The main options available to people with serious debt problems are listed below, in order of how serious each option is perceived to be.
Consolidation Loan/Remortgage
This involves either remortgaging your home or taking out a new loan in order to settle all your other debts. The advantages and disadvantages of doing this are shown here.
This solution would be available to anybody with sufficient equity in their home to do this (for a secured loan/remortgage) and sufficient income and decent credit record to be able to obtain and manage the payments on their new mortgage.
Debt Management Programs
These involve repaying your creditors at a lower rate than you are doing at present. The advantages and disadvantages of these are shown here.
Debt management programs can be either informal (self-managed), professionally managed by a third party, or agreed and supervised by a Court. They are most suitable for people with lower levels of debt, especially where the inability to repay at normal levels is thought to be temporary.
Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors under which you repay whatever amount you can afford for an agreed period, normally 60 months, after which the remaining debt is written off. The advantages and disadvantages of an IVA are shown here.
An IVA is most suitable for people with quite serious amounts of debt, and for whom the likely alternative would be formal bankruptcy. It is agreed by a Court and supervised by an Insolvency Practitioner.
Bankruptcy
For some debtors, the best solution is to declare themselves bankrupt. The advantages and disadvantages of this step are shown here.
Declaring yourself bankrupt is a very serious step and should be considered a last resort. It should only be considered by anybody who cannot realistically opt for any of the above methods. It does draw a line under your debts, but you may be required to pay a sum to your Trustee in Bankruptcy for up to three years afterwards.
Do nothing at all
Doing nothing may be considered by some people to be the easy option, but it is in fact the worst choice of all. Your debtors will not stop chasing you, they will continue to add interest, charges and Court fees to your account, and if you are a homeowner they may be able to convert their unsecured debts into debts which are secured on your home.