Towards the end of 2009 the recession in the UK came to an end. Though this was over 6 months ago, the effects are still resonating throughout the country as we get towards the last third of 2010. One group who found themselves effected by the recession were those who earned high wages, as some of them ended up financially insolvent. The traditional expectation is usually that people who dont earn very much money or are unemployed are effected the most by debt issues. We definitely don’t expect middle class professionals to get into such a financial mess that they have to take out an insolvency plan.

However, such people were indeed victims of the recession in a number of cases. The number of insolvencies amongst higher earners increased notably and this has been attributed to their ‘credit’ lifestyles. In many cases, these are people who have at least one credit card and who spend on that credit card regularly. Those made insolvent despite high wages often spend a lot on credit in this way. However, they then pay it off quickly.

This lifestyle was ended abruptly when the recession kicked in, with banks and credit card providers making credit increasingly difficult to come by as they prepared for the difficult economic times ahead. With less credit available, those who had the credit habit found themselves in a lot of difficulty and were forced to borrow money just to pay off loans.

As the majority of businesses in the UK struggled, mass redundancies spread through the country and many individuals began to struggle with their debt. When the higher earners lost their income they were unable to service their debt and the amount of debt quickly grew as more and more credit was used to pay off credit cards.

These reasons are why so many high earners ended up insolvent. This does show that it is not just low earners who are at risk from personal debt problems – those that earn high wages are also in danger.

Get help to Consolidate Debt.

Being in a financial bind is a situation that many of us are familiar with. Sometimes, even when we are being good with our payments and budgets, things happen that can through us into a financial hold – be it a medical emergency or sudden unemployment. When getting out of debt becomes difficult to impossible it is time to look to a debt solution. One great option is a debt management program, or DMP.

You can find debt management through either online vendors or credit counseling agencies. These programs work for you with the collection agencies and creditors to lower the rates on your bills and that in turn will make your monthly payment lower making it easier for you to pay down and eliminate your debt.

You can bundle a number of bills under a debt solution like DMP be they medical, credit card, or even student loans. Knowing whether or not you need a DMP is simple. Do you have so many bills that managing them seems impossible? Have you tried to set up a repayment plan on your own but it wasn’t effective? Are you receiving collection calls during the day? If you answered yes to any of the previous questions, it may be time to seek the help of a DMP.

The benefits offered with debt management include the lowering of your interest rates and monthly payments, as well as waiving any of the over the limit and late fees you’ve been accumulating. Also, they will put an end to collection calls and make your debt one monthly manageable payment.

So you think you’re ready for debt management? Make sure you look at the company’s profile, background, and testimonials. Do a little bit of research before taking the next step and when you the DMP will negotiate on your behalf to make an easier repayment plan. The monthly singular payment you make will be distributed among your creditors by the debt management program.

Alleviating your debt is the smart choice, but there are things that you need to consider. If you are offered a repayment plan that is still too expensive for you to accomplish, don’t do it! If you are offered a plan that you feel is something that is feasible, get it in writing and maintain it for your records. Any plans that are offered to you should be approved by your creditors as something they will accept. Make regular payments and make sure they are sent on time so you’re no longer a late payer.

Working with a debt program is not detrimental to your credit score, but waiting around and not making payments, or being inconsistent with your payments will do nothing in terms of being a debt solution.

For those that are in need of financial assistance, there is a debt solution waiting for you. However, once you find that solution, it is important that you change your spending behavior or you will end up at point 1 all over again.

Believe it or not, the bankruptcy laws are there for your protection. The old days of companies, particularly credit card companies, rewarding people for loyalty have long gone and in the current economic climate financial institutions generally have only one interest – their bottom line. Declaring yourself bankrupt offers a way out.

However, before declaring yourself bankrupt, you should examine every possible alternative avenue. Bankruptcy stays on your credit report for up to ten years, and under the Bankruptcy Abuse Prevention and Consumer Protection Act, 2005 (“BAPCPA”) it is now law that anyone filing for bankruptcy must, within 180 days of filing, attend US Trustee approved consumer credit counselling to ensure that all alternatives are explored.

These are the steps to be taken if it is found that having gone through all the options bankruptcy is the only viable way forward.

Firstly, you have to decide which type of bankruptcy you are going to file under, the two most common being chapter 7 and chapter 13. Chapter 7 is often seen as the preferred option, but under the new BAPCPA rules, all applicants for bankruptcy have to undergo a means test, the result of which often forces individuals into chapter 13.

Next thing is to think about whether or not you employ the services of a lawyer. I would strongly suggest you do. This is your financial future at stake and you should have the best legal representation you can afford.

Thirdly, once you have decided to file, do not use your credit cards. This is because your case could be revoked if you have willingly taken on debt that you know you cannot afford to repay.

“Automatic stay” is triggered when your lawyer files your bankruptcy case. Creditors then have to approach your lawyer direct regarding any debt, thus taking the pressure off yourself.

A meeting of creditors, which you have to attend, will be called shortly after filing for bankruptcy. This last about ten minutes and you are questioned, under oath so that the truth of your financial statement can be proved. Beforehand you will have submitted a list of creditors and your personal assets.

Once your assets have been sold and the proceeds disbursed among your creditors you no longer owe anything, even if your assets were insuficient to cover all outstanding debt, (chapter 7 filing). A notice of discharge will be sent out after 60 days.

Chapter 13 works differently to 7 in that no assets are sold. A repayment plan is drawn up, the terms of which are determined by means test and can be harsh, to repay all your creditors over a 3 – 5 year period. The bankruptcy is discharged when the repayment plan is complete and 30 – 60 days have passed since the final payment.

For additiregardingal free informatiregarding regarding bankruptcy visit www.declaringyourselfbankrupt.org where you will find a load of useful informatiregarding and advice regarding declaring yourself bankrupt.