ireland.

Once the amount of your installment is decided, you must keep up with the payment; If
you don’t pay as ordered action can be taken to ‘enforce’ the debt. The type of action
taken falls into a few general categories and is different depending on the country you
live in. These are:

• Attachment of earnings/wage arrestment – An order to your employer to deduct a

set amount from your wages

• Charging / Inhibition order - Placing a charge or inhibition on your property if you own
your home or another property. In England, Wales and Northern Ireland this means
that the debt is secured against your home and will be paid when you sell it. In
Scotland it isn’t secured against your home, but you need the creditor’s permission to
sell it

• Third party debt order – A order for someone who owes you money to pay it to the
creditor instead of you. It’s most commonly used to freeze your bank account and pay
the creditor any money you have in that account. In Scotland, this is known as a Bank
Account Arrestment and can only be used to take money from bank accounts.

• Seizure of goods - Agents employed by your creditors don’t have an automatic right to
enter your home, but if you let them in they then have the right to remove goods.

In England and Wales and Northern Ireland a creditor with a CCJ/money judgment can
ask the court to put a charge on your home even if you haven’t fallen behind with your
CCJ payments. Having a charging order doesn’t always mean you will lose your home. A
creditor can ask the court to order a sale of your home if they have a valid reason, and only if
the court agrees to this will you lose your home. In Scotland, the court cannot order you to
sell your home.

A HP creditor can also ask the court to order you to give the goods you bought through
the HP agreement back to them.

Falling behind with your unsecured debts affects your credit rating and
may affect your ability to borrow in the future. The options in this
booklet on how to deal with your debt may also affect your credit rating.

3
Where can I get advice?

If you tell your creditors you can’t keep up with payments, they’ll want to know how you’re
going to deal with your situation and it’s important to get the right advice.

You can get advice that’s independent and impartial from a debt advice professional, who’ll
review your whole financial situation and advise you on how to deal with your total debt. This
will ensure you get a realistic budget to work with and you’ll be advised on all options available
to you.

We always recommend you seek free debt advice. You don’t need to pay to get good debt
advice. There are a number of free debt advice providers recommended by the Money Advice
Service and StepChange Debt Charity is one of them.

The Money Advice Service is a service run by the government to offer free and impartial
money advice, and this includes telling you where you can get free debt help and advice.
Their website can guide you to the right debt advice agency, depending on whether you
prefer to speak to someone face-to-face, on the phone or get advice online.

Contact the Money Advice Service:

Helpline: 0800 138 7777

Website: www.moneyadviceservice.org.uk
Web chat available

4
What options do I have?

Administration Order
An administration order is available to residents of England, Wales and Northern Ireland.
It’s not available in Scotland.
The court decides how much you’re able to pay to your creditors each month based on your
finances. You make this payment to the court and they share it out among your creditors on
your behalf. The court will also write to your creditors to tell them you have an administration
order in place.

Eligibility criteria
You can apply to the County Court for an administration order if:
• your total debt is no more than £5,000
• you owe money to two or more creditors, and
• you already have a County Court judgment (CCJ) or High Court Judgment against
you by at least one of your creditors that you can’t pay in full

Cost
There are no application fees for an administration order. However, the court takes 10% of
everything you pay. So if you pay £100 each month, the court will keep £10 and send £90 to
your creditors. This means by the time your administration order is finished, you will have paid
more than your total debt at the point it started.

Advantages
Interest and charges are stopped.

The creditors must stop contacting you with demands for payment, and they cannot take any
further action unless the court gives them permission to do so.

You only have to make one monthly payment rather than one payment per creditor per
month.

You can apply for a composition order, which means the administration order is stopped,
and part of the debt is written off. The court may agree to this if it would take a very long
time to repay your debts in full. A composition order normally writes off any remaining debt
after you’ve made payments for three years.

The administration order is binding on you and your creditors, but if your circumstances
change, you can ask the court to change the amount you pay.

Disadvantages
The order can be cancelled if you don’t make the payments. Your creditors will then be able
to contact you directly again to collect the debt, interest and charges can be added and legal
action can be taken.

The administration order appears on the public Register of Judgments, Orders and Fines for
six years from the date the order was made. The information will also appear on your credit
file for six years.

5
Risks
If you’re working, the court can take the payment directly from your wages, meaning that your
employer will find out about the order. This is known as an ‘attachment of earnings order’.

Creditors can ask the court to leave them out of an administration order or increase the
payment. However, the court makes the final decision, taking your circumstances into account.

Bankruptcy
Bankruptcy is a legal process where most of your debts are written off after a year. You can
apply for bankruptcy anywhere in the UK, but the process differs depending on where you
live. Bankruptcy in Scotland can also be known as sequestration or minimal assets process.

A trustee, either a civil servant or an insolvency practitioner, will take over control of your
finances and assets (items of value that you own), and contact all of your creditors. You may
need to make payments to the trustee or sell valuable assets.

To apply, you must provide full details of your income, spending, debts and assets. Your
application may be rejected if you can afford to keep up with the repayments on your debts.

Cost
England and Wales: £680 fees which must be paid before the application is submitted.
Northern Ireland: £647 fees which must be paid before the court hearing.
Scotland: £200 before the application is submitted, unless you’re eligible for the ‘minimal
assets process’ which is £90.

Advantages
You’ll be free from debt after a year (six months under the minimal assets process in
Scotland) which allows you to make a fresh start after only a year.

Once the application has been approved, creditors included in your bankruptcy can’t take
further legal action to recover the debt. Almost all types of debt are included in
bankruptcy.

You can get a bankruptcy order even if you own a property. If there’s little or no equity, or
you have a spouse or relative who can buy your share of the equity, you may be allowed to
keep it.

Disadvantages
The bankruptcy is registered on a public individual insolvency register. It’ll also appear on
your credit file for six years.

Not all debts are included. You will still have to pay:
• Child maintenance arrears (in Scotland these are included in bankruptcy)
• Criminal fines
• Debts due under family proceedings for divorce or maintenance cases
• Social fund loans
• Student loans
• TV licence arrears
6
 • Fraudulent debts, for example benefit fraud

If you live in England, Wales or Northern Ireland, you cannot borrow £500 or more without
telling the lender that you’re bankrupt. In Scotland the limit is set at £2,000.

You may have to make a monthly payment to the trustee for up to three years (four years in
Scotland). The amount you can afford is based on your available income after your
household bills and essential living expenses are accounted for.

The trustee can sell any assets you have to raise money to pay to your debts. Assets they
may sell include any property you own with equity, and cars over a certain value. Some
assets can’t be taken from you, such as tools needed for work and ordinary household
goods.

If the trustee finds you have acted dishonestly or carelessly before your bankruptcy, the
restrictions applied during your bankruptcy can be extended for up to 15 years.

Risks
If you’re self-employed and rely on credit to run your business, you may not be able to continue
doing this, so your business could be at risk.

You’re barred from some professions and roles while bankrupt. This may affect your
employment. For example, you can’t be a company director while bankrupt.

If any of your debts have a guarantor or are in joint names, the other person will be responsible
for paying the remaining balance owed.

Any assets you acquire in the 12 months following your bankruptcy (and up to five years after
your bankruptcy is awarded in Scotland) may be taken by the trustee.

Debt Management Plan (DMP)

A debt management plan is available throughout the United Kingdom. You can arrange a
debt management plan through StepChange Debt Charity, or you can arrange repayments
directly with creditors yourself.

Whichever option you choose, a realistic budget is always the starting point. This will tell you
how much you can realistically afford to pay your creditors.

A DMP can be used to pay all the unsecured debts you owe.

If you choose to do a DMP with us, we’ll help you set a realistic budget, negotiate with your
creditors and disburse your available funds to the creditors for you.

If you choose to negotiate yourself, you’ll be responsible for contacting your creditors and
paying each creditor your proposed payment each month.

Cost
Free with StepChange Debt Charity.

7
Advantages
A DMP is flexible arrangement which is tailored to your individual needs and can be adapted
to accommodate changes to your circumstances.

Your creditors understand the difficulties faced by their customers and are used to
dealing with StepChange Debt Charity, other debt management plan providers and
individuals.

You only make one monthly payment rather than one payment per creditor if you arrange a
debt management plan through StepChange Debt Charity or another DMP provider.

If you’re making the arrangement through StepChange Debt Charity or another DMP
provider, your creditors are contacted on your behalf.

Disadvantages
Your creditors can still contact you directly.

A DMP is not binding on your creditors.

Your creditors don’t have to agree to the payment amount they’re offered, however they
shouldn’t refuse or return the payments sent to them.

You’ll have to repay all the debt you owe. A DMP doesn’t write off any of the debt you owe.

Risks
Your creditors may start or continue legal action while the DMP is in place. This includes
registering a default on your credit file and applying to the court for a judgment. If a creditor has
already gone to court, the DMP won’t prevent further legal action.

Your creditors may continue adding interest and charges, which would mean it’ll take longer to
repay the debt.

Debt Payment Programme (DPP) under the Debt Arrangement

Scheme (DAS)
This option is only available if you live in Scotland.

A DPP under the Debt Arrangement Scheme is a Scottish Government-approved debt

payment scheme. It helps you repay your debts at a manageable rate and in a reasonable
period. Payments are proposed to your creditors based on what you can realistically afford,
and if these are agreed, interest and charges are stopped and you’ll be protected from legal
action.

Only an approved money advisor can recommend and set up a DPP under the Debt
Arrangement Scheme.

A DPP will include all debts you owe, including priority debts.

8
Cost
The Accountant in Bankruptcy (AiB) takes a fee of 2% from your weekly or monthly payment
and your payment distributor takes a fee of 8%. This is to cover the distributions costs of the
DPP. You don’t have to make any extra payments to cover this as it’s taken out of the amount
paid into the DPP.

Advantages
Interest and charges are stopped.

The creditors included in your DPP can’t take further legal action to recover the debt.

You only have to make one monthly payment rather than one payment per creditor.

The arrangement is binding on all parties and if your circumstances change, your continuing
money advisor can vary the amount you pay.

Disadvantages
A DPP is recorded on the public DAS register for as long as it’s in place.

Risks
Your creditors have the option to reject a DPP proposal.

If the DPP fails or is revoked, creditors can take legal action or begin adding interest and
charges again.

Debt Relief Order (DRO)

A debt relief order is a legal process designed to help people with debts less than £20,000
who only have a small amount of available income to pay their debts. It has a very similar
effect to bankruptcy.

Eligibility criteria
You can apply for a DRO if:
• You live in England, Wales or Northern Ireland
• Your total debt is no more than £20,000
• You have less than £50 a month left over after your household bills and essential
living costs, and
• Your assets (items of value you own) must be worth less than £1,000 in total. Some
assets are not counted, for example essential household items, tools needed for work
and a car as long as it’s worth less than £1,000.

You can’t have a debt relief order if you own a property, even if it has no equity.

The debt relief order lasts for 12 months and as long as you still meet the eligibility criteria at
the end of this period, the debts included in the order are written off.

The order has to be arranged by an approved intermediary who will prepare your
application and submit it on your behalf.

You can’t have a debt relief order if you’ve had one in the previous six years.
9
Cost
£90 to be paid to the Insolvency Service before the application is approved.

Advantages
You will be free from debt after one year, after which you can make a fresh start.

After the order has been approved, you don’t make any further payments to the creditors
included in it

Once the order has been approved, your creditors can’t take further legal action to recover
the debt. The fee is much cheaper than standard bankruptcy.

You can keep the assets you have.

Other debts such as rent arrears, council tax, water, electricity and gas arrears are also
written off.

Disadvantages
The DRO is registered on a public individual insolvency register. It’ll also appear on your credit
file for six years.

Not all debts are included. You’ll still have to pay:

• Child maintenance arrears
• Criminal fines
• Debts due under family proceedings for divorce or maintenance cases
• Social fund loans
• Student loans
• TV licence arrears
• Fraudulent debts, for example benefit fraud

You can’t borrow £500 or more without telling the lender you have a debt relief order.

If the Insolvency Service identifies you have acted dishonestly or carelessly before the debt
relief order, the restrictions applied during your debt relief order can be extended from two to
15 years.

Risks
If you’re self-employed and rely on credit to run your business, you may not be able to continue
doing this, so your business could be at risk.

You’re barred from some professions and roles during your debt relief order. This may affect
your employment. For example, you can’t be a company director for twelve months.

If any of your debts have a guarantor or are in joint names, the other person will be responsible
for paying the remaining balance owed.

Your creditors can continue to add interest and charges until the end of the debt relief order. If
it’s revoked before the end of the 12 months, you may owe more than you did when you first
applied for the debt relief order.

10
Equity Release
Equity release is an option if you’re a homeowner aged 55 and over and you can release
some of the money tied up in your home. It’s available throughout the United Kingdom.

You can release some of the equity in your home to provide a tax-free cash lump sum, a
regular income or a flexible borrowing reserve, without the need to move. How much you
can release varies between providers but usually depends on how old you are, the value of
your home and the type of plan you choose.

StepChange Debt Charity has qualified advisors who can give you free and impartial advice
about your options.

Cost
There are no charges for the advice we give, but there are charges involved in the
arrangement of any equity release product you choose. The cost will vary depending on the
product you choose.

You’ll always be given the costs and key facts about the products before you decide to go
ahead.

Advantages
You can release money from your property without having to move. There are a number of
products available to suit your circumstances.

You may be able to pay off your full debt with your equity.

You’re guaranteed to be able to live in your property for the rest of your life. This is until the
last person has died or moved into a long-term care home.

Disadvantages
The amount of equity in your home is reduced.

The income gained from equity release may affect your entitlement to welfare benefits.

Risks
The amount you can release may not pay off all your debt and you may have to find another
way to repay the remaining debt.

Certain equity release products have compound interest. This means that if you can’t pay the
interest on a monthly basis, it will accumulate and payment is made using your equity.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding arrangement set up by an insolvency practitioner on your behalf.
They negotiate with your creditors to arrange partial repayment of your total debt with either a
monthly payment and or a lump sum of money. Monthly payments are usually made between
60 to 72 months at an amount you can afford. At the end of the IVA, the creditors write off any
remaining debt.

11
An IVA normally only includes unsecured debts. Priority arrears are not usually included as
an IVA won’t prevent them taking further action. For example, if you have mortgage arrears
and they were included in the IVA, you’d lose your home.

This option is only available in England, Wales and Northern Ireland. In Scotland, there’s a
similar option called a ‘protected trust deed’.

Cost
The insolvency practitioner will charge you to set up the arrangement and to administer it. You
should be told clearly how much you’ll be charged before you decide to go ahead with the
arrangement.

Advantages
Once the IVA has been approved, all your creditors are bound by the terms, even if they
didn’t agree to it.

The creditors included in your IVA can’t add interest or charges, and they can’t start legal
action. Unlike bankruptcy, an IVA will normally allow you to keep assets such as your home
and car.

You only have to make one monthly payment, rather than one payment per creditor.

Your insolvency practitioner can alter your IVA payments or agree to a short payment break if
your circumstances change.

At the end of the IVA, the creditors write off any remaining debt.

Disadvantages
The IVA in your name is registered on a public individual insolvency register. It’ll also appear
on your credit file for six years.

If you have equity in your home, you’ll probably have to use some of the equity towards the
arrangement, usually by re-mortgaging towards the end of the IVA. If you’re unable to
release this equity, you may have to make extra payments.

Risks
If your circumstances change and you’re unable to pay, your IVA may fail. Your creditors
can then resume contacting you, adding interest and charges, or taking legal action.

If the IVA fails, you may be made bankrupt by your creditors.

The completion of the IVA may be delayed indefinitely if you don’t cooperate with the
insolvency practitioner. Your IVA won’t be removed from your credit file until the insolvency
practitioner confirms it has been completed.

12
Protected Trust Deed (PTD)
A PTD is only available in Scotland. It’s a legally binding arrangement set up by an insolvency
practitioner on your behalf. They negotiate with your creditors to arrange partial repayment of
your total debt with either a monthly payment and or a lump sum of money. Monthly payments
are usually made over 48 months at an amount you can afford. At the end of the PTD the
creditors write off any remaining debt.

A PTD will include all debts you owe, including priority debts.

Cost
The insolvency practitioner will charge a set price for their services and the amounts will be
given to you before you decide to go ahead with a PTD. The fees are taken from the monthly
payments you make to the insolvency practitioner and the money raised if any of your assets
are sold.

Advantages
Once the PTD has been approved, all your creditors are bound by the terms, even if they
didn’t agree to it.

The creditors included in your PTD can’t add interest or charges, and they can’t take
further legal action to recover the debt.

You only have to make one monthly payment rather than one payment per creditor.

Your insolvency practitioner can alter your payments or agree a short payment break
if your circumstances change.

At the end of the PTD, the creditors write off any remaining debt.

Disadvantages
The PTD is registered on the public Register of Insolvencies. It will also appear on your credit
file for six years.

There are no guarantees that you’ll be able to keep your assets, including your home or car.

Risks
If your circumstances change and you’re unable to pay, your trust deed may fail. Your
creditors can then resume contacting you, adding interest and charges, or taking legal
action.

If the trust deed fails, you may be made bankrupt by your creditors.

Selling Your Home

Selling your home and moving to another one is a big step, but it can allow you to clear your
debts more quickly and make a fresh start.

Paying the debt off early is likely to save you money by reducing the amount of interest
and other charges you would normally pay if you were only making the minimum
payments.

13
Moving home can have a big impact on your home and family life, and all of these should be
considered when deciding when and where to move.

Cost
There are costs involved in selling your home such as valuation, estate agent and
solicitor’s fees, moving costs.

Advantages
If you have enough equity in your home you may be able to clear your debt in full, giving you
a fresh start.

If you move to a more affordable property, you can increase your available income as bills will
reduce.

Disadvantages
It may take time to sell your home and you’ll still have to pay your creditors something until
you have the funds available.

Until you’ve cleared your debts, your creditors can still take legal action against you.
Therefore even if you tell them your intention to sell your home to repay your debt, it won’t
prevent your creditors taking action against you.

Risks
Your home may not sell for as much as you think it’s worth.

Even if you intend to use the equity to partially settle your debts, your creditors may not agree
to write off any of your debt, and may not tell you this until after you’ve sold your home.

After paying the costs, you may not get the amount of money you need to pay off all your
debts.

Token Payment Arrangement

A token payment arrangement is a type of debt management where you’re only able to
afford a very small payment each month to pay your creditors. A token payment is viewed as
evidence you’re willing to pay but, because of changes to your circumstances, you can’t pay
the amount you should. The amount usually paid in these circumstances is £1 per month to
each creditor.

Similar to a debt management plan, you can arrange a token payment arrangement with us
or you can arrange repayments directly with creditors yourself. It’s available to anyone living
in the United Kingdom.

Whichever option you choose, a realistic budget is always the starting point. This will tell you
how much you can realistically afford to pay your creditors.

If you choose to do a token payment plan with us, we’ll help you set a budget, propose the
token payment with your creditors and disburse your available funds to the creditors for you.

If you choose to negotiate yourself, you’ll be responsible for contacting your creditors and
paying each creditor your proposed payment each month.
14
Another alternative, if you don’t feel you can afford £1 per debt, is to ask them for a payment
break. This means you ask them to accept no payment from you for a period of time, usually
up to six months.

Cost
Free with StepChange Debt Charity.

Advantages
Your creditors should understand the difficulties faced by their customers and are used to
dealing with StepChange Debt Charity, other debt management plan providers and
individuals.

If you choose to make the arrangement through StepChange Debt Charity, you only have to
make one monthly payment rather than one payment per creditor, and we contact your
creditors on your behalf.

The arrangement is not binding on either party. If your circumstances change, you can change
the payment amount as long as your budget is still realistic.

If your creditors accept a payment break then you don’t have to pay anything for the agreed
period of time.

Disadvantages
This option doesn’t repay your debt; it’s a temporary arrangement to give you the
breathing space you need to improve your circumstances.

Your creditors can still contact you directly.

The arrangement is not binding on your creditors.

Your creditors don’t have to agree to the payment amount they are offered, however they
should not refuse or return the payments sent to them.

Risks
Your creditors may start or continue legal action. If a creditor has already gone to court, the
arrangement won’t prevent further legal action.

Your creditors may continue adding interest and charges, which would mean it’ll take longer to
repay the debt.

It may take time for your circumstances to improve, meaning an insolvency option may be
better for you in the long term, especially if the improvement you were expecting is delayed.

Using Your Assets

You can consider selling or realising any assets you have to help clear your debt. This option is
available to anyone who has any assets of value that can be sold to help repay some or all of
their debt.

15
Assets are anything of value. They can include jewellery, vehicles, property, savings or
electrical and technological devices. If it has a value and you can live without it, then you could
sell the item or cash it in if it’s savings, to pay your debts.

Paying the debt off early is likely to save you money by reducing the amount of interest
and other charges you would normally pay if you were only making the minimum
payments.

Even if your assets aren’t worth as much as the debt you owe, some creditors may accept a
lump sum of money to settle the debt.

Cost
There may be costs involved such as advertising the sale of your assets or penalties for early
redemption of savings.

Advantages
If you can raise enough money you can completely pay off your debt, giving you a fresh
start.

If your creditors agree to a partial settlement, they’ll agree to write the remainder off and you
won’t have to pay more later on.

The amount of money you can save by paying your debt off early is most likely to be more
than the amount your assets will increase in value over the same period.

Disadvantages
It may take time to sell your assets and you’ll still have to pay your creditors something until
you have the funds available.

If a creditor agrees to a partial settlement, it is recorded on your credit file and it stays on there
for six years, which may affect your ability to borrow money in the future.

Until you’ve cleared your debts, your creditors can still take legal action against you.
Therefore even if you tell them your intention to sell your assets to repay your debt, it won’t
prevent your creditors taking action against you.

Risks
After paying the costs, you may not get what you think your assets are worth and you may
not have enough to pay off all your debt.

Even if you intend to use the sale of the asset to offer a partial settlement of your debts, your
creditors may not agree to write off any of your debt, and may not tell you this until after
you’ve sold your asset.

16
Which option should I choose?
There are many factors to weigh up when deciding which options are best for your situation.

First, think about how much you can realistically afford to pay your creditors and if this amount
is going to change in the future. This should give you some idea how long it would take you
pay off your debts at a manageable amount.

You can then decide whether this is realistic, or whether you need to consider an option which
writes off part or all of your debts.

Some of the key questions to ask yourself when choosing any option are:
• Can I repay the full amount I owe in a reasonable time? What’s reasonable for me?
• Will my circumstances improve?
• Will my assets be affected? Do I need to protect my home? Is there equity?
• Will my job be affected?
• Will the option I choose include all my debts?
• Will the option I choose have a significant impact on my family?
• Do I need to continue using credit?
• What are my future plans? For example, do I plan to buy a property, retire, start
a family or change jobs in the next few years?

Where can I find out more information?

For information on all options for solving debt problems www.GOV.UK

For information on all financial matters www.moneyadviceservice.org.uk
For residents of Scotland www.aib.gov.uk
For residents of Northern Ireland www.economy-ni.gov.uk

17
Your Debt Advice Guide
We are the UK’s leading debt charity. Every year, we help thousands of people
overcome their debt problems.
Because we are a charity, our advice is completely free. Many debt management
companies charge for their services and they make profits from handling your debt
problem.
With us, however, you can be assured we will always give you the help and support
that's in your best interest.

Take control of Your personal action plan gives you specific advice
that’s tailored to your situation. It gives you a complete

your finances
When debts get out of control, it’s often difficult
to know where to turn. Worry and stress can
make it difficult to think clearly and make the
right decisions. That’s why we’re here to provide
the expert and impartial advice that you need.
You might owe money to lots of different
companies. They might be banks, loan
companies, energy companies – maybe all
pursuing you for money at the same time. They
might even be threatening you with legal action.
But being in debt is not a crime.
And you should never feel pressured into
repaying more than you can afford.
The important thing is not to panic or bury your
head in the sand. There is a way out
of this. And we can help.
summary of your financial position now and the actions
you need to take to improve things. This guide gives you
general advice and tips on dealing with debt problems
and managing your money.
Please take time to read your personal action plan
carefully, and, where we have outlined actions to take,
try to take them.
Some other steps to take:
Stay calm and think things through
Debt problems are never solved overnight.
Take time to sort things out. Just by contacting
us and reading through our advice, you will
be able to clear your head and organise your thoughts.
Remember, if you need further help,
we’re here to support you.
Share your problems
If you feel that you can, consider sharing your problem
with someone who’s close to you.
Talking about it may relieve a lot of stress.
It may also help you work things out and give

Your next step? you more practical ideas about dealing with debt.

Just follow our advice

By contacting StepChange Debt Charity, you’ve already
taken the first important step in your financial recovery.
You are
Your next step is to follow the advice that we have not alone –
provided in this pack.
we’re here
to help you
Improving your
financial situation
In your Personal Action Plan, we’ve given you tailored advice to help you with your
current financial problems. Being more careful in the way that you manage your
money will bring long-term benefits too.
Reducing your
spending
If you’re already cutting back on your spending,
you’re doing the right thing. But could you do
more? We may have highlighted areas where you
can look to save money. Here, though, are some
general points to consider. If you haven’t already
made a conscious effort to reduce your spending,
now’s the time to do it.
Shopping
If you plan your shopping and work to a budget, you are less
likely to make impulse buys or spend more than you want to.
• While you should never cut back on essential food items,
there are cheaper brands or supermarket own-label
products that offer good value.
• Use a shopping list and stick to it.
• Consider switching to a cheaper supermarket
• Look out for special offers and coupons, and remember to
use them
• There might be reduced grocery items available at the end
of the supermarket day.
Utilities
Gas and electricity
Are you getting the best deal on your gas or electricity?
It might be that by switching your current provider, you could
reduce your bills. Go online to see what’s possible. You can
compare, switch and save using any utility switching service
that’s signed up to OFGEM’s confidence code.
If you stay with your current provider, there are other ways
you could save money. Most companies offer a discount for
paying by direct debit.
Or if you have gas and electricity from the same supplier,
you could get a ‘dual-fuel’ discount. Contact your supplier to
see if that’s available to you.
Maybe you can reduce your energy consumption. There are
many ways you can do this, such as using loft and cavity
wall insulation. There may be free offers available. Visit
www.energysavingtrust.org.uk
Water
If you are a low water user, it might be cheaper to have a
water meter fitted. There are also water saving devices that
can be used in the home. Contact your water company to
find out more.
Telephone, satellite and internet
These bills can really add up. So it’s really worth reviewing
the package that you are on to make sure that it offers the
best value available. Check with your current provider, shop
around or use comparison sites. Here are a few ideas for
cutting costs:
• Change to a combined phone, TV and broadband
package to get a better deal.
• Think carefully about what you really need. If you can live
without those extra TV channels, for example, you can
make substantial savings.
• Cancel your mobile phone contract and start using a pay-
as-you-go phone so you can control how much you
spend.
Housing
Moving home is probably a last resort, but as one of your
largest monthly bills is usually your rent/mortgage, is it worth
thinking about downsizing or moving to a cheaper property?
Increasing your
income
Finding ways to boost your income is not always
easy. But if you’re able to work, don’t give up.
Keep looking for opportunities that could
improve your situation. If you’re already in work,
could you increase your hours or take on a
second job?
A few other things to consider
• Are you claiming all the benefits that you’re entitled to?
• Could you rent a room to a lodger?
• Could you get a friend to move in and share the bills?
Tackling your debt
Ideally, everyone who borrows money should do everything they can to repay it.
Sometimes though, the situation can be so severe that repaying the full amount simply
isn’t possible. Whatever your circumstances, we’re here to do what’s best for you and
work out what you can afford. There are some actions, however, that you need to take
first. So check your personal action plan and follow our advice below.

What to pay first

When tackling debt, it’s important to know which debts you should pay first. Priority debts are the ones
that carry the most serious consequences if not paid. It’s not the size of the debt that’s the most
significant factor here, but what can happen if you don’t pay. Your personal action plan shows you
what you pay each month on these. If you do fall behind with any of your priority debts, talk to us. We
can help.

This table shows what your priority debts are:

Priority debts Result of non-payment

Mortgage

Rent Losing your home

Secured Loans

Council Tax or Rates

Court Fines A visit from bailiffs, deductions

taken from your salary or
Tax, VAT or National Insurance imprisonment
Court Judgments/decrees

Child Maintenance A fine, deductions taken from

your salary or imprisonment
TV Licence

Gas, Electricity or Other Fuel

Hire Purchase Loss of goods or services

Telephone

Paying what you can

afford
Don’t be pressured
to make higher
Your budget shows to what extent you can manage everyday
payments than you
living costs and priority debts. What’s left over is what you can
can afford
pay to your non-priority creditors.
Do not use the money set aside for your priority household
bills to pay your non-priority creditors. Falling behind with your
mortgage has far more serious consequences than falling
behind with your credit card.
Actions that creditors
might take
If you’re behind on your payments, it’s only natural that your creditors will want to try
to persuade you to continue or even increase your payments to them. By knowing
your rights and responsibilities you’ll be better prepared if they do contact you.
If you are behind with your payments, your
creditors might take a number of different
actions to recover the money owed to them.
You need to be prepared for the time when your
creditors might increase pressure.
Your credit rating
Your personal action plan explains how your credit rating
may be affected, and how it may affect you obtaining
credit and other financial services in the future.
Default notices
Usually, if you are two to three months in arrears, your
creditor will send you a default notice. This is the last
chance you have to clear your arrears before they can
end the original agreement.
At this point you can still arrange to make a reduced
payment. If they accept your offer, they can still send
a default notice to you, but you are still responsible for
paying the debt in full.
When they have ended the agreement, your creditor can
use a collection agency or solicitor to help them recover
the debt. The creditor may add any additional costs
incurred in the collection process to your debt.
Actions solicitors and debt collection
agencies can take
If you receive a letter from a solicitor or debt collection
agency, don’t panic, but don’t ignore it.
Any letters that you receive might be threatening and
mention court action. But solicitors and collection
agencies have no more legal powers than your original
creditor to force you to pay.
Debt collectors are not bailiffs, and home visits are rare.
But if a collector does call, you don't have to let them into
your home. You can still offer a reduced payment and
show your budget and list of creditors.
If you get a court letter, you can still offer to make a
reduced payment to the creditor. Simply complete the
details on the forms they send to you, using the figures
from your budget. If the creditor doesn’t accept the offer,
the court will decide what payment you should make.
If there’s anything you’re unsure of, or you need our help,
just give us a call on 0300 303 5666. We can talk you
through what happens and what you should do.
Harassment
Creditors and their collection agencies are allowed
to make reasonable contact to collect the debt owed
by you. If they call or visit you at work or call late at
night, this is harassment, and you can complain to
the creditor and the Financial Ombudsman Service.
Their details can be obtained from
www.financial-ombudsman.org.uk
Together, we can solve
your debt problems
It’s often difficult to see a way out of severe financial problems. With our support,
and the vast experience we have in dealing with problems like yours, we can resolve
issues that, at times, might seem impossible. You’ve already taken the important first
step of asking for our help.
We help thousands of people every day, Listen to what some of them say about us.
Their words are even more meaningful than ours.

"I have already referred friends to the

charity as it has helped me get my life
back on track and I am so grateful."
Clare, Cleveland

"My depression has lifted and I

can sleep knowing that my
problems are under control."
Deborah, Gloucestershire

Your next steps

Recognising that you’re in financial difficulty is the first step towards addressing problem debt. It’s also one of the
hardest. By getting in touch with us you’ve already taken a huge step towards a debt-free future. But what you do next
is just as important.
It’s only natural to feel a little daunted at the start of a journey like this. But we’ll be with you every step of the way. The
personal action plan included in this pack sets out what you need to do next.
And if there’s anything you’re not sure of, just give us a call.

For more information

Call: 0300 303 5666
Monday to Friday 8am to 8pm
Saturday 9am to 4pm
Calls cost no more than those to geographic numbers (01 or 02) and will be free in most ‘inclusive minutes’ or ‘discount’ schemes. The cost for calls
made outside of inclusive minutes or discount schemes can vary, so please check with your landline or mobile provider.
Online: www.stepchange.org
StepChange Debt Charity, Wade House,
Merrion Centre, Leeds LS2 8NG

If you’d like more information on debt, budgeting or money management, visit our website and MoneyAware blog. We’re
also on Twitter and Facebook as MoneyAware. You can hear more about the latest news, client success stories and the
lighter side of money.
If you gave us your email address, you’ll receive the first of our MoneyAware newsletters soon. Or you can sign up to
receive it on our website.
How we handle complaints
We’re committed to providing you with an excellent standard of service. Your confidence and trust
are important to us, so if you’re unhappy with the service you’ve received from us we want to
work with you to resolve it as quickly and effectively as possible.

Help us to help you

If you’re unhappy with any aspect of our service please tell us so we can investigate. To do this,
call us, email us, or write to us using the contact details below.

Please give us as much information as possible and tell us how you'd like us to resolve it.

What happens after I’ve sent my complaint?

When we receive your complaint, we’ll aim to resolve it as quickly as possible and, where this has
been agreed with you, we’ll confirm this in writing. In the unlikely event we’re unable to resolve your
complaint within four working days, we’ll:

• Let you know in writing that we need more time to investigate

• Investigate your complaint and aim to respond within four weeks. If we’re unable to do this,
we’ll send you an update.
Our aim is to send a final response within eight weeks of a complaint. If this isn’t possible, we’ll
write to explain why and tell you when we will be able to respond.

In the unlikely event we take more than eight weeks to send a final response, or you don’t think
we’ve resolved your complaint, you can contact the Financial Ombudsman Service free of charge.

You must refer your complaint to the Financial Ombudsman Service within six months of the date
on our final response.

Contact information

Financial Ombudsman Service

complaint.info@financial-ombudsman.org.uk

0800 980 2287 0800 023 4567 or 0300 123 9123

Financial Ombudsman Service

Exchange Tower
London
E14 9SR

www.financial-ombudsman.org.uk