Hello Dear Reader,

I’m writing this because June might be the month when you can’t keep up appearances any more! This might be the month where you come clean with your creditors, your family and yourself about what you can afford to pay and what you can not afford to pay. If you have lost your job, if you have been made redundant and you are still job hunting then this is the post for you.

You’ve got debts haven’t you. You have more going out than you can manage. You are eating less food, you can’t afford to get the MOT done on the car, your insurance policies can’t be renewed and you often miss a mortgage or rent payment. This is you? To start, I want you to be honest. I want you to admit that these debts have weighed you down, have made your miserable, have caused you to lose sleep, have resulted in you on medication and your family life is suffering. This is you?

If you think your situation is genuinely temporary then you could contact your bank, credit card company/ies in writing and tell them about your situation. Banks, credit card companies and utility companies have helpline numbers where you can discuss your situation. You may find this really difficult and you may feel anxious about this but being honest is the first step to getting help.You may be able to follow advice I’ve given this week and take control of your debts yourself. However, you may be getting by on benefits/welfare and the phone keeps ringing, the letters keep coming and the next step is a county court injunction and the bailiffs will be pounding on your door.

If I’m talking to the right person, then you haven’t got any money to give the courts, the bailiffs and you’ve already sold anything you have. You can’t do any more and God knows you’ve tried. I’m going to try and help anyone navigate their way through the legal minefield of Debt repayment when you haven’t go a hope in hell’s chance of paying them back! There are plenty of routes but any journey across a minefield is precarious . Here are your options.

Debt Management Plans - A Debt Management Plan is an agreement between you and your creditors to pay
all of your debts. You make regular payments to a licensed debt management company. The company then shares this money out between your creditors.

Get a Debt Management Plan

1. Only set up a plan with a company licensed by the Office of Fair Trading. Find a licensed debt management company.
2. The company works out your monthly payments. You’ll have to give details about your financial situation. For example, your assets, debts, income and creditors.
3. The company contacts your creditors and asks them to agree to the plan (they don’t have to).
   
   

   Costs

   Some companies will charge:
   • a set up fee
   • a handling fee each time you make a payment
   Make sure you understand the costs of your plan.

   Eligibility

   Debt Management Plans can only be used to pay ‘unsecured’ debts – for example, debts that haven’t been guaranteed against your property.

   Your responsibilities

   Your plan can be cancelled if you don’t keep up your repayments.
   
   
   Citizens Advice, the National Debtline or StepChange Debt Charity can tell you if a Debt Management Plan is right for you.
   
   
   

   Administration orders

   If you have a county court or High Court judgment against you, which you can’t pay in full, an administration order is a way to deal with the debt.
   The debt must be less than £5,000.
   You make one payment a month to your local court. The court will divide this money between your creditors.
   Citizens Advice, the National Debtline or StepChange Debt Charity can tell you if an administration order is right for you.

   
   

   

   Get an administration order

   To apply, fill in an application for an administration order (N92), and return it to your local court.
   The court decides:
   • how much of your debt you have to repay – for example, all or just part of it
   • how much your monthly repayments will be
   • how long the arrangement lasts
   If you can’t pay all your debts the arrangement is known as a ‘composition order’.

   Costs

   There’s a court fee each time you make a payment. This can’t be more than 10% of your debt.
   ExampleIf you owe £5,000 the total fee can’t be more than £500.

   Eligibility

   You must:
   • owe less than £5,000, including any interest and charges
   • owe money to at least 2 creditors
   • prove you can afford your repayments - for example, give details of your income
   • have a county court or High Court judgment against you, which you can’t pay in full

   Your responsibilities

   You must keep up your repayments or the court can:
   • take money from your wages – known as an ‘attachment of earnings order’
   • cancel the arrangement.
   • 
     
     

     Individual Voluntary Arrangements

     An Individual Voluntary Arrangement is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an ‘insolvency practitioner’, who will divide this money between your creditors.
     Citizens Advice, the National Debtline or StepChange Debt Charity can tell you if an Individual Voluntary Arrangement is right for you.
     

     
     

     Get an IVA

     1. You can only get an Individual Voluntary Arrangement through an insolvency practitioner - find an insolvency practitioner.
     2. Your insolvency practitioner works out what you can afford to repay and how long the Individual Voluntary Arrangement lasts. You’ll have to give details about your financial situation. For example, your assets, debts, income and creditors.
     3. Your insolvency practitioner contacts your creditors. If those holding more than 75% of your debts agree to the Individual Voluntary Arrangement it will start. It will apply to all your creditors, including any who disagreed to it.

     Costs

     There are usually 2 fees:
     • a set up fee
     • a handling fee each time you make a payment
     Make sure you understand the costs before asking an insolvency practitioner to act for you.

     Your responsibilities

     Your Individual Voluntary Arrangement can be cancelled if you don’t keep up your repayments.
     

     5. Debt Relief Orders

     Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £15,000, have little spare income and don’t own your home.
     If you get one:
     • your creditors can’t recover their money without the court’s permission
     • you’re usually freed (‘discharged’) from your debts after 12 months

     Get a Debt Relief Order

     You get a DRO from the Official Receiver (an officer of the bankruptcy court), but you must apply through an authorised debt adviser. They’ll help you fill in the paperwork.
     To find an authorised debt adviser contact Citizens Advice,the National Debtline or StepChange Debt Charity.

     Costs

     The Official Receiver’s fee is £90. Your debt adviser can tell you how and when to pay it.

     Eligibility

     You’re generally eligible if all the below apply - you:
     • owe less than £15,000
     • have less than £50 a month spare income
     • have less than £300 worth of assets
     • have lived or worked in England and Wales within the last 3 years
     • haven’t applied for a DRO within the last 6 years

     Restrictions

     If you get a DRO you must follow rules called ‘restrictions’. You can’t:
     • borrow more than £500 without telling the lender about your DRO
     • act as the director of a company
     • create, manage or promote a company without the court’s permission
     • manage a business without telling those you do business with about your DRO

     When do the restrictions end?

     Check the Individual Insolvency Register to see when the restrictions end.
     The restrictions usually last 12 months. They can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.
     The Official Receiver will tell you if they should be extended. To extend them, you’ll be asked to agree to a Debt Relief Restrictions Undertaking. If you don’t agree, the court can issue a Debt Relief Restrictions Order.

     What you need to know

     DROs can be cancelled if:
     • your finances improve
     • you don’t co-operate with the Official Receiver - eg give them information they ask for
     Your DRO is added to the Individual Insolvency Register - it’s removed 3 months after the DRO ends.
     Your DRO will stay on your credit record for 6 years
     All information available from http://www.gov.ukhttps://www.gov.uk/options-for-paying-off-your-debts/fast-track-voluntary-arrangements
     
     
     Get free help and advice for debt problems from:

Dear Reader, I hope you don’t mind but I’ve spent a few hours reading around the topic and I wanted to signpost where people can get help if they just can’t cope with debts any more. If you have lost your job and have been out of work for a while and you owe money, then face up to the reality that you can’t afford to pay it. It’s not nice and I can assure you that I am not being flippant and you are in my prayers.

I will be on Radio Cornwall tomorrow and I hope you can email in your debt stories, your queries or requests for advice or any advice you can give to help people get out of debt. Send your emails to [email protected] - titled - for Frugal Queen by 11am GMT tomorrow and we will get through as many as we can on the programme. If you have used any of the methods I have listed or any of the debt advice charities, then drop an email to Radio Cornwall and we can share that with others. Your story might be the support that someone in debt needs.

I know that so many of you are really struggling. Next week, I will focus on food budgets, shopping, planning, shopping lists and I need spies all over the world! Where do you live? Where is it affordable to shop where you live? I want to know about Op shops, Thriftstores and charity shops where you are. I want to know where the markets are, where the butchers are, where the supermarkets are. Who’s got the links to coupons? Who picked up a bargain and can share where before it’s all gone.

Until tomorrow, please email into [email protected] with your debt stories and I will do my best to give advice to anyone who phones in 01872 22 22 22. You don’t have to give your name but I will do all I can to give advice.

I’ll put the listen again link up on the blog after the show.

Until tomorrow,

Love Froogs xxxxxxxx