Things you need to know if you are in debt
Are you struggling with debts in the UK? Here’s what you need to know about your financial situation and how to free yourself from your debt.
More and more Poles are struggling with debts in the UK. It would seem that sweeping the matter under the carpet and escaping to Poland will easily free us from debts and we will have the headache out of debt. Nothing could be more wrong. There are many myths about debts in the UK, often ending up in the belief that we are repeating half-truths like a mantra, instead of seeking information about what threatens us if we have debts in the UK and what the consequences of delaying paying off our debt can be. What are the consequences of having outstanding debts in the UK and how can we deal with our situation? Here’s everything you need to know about debts in the UK.
Not all debts are time-barred
It is often heard that all debts in the UK expire after 6 years. As in every story and here is a grain of truth. According to the British Limitations Act 1980, debts expire after 6 years, provided that the creditor has no longer brought the case to court or there is no court order for your debt. If he did, avoiding phone calls or not answering letters will not help, even after 6 years you will be forced to settle the debt – except that this time plus procedural costs, penalties and interest.
Return to Poland is not an effective method to get rid of debts
With the entry into force of the European Enforcement Order, all state authorities have the right to collect debts within all Member States. (For the time being Brexit won’t change much here either). Hence, leaving the country will not protect you against the obligation to pay your debt. What’s more, fleeing the UK before you can settle your debt, you can close your way back to this country. It may turn out that a few years after returning to Poland, you will miss the Islands, or rather the standard of living on the Islands. If you left the country, leaving behind debts, returning, you will only find a terrible credit history that will significantly limit your financial field of activity for at least the next few years.
Banks can collect your debt automatically
If you have unpaid credit cards, overdrafts or loans at the bank, the bank can debit your account without asking for permission. The appropriate amount will be blocked on your account and collected to repay the debt. Similarly, if the creditor has already reported your debt to court. He has the right to block and automatically collect the debt from your account through your bank.
You also have to pay for bankruptcy
It would seem that bankruptcy is simple and it is enough for an insolvent person to declare bankruptcy and after the weld. Few people know that you have to pay for this deal. The whole process costs about 700 pounds. What’s more, the declaration of consumer bankruptcy does not mean that you will get rid of all debts. Some debts may be written off, but you will have to pay back the remainder. You will receive a planned debt repayment plan, which will take into account your financial situation and allow you to systematically repay the debt. What’s more, if you have assets or valuable items, they can be collected to pay off your debt. It’s not over yet. If you decide to declare bankruptcy, your credit rating will be very low for the next 6 years, you will be entered in the national bankruptcy and bankruptcy register and certain financial restrictions will be imposed on you, which may apply for up to 15 years.
Prioritizing your debts is very important
All debts can be divided into two types: priority and low priority. Priority debts include mortgage, flat rental fees, council tax, bills and taxes. Low priority debts are consumer loans, student loans and social loans. Prioritizing your debts will help you determine which debts should be repaid first. What’s more, thanks to setting your debt priority, you will be able to match the most appropriate way of repayment and debt control.
If you are struggling with low priority debts, it would be a good idea to use [consolidation loan] [/ consolidation-loan /]. Such a loan will allow you to combine several loans into one easy-to-pay loan. A consolidation loan is easier to repay than several loans at once, its installments are lower and the repayment period is extended so that you can freely settle your debt without unduly straining your household budget.
Debt Management Plan and Individual Voluntary Agreement
For high priority debts, you should consider joining DMP or IVA. What are they The Debt Management Plan is a form of agreement between you and your creditor that sets out your debt repayment plan. Debt management plans are usually used when you can afford to pay a small amount each month or when you currently have debt problems but you will be able to pay back within a few months. IVA, unlike DMP, is a legally binding agreement between you and the lender. Individuals with over $ 15,000 in debt can join the Individual Voluntary Agreement. In the case of IVA, you have a certain repayment amount and repayment period (usually debt is repaid after 5 years). Importantly, in the case of IVA, part of our debt is written off, so you do not have to pay back the whole debt. By signing IVA, you are entered on the national bankruptcy and bankruptcy register, but your name disappears from it 3 months after repayment. It is therefore a good alternative to consumer bankruptcy.
Don’t hesitate to ask for help
If you feel that your financial situation is overwhelming you and you are losing control of your bills, don’t hesitate to ask for help. There are many institutions operating for free that help people in debt. By applying to them, you will receive free advice and an individually tailored debt repayment plan. One such institution is the National Debt Line. Also remember to inform your lender about your financial problems. In accordance with the principle of responsible lending, all lenders operating in the UK are obliged to assist you and agree with you on favorable terms for repayment of the loan. As you can see, we can find the right solution for our financial problems in every situation. Remember, however, that financial problems are not worth ignoring, so the sooner you take action the better.