Topic 5 Flashcards
(32 cards)
Hardcore debt
The amount of money the borrower will never be able to pay off
Shopping around for loads of loans looking for the best one can cause a problem why
Lender may view multiple credit searches by different credit providers as a sign that the individual is finding it hard to get a loan
Small print
The legal terms and conditions attaching to a loan
Some companies claim they can use legal loopholes to wipe out 75% of your debt but what’s the downside
These companies often charge high fees for their services
In a debt management plan who do you pay the money to
DMP MANAGER
In a administration order who do you pay
Single monthly payments to the court.
What does a CCJ represent
Legally binding requirement to pay off your debt in either full or instalments
Who can you pay if you have a CCJ
Court or directly to the creditor
Is there fees for administration orders and CCJs
Both incur fees payable by debtor but can be added to the total debt
What’s the required amount of debt for administration orders and CCJs
Under 5000 in unsecured debt
What options are available if outstanding debt amounts to more than 5000£
Options available are IVA individual voluntary arrangement , debt relief order or bankruptcy
Creditors representing how much of the debt need to agree to the IVA
Creditors representing at least 75% of the total debt value
Who are IVA’s set up by and supervised by
Licensed insolvency practitioners (IP)
How long does a IVA USUALLY LAST FOR
Usually five years
Creditors only often agree to IVA’s if the amount they receive is how much of the money owed
At least 30% of the money owed
What are the costs of a IVA both the cost for setting up the IVA and the supervisory fee
7500£
How much unsecured debt to qualify for DRO Debt Relief Order
Less than £30,000
How much surplus income after paying normal household expenses do you need to have to qualify for a DRO debt relief order
No more than £75 per month
How much in assets can you have to qualify for a DRO debt relief order
No more than £2000
Why are DROs quicker and easier than IVAs and bankruptcies
Because the debtor can simply apply online through one of the four authorised free debt agencies, Step-change debt charity, National debt line, pay plan and debt advice foundation then the agencies will forward the application
What’s the cost of DROs
£90
How long does a DRO take
12 months then the debt is discharged
How long may a bankruptcy last for
May only last 12 months before bankrupt is discharged
What do you need to owe in debts to start a bankruptcy
£5000 on a unsecured loan
