A 2009 Prudential survey showed that over-60’s are set to receive a retirement income of £17,779 per annum in 2009. Given that the average income for working people is £24,908, this means that retired people will receive 29 per cent less. This sudden reduction in income can make paying household bills more of a challenge and is the primary reason for personal debt.
What Debt Solutions are Available for Over-60’s?
It is important to choose the right debt solution and this will depend upon how much personal debt over-60’s have. Retired people owing in excess of £15,000 are likely to find that an Individual Voluntary Arrangement (IVA) or personal bankruptcy is preferred for becoming debt-free. Over-60’s with more modest personal debts will find that a Debt Management Plan (DMP) or Debt Relief Order (DRO) are more effective.
Should Over-60’s Pursue an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a legally binding debt solution that allows over-60’s to become debt-free in just 60 months. At least 75 percent of creditors, in terms of value, must vote in favour of the IVA. An IVA is only suitable for dealing with serious personal debts over £15,000 and represents the principle alternative to personal bankruptcy. It is a debt solution that is normally only pursued by over-60’s that own their own home.
Personal Bankruptcy for the Over-60’s
Personal bankruptcy is the best known debt solution. It allows over-60’s to become debt-free in just 12 months, provided that speculation isn’t the primary reason for their personal debts. Whilst it can help over-60’s balance household bills, it isn’t the right debt solution for home owners. Retired people that own a home may be better suited by an Individual Voluntary Arrangement.
How Debt Management Plans can Help Over-60’s with Financial Difficulties
A Debt Management Plan is a way for over-60’s to manage household bills and overcome financial difficulties. Debt Management Plans help debtors reduce monthly repayments to ensure that retirement income meets all essential outgoings without creditor harassment. Retired people must have a minimum of three creditors and be in a position to contribute at least £100 each month. It may be possible to stop further charges and interest accruing on any personal debts.
A Debt Relief Order Can Help Over-60’s Become Debt Free
Debt Relief Orders are a new government debt solution designed to help over-60’s become debt-free in just 12 months. It is a debt solution for retired people on low incomes. A Debt Relief Order is only suitable for individuals that have a disposable income of less than £50 per month and assets valued at under £300. An intermediary, who is a qualified debt counsellor, will help over-60’s with the necessary paperwork.
Financial difficulties and personal debts may seem overwhelming, but there are debt solutions available to help over-60’s manage household bills. An Individual Voluntary Arrangement (IVA) or personal bankruptcy allows over-60’s to become debt-free. Others may wish to manage personal debts with a debt management plan or Debt Relief Order. Always consult a qualified debt counsellor before proceeding with any debt solution.