A large number of people in the UK have struggled financially over the last few years because the cost of essential items has gone up so much. People are still buying the same things which they always have but because of inflation the amount they have to spend on these items has gone up significantly. Because of this situation many people have had to use credit cards, over drafts and even apply for loans in order to buy thing which they absolutely need. Using such options has left a lot of people with large debts and facing possible bankruptcy. There are however a number of other options which are available which let people avoid bankruptcy.

People can seek a debt relief order if their debt is less than 15,000 and they do not own their own home. These people must also have less than 300 worth of assets and an income of less than 50 after they have paid tax, national insurance and for household essentials. A debt relief order gives the person a 12 month period where debtors do not chase them for payment and if after 12 months their situation doesn't change, they are free from their debt.

There is also the option of an individual voluntary arrangement where a person agrees to pay all or part of their debts. This route involves the courts but if they agree, they will stop creditors involved from seeking further payment or appealing for the person to seek bankruptcy. This option can also help if a person would like to keep certain assets such as their house whereas others will not give the person this option.

For people with a smaller debt of less than 5000, there is the option to seek and administration order. This alternative freezes their debt and interest and they deal with the court from thereon instead of the credit company. They must make an agreed monthly payment to the court who will then break down that payment between the companies who are owed money.

People can also try to arrange an informal agreement with their creditors such as a lower monthly payment or some kind of payment schedule. Many try to avoid this option though because the creditor can break the agreement whenever they choose to as they have no legal obligation to uphold it.

Are you looking for alternatives to bankruptcy? Speak to an expert.