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Fees

While all the debt advice we give is free, if you enter into a debt solution, a fee may be chargeable which is dependent upon your preferred debt solution and provider. Chargeable fees are paid by your creditors from the agreed contributions that will be paid by you to them during the term of your agreement.

If you’re a resident in England, Northern Ireland or Wales and qualify for an Individual Voluntary Arrangement, this will be provided by Creditfix Limited (part of the same group of companies as UK Debt Expert Limited) and separate fees will apply.

Fees differ for both Trust Deeds and the Debt Arrangement Schemes, which are solutions that are only available to people living in Scotland. Fees will be charged by the Carrington Dean Group Limited (part of the same group of companies as UK Debt Expert Limited).

Solutions

Fees

Debt Advice

Free

Debt Management Plan (DMP)

Fees applicable (paid to your provider)

Debt Arrangement Scheme (DAS)

Free to set up (fees thereafter paid to your provider Carrington Dean)

Debt Relief Order (DRO)

Free

Bankruptcy

£680 administration fee (paid to Insolvency Service)

Individual Voluntary Arrangement (IVA)

Fees applicable (paid to your provider Creditfix)

Trust Deed

Fees applicable (paid to your provider Carrington Dean)

Are there any disadvantages to entering a debt solution?

It’s important to ensure you’re armed with all the facts before entering a debt solution.

While debt solutions can be a positive way to manage what you owe, there are factors to consider before you continue.

Every debt solution, both formal and informal, comes with advantages and disadvantages so it’s important to make sure you’re aware of these before making any decision about your financial future.

All considerations will be discussed by an expert to ensure you’re fully informed, however, you can find out more about both the advantages and disadvantages of all solutions below.

Solutions

 

Debt Management Plan (DMP)

Advantages
A DMP won’t be recorded on an insolvency register
A DMP shows you’re willing to repay your debt in full
Creditors can freeze interest and charges on your debts included
DMPs can be changed if your personal situation changes
A DMP will reduce monthly payments towards your debts
Your DMP provider will deal with creditors on your behalf

Disadvantages
You will have to repay your debt in full with a DMP
Creditors may reject the offer of reduced payments
Your credit score can be negatively affected
Your creditors can still take legal action against you
Creditors can contact you during the DMP
Some DMP providers charge fees for their services
Third party fees may apply

Debt Arrangement Scheme (DAS)

Advantages
Repay your debt with affordable monthly payments
Creditors bound by the arrangement can’t take legal action against you
Interest and charges on included debts are frozen
All creditor communication will be handled by your insolvency practitioner
The DAS offers an opportunity to avoid sequestration
Homeowners won’t be required to release equity in their home
You may get a payment break if your situation changes

Disadvantages
No debt is written off and you’ll repay what you owe in full
It can take several years to repay what you owe
The DAS will adversely affect your credit rating
Your arrangement will appear on the public DAS register
Your arrangement may be revoked if you don’t comply with the DAS conditions
You’ll need to abide by a strict budget during the arrangement
Creditors may reject your application

Debt Relief Order (DRO)

Advantages
All debts included in the DRO will be written off after 12 months
As of April 6th 2024 there will be no fee to enter a DRO
Interest and charges on unsecured debts included are frozen
You won’t need to go to court
You are protected from enforcement action by your creditors
Interest on included debts will be frozen

Disadvantages
Your credit rating will be negatively impacted and will stay on your file for six years
You can’t open a new bank account when in a DRO
You can’t apply if you’ve had a DRO or another form of insolvency in the last six years
A tenancy agreement could be affected by a DRO
If any of your debts are for goods bought on hire purchase, you might need to give those goods back
Your details will appear on the Insolvency Register during the DRO and for three months after it ends
Third party fees may apply

Bankruptcy

Advantages
You can make a fresh start, typically within a year
Creditors included can no longer take legal action against you
You’ll be able to keep enough money to live on as well as essential belongings
If you’re self-employed you can keep items essential for your trade
You may be able to keep your home if it has little to no equity in it
All creditor communication is handled by the official receiver on your behalf

Disadvantages
Your credit rating will be negatively affected for six years after your bankruptcy
Personal bankruptcy will appear on a public record
You’ll be required to sell your home if it has equity in it
You’ll need to pay a fee of £680
Some jobs are affected such as company directors, accountant, solicitor of financial services workers
You’ll be left with few or no assets of value

Individual Voluntary Arrangement (IVA)

Advantages
Lower monthly payments based on what you can afford
Protect assets such as your home or car
Unsecured debts included in the arrangement will be written off at the end of the term
Freeze interest on unsecured debts included
Stop pressure to pay from creditors bound by the arrangement
An Insolvency Practitioner will distribute payments to creditors on your behalf
You may get a payment break if your situation changes

Disadvantages
Spending restrictions are put in place during an IVA
Secured debts can’t be included
There’s a possibility creditors could reject the proposal
Homeowners may need to remortgage in the final year
Any windfall over £500 will be put towards your IVA
IVAs are recorded on the public Insolvency Register
An IVA will adversely affect your credit rating and appear on your credit file for six years

Trust Deed

Advantages
Payments are lowered and based on your affordability
Assets such as your home and car are protected
Interest and charges on unsecured debts included are frozen
Debts included in the Trust Deed will be written off at the end of the arrangement
Creditors bound by the Trust Deed can’t take legal action against you
Your Trustee will distribute payments to creditors on your behalf

Disadvantages
It’s possible creditors will reject your Trust Deed proposal
Your wages could be arrested if you don’t keep up with payments
A Trust Deed will have a negative impact on your credit rating
Homeowners may need to release equity towards what they owe
You can’t be a company director during a Trust Deed
You’ll need to abide by spending restrictions during your Trust Deed