Let debt go™ www.letdebtgo.co.

uk

A Debt Free Life

Let

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Let debt go™ | www.letdebtgo.co.uk

Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

In the past there has been a lack of free information and help available to those in debt. Let debt go™ is committed to changing this for good.

Let debt go™ is a trading name of Delavida Ltd. © 2010 Delavida Ltd. This handbook is distributed for free to the condition that it can be lent and circulated without our permission; however we do not permit the resale or hire out under any circumstances. Disclaimer: This handbook is for information purposes only. If you are looking at taking any of the following steps we strongly advise you visit www.letdebtgo.co.uk and allow one of our professional advisors to help you. We can NOT be held responsible for any actions taken based on the information in this handbook solely.

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Let debt go™ | www.letdebtgo.co.uk

Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Contents

Introduction

How we get into debt

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Step 1. What you need to know first

Important things you need to know about debt.

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Step 2. Ways to get out of debt

Which option is best for you? Debt Management Plans Individual Voluntary Agreements Bankruptcy

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Step 3. Creditors

Their powers Dealing with creditors Income and Expenditure (I&E)

10 12 13

Step 4. What next?

Take your first steps to debt freedom About Let debt go™ and how we can help

14 14

Glossary

Confusing debt jargon explained.

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Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Introduction | How we get into debt
For many years now the country’s largest banks have lent money to people without implementing a correct procedure to ensure that the person borrowing the money is in a secure position to repay the monies owed. Thus creating a spiral effect in which the bank then has to lend more money to the person to prevent them from missing repayments. No more is this true than in Britain, where - unlike many other European countries - our culture encourages us to live life for today and this is reflected in the ease of accessibility to loans and credit cards. The same ruling of loans also applies to credit cards. The banks continue to reissue credit cards and extend limits to prevent a “bad debt situation”. With this in mind our economy is now in tatters after years of lending abuse. The banks will always blame the borrower but with harsh times now a thing of continuity, if someone offers you unlimited spending on a credit card or £4000 to spend so long as you pay it back over a course of time you would be a fool not to take advantage. The finger needs to be pointed at the banks for irresponsible lending and then using bullying tactics to recuperate the funds back. This said, times have changed and Let Debt Go™ is moving with them. We have been working directly with members of the public who have been struggling with debt for years. Through our combined knowledge, experience and compassion for those in debt, we have created this handbook with the aim of making a difference.

Did you know?
Over a breath-taking six million households are struggling to make ends meet due to their debt.

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Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Step 1 | Important things you need to know about debt
Throughout our lifetime, a large proportion of us will get ourselves into debt, some of us only a few hundred pounds, some of us thousands, and some of us hundreds of thousands. Being in serious debt with sometimes the possibility of losing your home is understandably a very worrying time. Firstly, the most important thing to remember when you are in debt is that no matter how much you are in debt, there is a solution. Secondly, and equally as important; if you ignore your debts, your creditors have a number of options to recover any amount owed to them. It is better to deal with your debt problems at an early stage because if you do nothing, the creditor is likely to take court action which will result in extra expenses as you would generally be liable for the costs involved in raising the action. Creditors must tell you, in writing, how much you owe, and give you an opportunity to bring your account up to date before taking court action. The most common actions available to a creditor are outlined on the ‘Step 3 - Creditors’ section.

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A Debt Free Life

Step 2 | Ways to get out of debt
What option is best for you?
The main solutions to solve debt are Debt Management Plans, Individual Voluntary Agreements Plans (commonly referred to as an IVA) and Bankruptcy. Unfortunately, there aren’t exact criteria as to which solution would be best for you as each case can vary considerably. You would only be able to find out through speaking to a professional debt advisor. Many people get complacent with debt once they see the abundance of free information available on the internet and from charitable organisations and think, why can’t I do this myself? The answer is simple - you are not legally protected! The Insolvency Act of 1986 implemented strict rules to protect people in formal debt agreements such as Debt Management Plans, IVAs and bankruptycy as they are demonstrating a formal attempt to solve their debts. People who do it themselves are not legally protected. Your creditors have the right to refuse your offer, contest your income and expenditure and even pursue further action against youif they wish, whereas under an IVA, Debt Management Plan or Insolvency, they simply have to accept you have taken action towards solving your debts. Let debt go™ offers a free consultation to all UK citizens advising on the best possible options available to them, however there are many debt advice companies within the UK, so you have a wide range of choice to select the one that you feel most comfortable with. It is important to remember by taking advice from a Debt Management company you are taking a positive step to reclaiming financial independence and giving yourself and family the life you deserve.

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A Debt Free Life

Step 2 | Ways to get out of debt
Debt Management
A Debt Management Plan (DMP) is a Government-backed scheme that helps individuals or households manage their debts, when they are unable to maintain their contractual payments to their creditors due to financial difficulties. Should this be the right option for you, a third party can arrange this on your behalf and they become the intermediary between you and your creditors acting on your behalf. A DMP is not always suitable for everyone and so it is essential to first work out a budget you are able to live on (which excludes payments to your debts). This will help you to stay in control of your spending. After you have done this, if you have an available monthly surplus to pay your debts, the third party can then write to your creditors to arrange a monthly payment you can afford. You normally pay your DMP by making one monthly payment, which is then distributed to all your creditors. The advantages of a debt management plan include:    All interests will be frozen and charges stopped. Creditor calls and letters stopped as debt management company will deal with your creditors directly on your behalf. Make an affordable monthly payment which is divided amongst creditors, the debt management company will take a small administration fee from this.

Did you know?
British people owe more than a staggering one thousand billion pounds on cards, mortgages and loans.

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Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Step 2 | Ways to get out of debt
Individual Voluntary Agreements (IVAs)
An Individual Voluntary Arrangement is a formal Government-backed agreement between you and your creditors where you will come to an arrangement with people you owe money to, to make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe then generally after 5 years your debt is classed as settled. Due to its formal nature, an Individual Voluntary Arrangement has to be set up by a licensed professional Unlike many debt advice firms the Licensed Insolvency Practitioners on the panel do not charge any upfront fees for putting together a client's proposals for an Individual Voluntary Arrangement.

Did you know?
Since the year 2000, forty-four per cent more people are seeking help to sort out their debt.

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A Debt Free Life

Step 2 | Ways to get out of debt
Bankruptcy
Bankruptcy - This is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year). Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases. Please note that if you are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible.

Did you know?
Britons are struggling with an astronomical collective personal debt of 1.46 trillion pounds.

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A Debt Free Life

Step 3 | Creditors
Their powers
Creditors must tell you, in writing, how much you owe, and give you an opportunity to bring your account up to date before taking court action. Before a creditor takes you to court, they will send you a formal court document telling you that you are being sued. It is important that this document is not ignored or lost. If a creditor has taken action against you, you should get professional advice to make sure that the correct procedure has been followed by the creditor. Even after action has been taken, it may be possible to reverse this if you act quickly enough. The most common actions available to a creditor are outlined . Attachment of Goods The process of attachment is where an item owned by you, but kept outside your home (for example, items in your garage or shed), can be collected and sold to repay all or part of your debt. there are clear and detailed rules on what goods can be attached, and you can challenge decisions. You should contact an advice agency for further information on attachment of goods.

Exceptional Attachment Orders (EAO) If a creditor has shown the Court that he or she has taken steps to try to recover a debt through a wage arrestment without success, they can apply for an exceptional attachment order. This allows items in the property (for example, your home) to be 'attached'. Only items which are classed as non-essential items can be attached. These do not include essential items such as sofas, beds, bedding, the telephone, the television, laundry and kitchen equipment. If an EAO is granted, your items will be removed and will be auctioned to repay your debts. You should get help and advice as soon as possible.

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A Debt Free Life

Arrestment of Earnings To recover debt following court action, a creditor can contact your employer to carry out a wage or salary arrestment. The amount taken is fixed by law and based on the amount of money you earn. For example, if you earn £200 a week, £24 will be taken from your wage or salary. Your employer will be given a copy of the scale so they will know how much to deduct from your earnings. If your wages or salary increases, your arrestment will increase according to the scale. Your employer will send the money to the creditor from each wage until the debt has been repaid. A copy of the arrestment schedule will be sent to you. Your employer can charge you every time he or she pays an amount to your creditors, currently the fee is £1 (August 2006).

Bank Arrestment If you do not pay your debt following court action, a creditor can carry out a bank arrestment. This can be served on your bank, building society or even your credit union account. The money held in your account on the day the action takes place becomes frozen and you cannot use it to pay direct debits, standing orders and so on. A bank arrestment 'freezes' money you owe to the creditor plus possible expenses. For example, if you have £2000 in your account and you owe £1000, the bank may freeze £1500, but you should be able to access the remaining £500. A bank arrestment only freezes the money that is in your account on that day, although they can try again at a later date if they think money has been added to your account, for example, your salary or wages. The money 'frozen' stays in your account until you authorise it to be paid to the creditor. If you refuse to release the money held in your account, the creditor can apply to the court to have the amount released and you will have to pay the costs of this action. You should get advice if you have a bank arrestment.

Bankruptcy It is unusual for a creditor to apply to make a debtor bankrupt. However, this can happen, especially if a creditor runs out of patience because a debtor continues to break agreed payment arrangements and the creditor knows the debtor has items of value which can be sold to repay the debt. It is more common for an individual to make themselves bankrupt if they feel it would sort out their debt problems and the relevant court action has been taken against them.

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A Debt Free Life

Step 3 | Creditors
Dealing with creditors
This is something very rarely discussed when talking to financial institutions regarding debts and yet one of the biggest talking points on message boards and local communities alike. Not handling a call properly can have negative effects on your debt. It is important not to lose you temper no matter how provoked you are. Remember: the person on the other end of the phone is only doing a job. Companies can legally call you three times per day if you are in default of your account the best way to avoid this is to make minimal payments to your creditors if you can not afford the full amount. If you enter a debt management plan with Let Debt Go™ you will pay our clients and they will distribute the funds on a pro rata basis (paid evenly between all creditors) to all your creditors. If you enter a IVA or Bankruptcy you will be assigned a Insolvency Practitioner who will advise you of your next steps, as every case is individual we cannot advise on what to do or say but recommend you always maintain a minimum payment to all creditors of £1.00 until you are advised otherwise. Once in a debt management plan you are fully protected from any charges, interest and further action. This is monitored and governed by the Office of Fair Trading and other appropriate watchdogs. Debt collection companies will often push their luck only because people allow them to. Let Debt Go™ is committed to empowering the debtor to handle things themselves without feeling bullied. After all, bullying tactics is the only thing they can use to make you pay more or feel under pressure to act at that exact moment and make a payment to them. DO NOT allow any representative of any company to use this tactic if you feel they have advise the member of staff you are terminating the call, take a note of their name and act how you feel best to deal with the situation. Staying on the phone will only escalate the situation. Once you have made sought professional help and entered into a Debt Management Plan, IVA or Bankruptcy, you will not be required to do anything else and can enjoy a stress-free life.

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Let debt go™ | www.letdebtgo.co.uk

Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Step 3 | Creditors
Income and Expenditure
This is a term thrown about amongst debt recovery agencies so often but never really explained. We will try and make this a little clearer for you to understand. Your income and expenditure is quite self explanatory and is simply a list of your incomings and outgoings usually preferred in a monthly format. It is also called, by some, a Financial Statement or a household budget. The most frustrating thing with doing the income and expenditure is that debt recovery agents often question every little detail of them. On this list you should include every regular monthly payment you have to make whether it be your rent or a monthly life insurance policy. It can go down to as little as your regular trip to your hair dressers. Once completed you may find your outgoings exceed the money coming in. If this is the case then you have a problem. You (and your partner if applicable) need to sit down and see what costs can be reduced. Even shaving £5 off a few luxury items each month can help you considerably. However if you find that you are paying large monthly repayments to your creditors and this is what is taking you over your monthly budget then that is where the problem lies. This is where a company such as Let Debt Go™ specialises in reducing your repayments. If you’re paying £100 per month to a credit card and £100 per month to a loan that is £200 of your money being spent on bills where the money could be improving your way of living. We can rapidly reduce your repayments and extend the term of your debt with no added interest or charges. Once you have made the first step into entering a Debt Management Plan for example, our staff will take your monthly income and expenditure but it is important that you do a rough draft yourself and try and make sure that you have a minimum of £100 available to pay your creditors. So in simple terms work out what you have to pay minus paying all your debt payments and budget for a minimum of £100 to pay your third party to distribute amongst your creditors.

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Let debt go™ www.letdebtgo.co.uk

A Debt Free Life

Step 4 | What next?
Take your first steps to debt freedom
After reading this handbook you’re probably wondering now, what’s the next step to solve my debts? First you need to find a debt management company that is right for you who will advise you on the options available given your circumstances. As there are so many companies we advise you to look around and find one that you feel comfortable with. However you can if you wish receive a free consultation from us by logging onto our website www.letdebtgo.co.uk. All you have to do is enter a few details and we will assign you a professional-trained advisor to call you at a time convenient for you who will advise you impartially on your options.

Let debt go™ - About us and how we can help
At Let debt go™ we know from firsthand experience the stress and anxiety caused when in debt. This is the exact reason why we’re so passionate about offering widespread free tips and advice, so your debt experience is as stress-free and as short-lived as possible! We have helped hundreds of people get out the debt “black hole” and are helping thousands at this very minute take their first steps in tackling their debts head on. Log onto our website www.letdebtgo.co.uk now and take a look for yourself at how we can help. Let Debt Go™ would personally like to thank you for taking the time out to read our handbook and hope you have found it useful. If you have any comments, queries or suggestions, or even if you want to tell us your story and how you conquered debt, e-mail us today at customerservices@letdebtgo.co.uk. Let Debt Go™ is a Delavida brand. Delavida’s sole aim is to make as many people as happy as we can in any way we can through the products or services we provide. For more information visit www.delavida.eu Thank you for reading and all the best for the future,

The Let Debt Go™ team
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Let debt go™ | www.letdebtgo.co.uk

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A Debt Free Life

Glossary | Confusing debt jargon explained
Arrears A payment made after it is due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance, as is rent. Arrestment Arrestment means that money or goods held by a third party are 'frozen'. The most common example is arrestment of funds in your bank account. The third party (eg a bank) may agree to hand the property (funds) over to a creditor. Asset An asset is property that belongs to an individual. Including; real property (land or buildings) and personal property (eg cash, stocks and shares, or vehicles). Attachment Means that goods held by the person in debt, eg a car, are 'frozen'. Anything that has been frozen ('attached') can be sold. The money raised is then handed over to the person who is owed the money. Bankruptcy A form of debt relief, there are two kinds of bankruptcy: Personal bankruptcy; an individual, sole trader or partnership is formally declared bankrupt by the court (ie they cannot pay their debts) and that the debts and assets of a person should transfer to an appointed trustee. Company bankruptcy; companies can also fail and if this happens, the company is said to be insolvent. It may be made subject to liquidation, r eceivership or an administration order issued by the courts Beneficial Loan A loan made by an employer to an employee on which interest is either not charged or is less than the official rate. The difference between the interest charged and the official rate is taxable. Building Society 'Mutual' non-profit-making institutions set up to lend money to their members for house purchase. Building societies are 'mutual;' because they are owned by their members, and their members are entitled to their profits and benefits Creditor A creditor is an individual or a company that is owed money by another person.

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A Debt Free Life

Debt consolidation Debt consolidation is the replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It can also be called a consolidation loan. Debt relief The last resort for a debtor when dealing with debt where the debtor cannot pay their debts - bankruptcy. The debtor will lose control of their assets, possibly including their home and their credit rating will be greatly affected. A debtor is an individual or sole trader who owes money to another person or company (creditor). Direct debit An instruction you give to your bank or building society to make regular payments from your account to a specific company. Unlike a standing order you agree that the creditor can vary this amount each month. Earnings arrestment If you are working, the money you owe to a creditor can be taken from your wages/salary directly from your employer by an earnings arrestment. Endowment A permanent fund bestowed upon an individual or institution, such as a university, museum, hospital, or foundation, to be used for a specific purpose. Frozen account A bank account whose funds may not be withdrawn until a lien is satisfied or an ownership dispute is resolved. Grace period The period, normally 30 days, during which an insurance policy remains in force even though the premium has not been paid. Guarantee A commitment made by a person to be answerable for the debts or liabilities of another. Insured Mortgage A mortgage insured against loss to the mortgagee in the event of default and a failure of the mortgaged property to satisfy the balance owing plus costs of foreclosure. Liability Insurance Insurance against legal liability to pay compensation and court costs where the insured has been found negligent in respect of injuries sustained by another person or damage to his/her property. Liquid Assets Cash plus assets which can readily be converted into cash.

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Loan Policy

A Debt Free Life

A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalid title in the borrower, or loss caused by invalid title in the borrower, or loss of priority of the mortgage or deed of trust. Loan Sharking Charging an illegally high interest rate on a loan. Mortgage A loan in which the borrower (the mortgagor) offers a property and land as security to the lender (the mortgagee) until the loan is repaid. Repayments of the loan are usually made on a monthly basis over a long period of time, typically 25 years. In the UK, the most common forms of mortgage are the repayment mortgage and the interest only mortgage. Mortgage Broker A person or company engaged in the arrangement of mortgages for buyers. The broker is usually paid a commission by the lender. Mortgage Protection Term assurance to cover the repayment of a mortgage in the event of the death of the mortgagor during the period of the loan.In the case of a repayment mortgage the capital sum outstanding is gradually reduced over the term of the loan (albeit slowly during the initial years when the majority of the repayments are paying the interest) so that decreasing term assurance would be incorporated in the policy. For an endowment mortgage where the sum assured and the death benefit are at least equal to the amount of the loan throughout the term of the loan, level term assurance would be apt. Negative equity A situation where the purchaser of a property has taken out a mortgage and some time after the purchase, the value of the property falls below the mortgage amount. Ombudsman Ombudsmen do not have any formal power to reverse decisions but they have substantial moral authority over companies or national or local government agencies. Within financial services, there are different Ombudsmen for banking, building societies, insurance, pensions, and investments. If you have a complaint about your treatment by a financial services company, the first thing you should do is make the complaint directly to the compliance officer or senior management of the company. If the outcome is unsatisfactory, you can then take it to the Ombudsman who will investigate and consider all the facts of the case, and make a recommendation. The company will not always follow the Ombudsman's recommendation, but usually will. Open end mortgage A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions, usually as to the assets of the mortgage. Personal Equity plan A plan where people over the age of 18 could formerly invest in the shares of UK and other EC companies via an approved plan manager or through qualifying unit trusts and investment trusts and receive both income and capital gains free of tax.

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Re mortgage

A Debt Free Life

To re mortgage is arranging alternative finance for the purchase of a property which is already mortgaged. Secured loan A loan which is backed up by assets belonging to the borrower (normally property) in order to decrease the risk taken on by the lender. Mortgages and some personal loans are secured loans. If you don't maintain your repayments, your property can be at risk of repossession. Standing order An instruction you give to your bank or building society to make regular payments from your account to a specific company. This is a fixed amount unlike a direct debit which can vary. Surplus income This means the amount of money which you have left over when you subtract necessary expenditure from your income. Trustee in bankruptcy One appointed by a bankruptcy court, and in whom the property of the bankrupt vests. The trustee holds the property in trust, not for the bankrupt, but for the creditors. Trustor The borrower under a deed of trust is a trustor. Trustee Usually an accountant (a qualified insolvency practitioner), a trustee acts for the creditors by managing the trust deed when a debtor agrees to sign over their assets into a trust deed or when they are declared bankrupt. Unsecured creditor A creditor who does not hold security (such as a mortgage) for money owed. Unsecured Loan An unsecured loan is a loan where the lender has no entitlement to any of the borrower's assets in the event of the borrower failing to make the loan repayments. Such a loan normally carries a higher interest rate than a secured loan. Variable interest rate Interest rates offered by banks and financial institutions on loans or deposits which are liable to change according to circumstances. For example a movement in the interest rate set by the government would usually be an influence. Wrap around mortgage A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgagee under the wrap-around collects a payment based on its face value and then pays the first mortgagee. It is most effective when the first has a lower interest rate than the second, since the mortgagee under the wrap-around gains the difference between the interest rates, or the mortgagor under the wrap-around may obtain a lower rate then if refinancing.

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