Repay the debt
Clients with available income can make a repayment offer
(which they can realistically meet). Creditors should be asked to
freeze any interest.
‘Park the debt’
Clients with very little available income can make
a nominal/token repayment (e.g. £1), or request payment
suspension.
‘Full and final’ repayments
Creditors may accept lump sum offers smaller than the original
debt.
Write-off of the debt
Creditors have written-off debts where clients have mental
health problems, but this is not standard practice.
Debt management plan
Where a single monthly payment is made to a debt management
agency which administers payments to multiple creditors (sometimes
for a fee).
Bankruptcy.
An option if a large amount is owed and the client doesn’t own
any assets. Bankruptcy lasts for up to 1 year (with restricted
access to financial services). After this debts are usually
written off. However, the bankruptcy is registered with credit
agencies for 6 years, and can hinder the future use of financial
services.
IVAs
In England, ‘Individual Voluntary Arrangements’ involve clients
paying agreed amounts over short periods (typically 3-5 years). The
remaining debts are written off. An option if sizeable
payments can be made.
Debt Relief Orders (DROs)
In England, a form of insolvency for people with very low
incomes/very few assets. Only accredited money advisers can apply
for a DRO.
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