Taking Control. guide to Debt Solutions. Your comprehensive

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1 Taking Control Your comprehensive guide to Debt Solutions 1

2 Contents Page Number About X-debt 3 Debt Solutions: Individual Voluntary Arrangements (IVAs) 4 Company Voluntary Arrangements (CVAs) 5 Debt Management Plans 6 Debt Relief Order (DRO) 7 Bankruptcy 8 2

3 About X-debt At X-debt we pride ourselves on providing a very personal service to all our clients. We are a debt advisory company offering complete, impartial advice for those with debt problems. We will always recommend the debt solution that is right for you, ensuring that we provide you with complete and unbiased support. X-debt are licensed through their Insolvency Practitioner to advise on the full range of debt solutions available, which include: Individual Voluntary Arrangements (IVA) Debt Management Bankruptcy Debt Relief Orders (DRO) Company Voluntary Arrangements (CVA) X-debt performs the business of Individual Voluntary Arrangements (IVA) and Company Voluntary Arrangements (CVA). As the company operates with a Licensed Insolvency Practitioner we are duty bound to offer the best advice and if an IVA or CVA is not the best possible option for you we will advise on other debt solutions such as debt management, bankruptcy, Debt Relief Order, debt consolidation or liquidation/administration. With X-debt you can be rest assured that: We guarantee the best advice, free and without obligation - You make the final decision 1 We treat all our clients with compassion, dignity and respect We are fair to creditors We uphold the highest standards in the industry Our Head of Insolvency, Angela Canning, is a qualified Insolvency Practitioner, regulated by the Insolvency Practitioners Association and has over 20 years industry experience We operate during normal office hours but can be contacted at any time by and will respond to urgent enquiries at a time to suit you. 1 Any debt solution should always be considered very carefully and professional advice should be sought. Whilst X-debt offers free debt advice, fees are charged where a debt solution is undertaken. Fees are for setting up an arrangement and if appropriate, supervising the arrangement over a period of time. All fees will be outlined prior to any charges being incurred. Fees within an IVA or CVA are generally taken from the monthly contributions, agreed by you and your unsecured creditors and will not affect the amount you pay. X-debt complies with the Consumer Credit Act and Data Protection Act. Warning! An IVA or CVA can only be arranged and supervised by a Licensed Insolvency Practitioner (IP) and many companies advertising an IVA or CVA service do not have an IP in-house. In reality many are simply lead generation businesses who then pass your details to a firm of Insolvency Practitioners, generally for a large fee taken as your first few equivalent monthly contributions. In many cases these companies do not have the expertise or qualifications of a Licensed Insolvency Practitioner. An IP is regulated by his/her governing body, in the case of X-debt the Insolvency Practitioners Association (IPA), and are duty bound to offer best advice. If you are unsure of who you should approach to advise you on the most suitable debt solution and if your circumstances meet the criteria of an IVA or CVA, then please ensure the company you deal with actually employs an IP. We are here to help and advise you. If you wish to speak to an IP in the first instance then please call us as we offer this personal service. For free impartial advice call

4 Individual Voluntary Arrangement (IVA) Criteria for eligibility: Unsecured Debt Level (Estimate) More than 12,000 Total Household Income Earn a salary and/or have a surplus monthly household income What is an IVA? An IVA or Individual Voluntary Arrangement is an agreed contract 1 between you and your unsecured creditors. Generally you pay an agreed monthly sum, usually for 5 years. The Insolvency Practitioner distributes payments to your unsecured creditors, who accept the sum in settlement of the amount you owe them and agree to write off a portion of your debt. What are the advantages of an IVA? You can propose interlocking Arrangements with your partner. We help calculate one affordable payment per month by standing order, which is distributed to your unsecured creditors and pays the fees of the Arrangement There are no up-front fees payable The amount you pay is generally the same over the entire period of your IVA 2 The IVA is flexible if your circumstances change over the period of the Arrangement or you are made redundant Upon the IVA being approved, all unsecured creditors are legally bound by its terms and you avoid bankruptcy You learn to budget and live within your means 3 Upon the successful completion of the IVA (usually 5 years) you have no further obligations to your unsecured creditors leaving you free to make a fresh start Your employers will not know about the IVA unless you choose to tell them Unlike Bankruptcy, an IVA: Protects the family home 4 Is not advertised in the local press Does not stop you running your own business Does not lead to some professions terminating your employment 1 IVA proposals need to be agreed by 75% of your creditors 2 If your rise in surplus monthly income exceeds the cost of living rise or you earn overtime and bonuses or you receive a windfall, you will need to pay more into the IVA. 3 You cannot take new credit during the term of the IVA and you need to keep your payments up to date in the Arrangement to avoid it failing and the unsecured creditors rights being restored 4 You may need to release equity over the prescribed sum or extend the term of the Arrangement but this is governed by very strict criteria in the IVA proposal Please take our Debt Test on to give you an idea of whether you meet the criteria for an IVA or call us free of charge on for advice now. 4 Will my house be safe? How much will I have to pay each month? Got any questions? Speak to a friendly IP now:

5 Company Voluntary Arrangements (CVAs) Criteria for eligibility: Unsecured Debt Level More than 15,000 Total Company Income Surplus Monthly Profits What is a CVA? A CVA is similar to an IVA but for business debts and is a legally binding agreement with your company's unsecured creditors. What are the advantages of a CVA? Allows a company to reduce monthly commitments and improve cash flow Ensures your business creates and follows a clearly defined, structured and viable business plan and goals The agreement declares the company insolvent allowing all historic debts to be paid out of future profits Legal actions, such as winding-up petitions, cannot be implemented CVAs were introduced as a part of The Insolvency Act 1986, and recent government legislation was designed to encourage more companies to use this approach If you think you have a viable business and want to avoid liquidation, please call us free of charge on for advice now to see if you meet the criteria for a CVA. 5 Will I still be a Company Director? Got any questions? Speak to a friendly IP now:

6 Debt Management Plan (DMP) Criteria for eligibility: Unsecured Debt Level More than 5,000 Number of Unsecured Creditors More than 2 What is a Debt Management Plan? A Debt Management plan is an informal agreement made by your Debt Management company with your unsecured creditors to repay unsecured debts. Your Debt Management company can arrange for you to make a single monthly repayment which will be distributed to your unsecured creditors under the terms of the agreement with them. As part of your agreement with your unsecured creditors, your Debt Management company should request that interest and penalty charges are stopped or reduced so that your monthly repayment is fixed and does not increase. Please note that this is not guaranteed for all unsecured creditors and as the plan is informal, interest and penalties can be reapplied at any time. What are the advantages of a DMP? Mechanism to avoid bankruptcy, IVA and a Debt Relief Order if you need temporary help with your debts but you still need to pay debts back in full Your Debt Management company will work with you to calculate how much you can reasonably afford to pay your unsecured creditors Your Debt Management company negotiates with your unsecured creditors the amount you will repay monthly You make a single monthly repayment to your Debt Management company who then distributes a proportion of this sum to your unsecured creditors on your behalf. Debt Management company fees vary widely from company to company Debt Management plans can be set up quickly, depending on your situation How much will the Debt Management company take for themselves? 6 What are the differences between an IVA and a DMP? Got any questions? Speak to a friendly IP now:

7 Debt Relief Order (DRO) Criteria for eligibility: Unsecured Debt Level Less than 15,000 Income Monthly Disposable Income Low Between 1 and 49 Assets/Savings (Excludes cars under 1,000) No other assets or savings, or at least not of greater value than 300 What is a DRO? A debt relief order (DRO) is an order granted by the Insolvency Service in cases where you can t afford to pay off unsecured debts. You cannot apply for a DRO yourself so you will need to contact an authorised adviser who can apply for you. Your advisor will first check whether you meet the criteria prior to making the application. What are the advantages of a DRO? Usually lasts 1 year as long as your situation doesn t improve Your unsecured creditors cannot take action against you to get their money back Once the period of the DRO has concluded all unsecured debts included in the Debt Relief Order are written off Bankruptcy is avoided 7 This sounds great. Who do I ask whether or not I qualify for it? Got any questions? Speak to a friendly IP now:

8 Bankruptcy Bankruptcy should only be contemplated as a last resort. There are far reaching consequences as the following show: Your family home is not protected. In most bankruptcy cases where there is a house with equity that equity has to be realised. This could mean that either your spouse/partner or third party has to purchase your interest or it has to be sold, adding a burden to your personal relationship You may still need to make monthly payments to the Official Receiver Your situation may be advertised in local newspapers Bank accounts may be closed Your current or any future employers may carry out background searches on you which may mean your promotional prospects or employment suitability could be adversely affected In certain professions there is a risk of losing your job If you are declared bankrupt you are unlikely to be able continue in the following professions: financial services including banks, armed forces personnel, army, navy and Royal Air Force During the period of bankruptcy it is difficult to run a business as you may need to declare your bankruptcy status if you need to take credit You are automatically barred from acting as Director of a limited company or holding public office. Providing you have not been made bankrupt before, your bankruptcy is likely to end (known as discharged ) within 12 months, after which you will be free from debt and no further action can be brought by your unsecured creditors, although you may still have to continue making payments from your income for up to 3 years. Choosing Bankruptcy In some cases bankruptcy may well be the best advice but the IVA was introduced as an alternative to bankruptcy by The Insolvency Act An IVA is also a suitable alternative for most of those with careers stated above. There may be other, more appropriate ways to deal with your unsecured debts. It is very important that you get professional debt advice so you fully understand the consequences of bankruptcy and how it can affect your home, business and credit rating as well as the different debt solutions available to you. X-debt s best advice model will give you a fair assessment of the options open to you. There may be a better debt solution than bankruptcy - see how an IVA can help if you and/or your partner owe more than 12,000 and either of you are in regular employment. When 8 would bankruptcy be the best option? Got any questions? Speak to a friendly IP now:

9 For free and impartial advice, and to find out the best option for you, Get in touch today: Freephone: Submit an enquiry on: 9 X-debt (Debts Solved Ltd), Monton Road, Monton, Eccles, Manchester, M30 9PS

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