it is easy to Get into debt when you are out of work. Debt from loss of work counselling is available on 0800 074 6918

The financial effects of involuntary job loss

This new section of the site will examine the problems faced when the public suffer debt from loss of work or experience the financial effects of an involuntary job loss. Workers who are in debt because of unemployment, ill health, stress are welcome to utilise the services of The UK Insolvency Helpline. If you are a in debt we may be able to help you. The service provides a range of money advice services to the public including debt advice, financial help, a 24 hour free helpline, counseling and housing support.

The UK Insolvency Helpline are the main advice providers of debt from work loss related issues in the UK. We work with most of the UK's trade unions and employment assistance providers. Our ongoing research and statistics show that work loss can result in large and lasting debt problem that can have an effect on future work probabilities. Work Loss, whether it be a short or long term problem can cause a household or family enter into serious debt problems which may take years to solve. The counsellors have much experience in the area of unemployment and work loss and are here to help.

E-Insolvency is a national telephone helpline for people with debt problems in England, Scotland and Wales. The service is free, confidential and independent. Please call 0800 074 6918 for free advice.

There are 2 main reasons for work loss:

1. Cyclical - People are not buying enough British goods and services to employ the available workforce.
2. Technological  - The people seeking work do not have the skills wanted by potential employers.

What can clients do to reduce the effects of debt from work loss?

Mortgage and rent insurance is a great way to protect you from the worries in life. Mortgage Payment Protection and rent Insurance is designed to keep you from getting into debt or missing the mortgage payments due to unemployment, work loss or illness. This insurance is particularly important to protect yourself from getting into constant increasing debt. In circumstances where you feel you will not be able to pay the mortgage or rent due to reasons like unemployment or work loss because of ill health or old age etc, having the Mortgage Payment Protection or rent Insurance or mortgage and rent insurance really helps. The UK Insolvency Helpline understand the reasons why debt can be a direct result of being unemployed or clients being out of work.

Once the debt advice team has helped you to identify which debt solution would work best for you, we can also help you set it up- free of charge and without any obligation. The following methods can be used to deal with debts:

Debt Management Plans (DMP) for help to clear debt from loss of work

The purpose of Debt Management is to help you clear your debts at a reduced level over a fixed period of time to help you make a fresh start with your finances. Your property is not at risk, there are no legal set up costs, debt management plans are very flexible and the plan can be stopped at any time.

Debt Consolidation for help to clear debt from loss of work

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as security, most commonly a house. In this case, a mortgage is secured against the house. Using the security of a property allows a lower interest rate than without it, because by security, the asset owner agrees to allow the reposession of the property to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.

Sometimes, debt consolidation companies can discount the amount of the loan. When the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount. A prudent debtor can shop around for consolidators who will pass along some of the savings. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.

Individual Voluntary Arrangements (IVA) for help top clear debt from loss of work

An IVA is a formal alternative for individuals wishing to avoid bankruptcy.

The IVA was established by the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA compromises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged.

An IVA is a contractual arrangement with creditors and can be as flexible as an individual's own circumstances; they can therefore be based on capital, income, third party payments or a combination of these.

Creditors take a decision at a creditors' meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in bankruptcy. A vote is taken - by value. More than 75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved. If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.

Trust Deeds for help to clear debt from loss of work in Scotland

The Protected Trust Deed (PTD) is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.

Provided certain conditions are met, the Trust Deed may be registered as “protected”, thereby preventing creditors from petitioning for the debtor’s sequestration.

The main advantage of entering into a trust deed are that it takes the pressure off as all correspondence and the Trustee will handle all of the communications from a persons creditors.

Administration Orders for help to clear debts under £5,000

An Administration Order is a single county court order that covers credit debts and certain other debts which are all treated together. It allows you to make a single payment every month into the court. The court staff will then divide the money amongst your creditors on a pro-rata basis. An Administration Order stops creditors from taking further action against you.

Almost 10% of all adults in the UK over four and a half million individuals, have seen their debt levels rise over the last six months according to new research from The UK Insolvency Helpline.

E-insolvency operates the UKs leading free advice resource for families, individuals and small businesses in serious debt.

While most individuals are comfortable with the increase, 57% had factored the rise in borrowings into their outgoings, 41% of those surveyed, amounting to nearly two million adults, were unprepared for slipping deeper into the red.

Loss is the key cause of individuals' running into debt problems and the research reveals that the ability to keep personal finances in order is usually lost because of unexpected life changing events, such as loss of earnings. Somewhat surprisingly, the findings show home and education related expenditure also high up on the list.

E-insolvency is supported by the credit industry and assists the leading advice agencies across the UK to help people regain control of their finances and work with their creditors to repay their debts.

If you are in debt, E-Insolvency will do its best to assist you. The public can contact E-Insolvency on by calling 0800 074 6918. The service is a registered helpline, providing assistance to all types of workers and their dependants have problems including debt, unemployment, work loss, bereavement, ill health or disability, stress, family break ups, redundancy.

When people fear the consequences of bankruptcy to their homes, jobs and livelihoods, it is vital that they are aware there is an alternative. With credit easily available, managing debt becomes even more important. When debts become unmanageable, the longer it takes to seek help, the more difficult the problem becomes. For further information call 0800 074 6918 or complete the form on the left hand side of the page