1 Ask for help

One of the most difficult things to do when you are under financial duress and living with a negative equity problem is to simply ask for help.

Many people spend months and even years ignoring the problem, wishing it will go away or simply work itself out, however this is not the case.

Asking for help is the most important step of this recovery process. The only way to start resolving the issue is to ensure you have enough understanding of the situation, then you will be able to fully understand the options open to you.

Asking for help is recognised as one of the most difficult steps in this process.

2 Engage with a firm of regulated debt advisors

Since the global financial crisis in 2008, many people saw this as an opportunity to set up a business and give debt advice. The problem now is there are huge numbers of companies in this space who have not been regulated by the financial conduct authority and standards of professionalism and knowledge can be misleading.

It is vitally important that if you do find yourself in a negative equity or distressed debt position, that you only engage with a company that meets all of the requirements of the regulatory bodies to give you the standard and quality of advice you need.

There are some excellent regulated firms to give you the advice you need. Make sure when you are choosing who you are going to appoint to represent you and your family that they meet all the necessary criteria. It could be the difference between you achieving a positive or negative outcome.

3 Full disclosure of all financial information

You have now engaged a firm of professionals that are regulated to give you the advice you need.

To progress matters you now need to provide that company with full disclosure of all of your financial information.

This is a critical element of your plan, if you wish to break free from negative equity.


On a number of occasions we have been presented with what we have believed to be all of the financial information which relates to a particular client. We then produce a plan and proposal based on that information which ultimately is presented to the bank.

If for whatever reason the information we have presented is not an accurate reflection of the client's financial affairs, and the bank becomes aware of this, the plan and the proposal will be rejected.

4 Production of a plan

Your team of advisors will review all of the financial information that relates to your individual situation.

They will then present each of the options open to you and thoroughly discuss all the information presented.

From this, a plan will be determined and agreed between both parties.


If you are living in your home and want to remain in that property but you have an arrears situation and significant negative equity, all of the detail surrounding your circumstances will be discussed with you at that time.

It will be decided between you and your advisor how you would like to progress matters and the options available to you. A plan will then be agreed. You will be advised on what is achievable and realistic given your circumstances. This underpins the importance of only engaging with a professional, fully regulated firm who offer expertise in these complex situations.

5 All parties commit to your plan

Man Walking Up Sand Hill

The plan that is now agreed is a joint plan whereby both you and your advisors have a number of tasks to complete in order for the plan to be successful. These commitments will vary depending on the client's own personal financial situation.

It is of the utmost importance that the agreed plan should not at this point be deviated from.

If you are trying to come to a mediated settlement it will definitely not help your case with the bank to deviate from the agreed plan. Talk to your advisor if you are uncertain about anything.

6 Advisor puts your plan to your creditors

Signing Forms

Your plan is set and all parties have agreed to the terms of delivering the plan to the satisfaction of your creditors. This proposal will now be put to your creditors by your regulated advisor. It is important throughout this process that your advisor keeps the bank informed as to where you are in the process and furthermore develops a professional rapport with the bank representative.

This could be a bank official or the bank's legal representatives. A poor relationship between your team of advisors and your creditors can have a negative impact on reaching an agreement.

7 Full and final settlement reached

On receipt of your plan, the creditors will acknowledge same and a new process of mediation and negotiation begins. Your creditors usually have questions about the information received. Your advisor will work closely with your creditor to ensure they have all of the information they need to reach a decision on your proposal.

It is now, at this point when all of the financial information has been provided and all queries have been addressed that a full and final settlement is reached with your creditors.

You have now broken free from your negative equity position and are free to get on with the rest of your life.

If your goal is to break free from negative equity and achieve financial freedom, it is important to understand each of the steps set out in this guide.

This is a serious process and it is also important that you trust the guidance of your team of advisors.

Both the bank and your creditors will be looking for commitment to this process. Lack of cooperation or failure to disclose relevant information means your plan is more likely to fail.

Choose the right company to act for you and your family. Ensure that they are regulated first and foremost and also ask if they could provide information regarding the deals that they have been able to agree on behalf of their client base. This is a standard request so feel free to ask whenever you meet with your advisor at that first consultation.

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