Comparing IVAs to other debt management solutions
Which is most important to you?
Peace of mind
People in financial difficulty often experience the following:
- anxiety attacks
- insomnia
- depression
- breakdown in communication with family members
- relationship problems
- stress brought about by debt collectors phoning and mailing payment demands
- lack of concentration
- problems at work
The FIRST thing to do if you are feeling depressed or are experiencing anxiety attacks is consult your doctor. Your GP will be able to suggest suitable treatments. Nothing is more important than your health, both for you and for your nearest and dearest.
Once you are feeling better, there are a number of effective ways of resolving your debt problems:
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. If the monthly payment is one you can afford, taking into account your mortgage and any other secured debts, this may be the right option for you.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. Your home is safe so long as you can meet repayments in the future. We would recommend that you consult an Independent Financial Advisor before taking this step.
A DEBT MANAGEMENT PLAN enables you to repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. This could be the answer for you, though you need to check which of your creditors will be prepared to stop charging interest, rather than merely deferring interest for a limited period. It won't stop letters and phone calls from debt collection agencies. And it won't stop creditors seeking charging orders on any property you have, obtaining County Court Judgments or attachment of earnings orders.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually over a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. The payment plan will be based on what you can afford to pay each month, so it usually means a substantial portion of your debts are written off. In terms of peace of mind, one benefit of an IVA is that it is the Supervisor's duty to deal with creditors so you won't be plagued by phone calls and letters from debt collection agencies. You also know precisely what your payment obligations will be for the five year life of the IVA.
Filing for BANKRUPTCY is a big decision but, once taken, can help some people draw a line under their debt and start afresh. The bankruptcy period usually lasts for one year and could affect your future employment choices. It also requires a notice to be published in your local newspaper and in a publication called the London Gazette.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
Protecting my career
Most careers are safe, whatever option you choose to tackle your debt problems. Your employer is unlikely to find out that you have debt problems, unless there is a clause in your contract of employment or professional regulations which requires notification. The FIRST step is to read your contract of employment and professional regulations to check whether your employer or professional body needs to be informed.
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. Your employer will not find out about this unless you have a loan with your employer and are paying it off.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. Your employer is unlikely to find out about this arrangement and would probably be unconcerned if they did. Interest rates are likely to be lower than those that apply to unsecured debt, though your home will be at risk if you are unable to meet repayments. We would recommend that you consult an Independent Financial Advisor before taking this step.
A DEBT MANAGEMENT PLAN enables you to repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. Your employer need only find out about a debt management plan if they are included in the plan. But remember that such plans won't stop creditors seeking charging orders on any property you have, obtaining County Court Judgments or attachment of earnings orders. In the latter case, your employer, obviously, would be informed.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually over a period of five years, after which you will be debt free. Your employer would only be notified if they were also a creditor. However, certain professional bodies require you to notify them of your intention to apply for an IVA.
Filing for BANKRUPTCY requires a notice to be published in your local newspaper and in a publication called the London Gazette. Certain professions and occupations are closed to, or do not look favourably upon, bankrupts.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
Saving my home
If you own your own home, it's essential to restrict your debt solution options to those that safeguard your property. Those in rented accommodation are unlikely to suffer any consequences from the debt solution choices they make so long as they pay the rent and the accommodation is not connected to their job.
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. If you can afford the monthly payments after you have made your mortgage payment, this may be a good option for you.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. Your home will be at risk if for any reason you are unable to meet repayments in the future. And any creditors not consolidated into the re-mortgage could take action against you. We would recommend that you consult an Independent Financial Advisor before taking this step.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually over a period of five years, after which you will be debt free. If there is equity in your property (ie the value of your home less the amount owed to all secured creditors) your unsecured creditors will expect a proportion of this money. Credit card companies generally demand 75% of this equity be paid into the IVA. But this amount is typically paid in the last two years of your IVA, when you are in a position to re-mortgage your home. Also, the IVA payment plan will be based on what you can afford to pay each month, after taking your mortgage payments into account, so it usually means a substantial portion of your debts are written off.
If you have equity in your home, then filing for BANKRUPTCY can mean that the Trustee will look to realise that equity by whatever means. However, if your spouse or children are living with you, you may be able to defer any sale of your home until the end of the first year after your bankruptcy. After that time, the interests of your creditors will usually come first and the court will only refuse an order for sale in exceptional circumstances or if the value of your interest in the property is worth less than £1,000. Before seeking an order for sale, the Trustee would, however, usually offer the bankrupt's spouse the option to buy out the bankrupt's interest in the property. But if they are unable or unwilling to make that payment the Trustee could obtain an order forcing the sale, regardless of whether there are children or other dependent relatives living there.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
Keeping my car
Transport to and from work and for seeing friends and family is important, as is the need to safely get the children to school. Most debt solution options will enable you to keep a vehicle for everyday use, but you may need to give up an expensive car and run something more modest.
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. Creditors do not need to be informed of what vehicles you own, so your car choice will be unaffected.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. Again, creditors need not be informed of what vehicles you own, though your home will be at risk if you are unable to meet repayments. We would recommend that you consult an Independent Financial Advisor before taking this step.
A DEBT MANAGEMENT PLAN enables to you repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. Creditors often want to see a schedule of income and expenditure before agreeing to any plan, so extravagant expenditure on a luxury vehicle will not be accepted.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and you creditors in which you agree to make manageable payments every month, usually over a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. The Licensed Insolvency Practitioner dealing with your proposal must list all your income and expenditure so any vehicles you own will be declared. Those with a value of over £4,000 might need to be sold and replaced with a cheaper vehicle, with your creditors receiving the balance.
Filing for BANKRUPTCY means that, once appointed, the Trustee in Bankruptcy has the right to sell most of the bankrupt's assets. The bankrupt can seek to have certain assets, like a modest vehicle, excluded on the grounds that they need it to get to and from work.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
Taking control of my debts
Taking a proactive approach to your debts is the best way of sorting them out for good. Burying your head in the sand means your creditors may:
- continue to harass you from dusk till dawn
- obtain a County Court Judgment against you
- obtain an income payment order against you
- obtain a charging order on your home (if you own it)
- petition for your bankruptcy
You can address some (or all) of these risks immediately when you take one of the following options for dealing with your debt:
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. If the monthly payment is one you can afford, taking into account your mortgage and any other secured debts, this may be the right way for you to take control of your debts.
RE-MORTGAGING YOUR HOME is another option, if you have enough equity in your home to cover the debts that you owe. Your home may be at risk if you are unable to meet repayments. We would recommend that you consult an Independent Financial Advisor before taking this step.
A DEBT MANAGEMENT PLAN enables to you repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. This could be the answer for you, though you need to check which of your creditors will be prepared to stop charging interest, rather than merely deferring interest for a limited period. It won't stop letters and phone calls from debt collection agencies. And it won't stop creditors seeking charging orders on any property you have, obtaining County Court Judgments or attachment of earnings orders.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually for a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. The payment plan will be based on what you can afford to pay each month, so it usually means a substantial portion of your debts are written off. Once it is up and running, it is the Supervisor's duty to deal with creditors so you won't have to be plagued by phone calls and letters from debt collection agencies. You also know precisely what your payment obligations will be for the five year life of the IVA.
Filing for BANKRUPTCY is a big decision but, once taken, can help some people draw a line under their debts and start afresh. You will normally be embarking upon a one-year period of restrictions and a three-year period of income payments. Also, unlike with an IVA, you don't get a say in choosing the Licensed Insolvency Practitioner who will be your Trustee in Bankruptcy.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
Avoiding the stigma of bankruptcy
The stigma associated with bankruptcy has diminished over the last 20 years. Before 1986 an individual was bankrupt for seven years and had to apply (in open court) for his/her discharge. Then on 29 December 1986 discharge became automatic (meaning no need to apply to the court) after three years. The time period was further reduced to twelve months on 1 April 2004, though a longer time period may apply in certain circumstances. Since then, the bankruptcy figures have rocketed upwards. And the more bankrupts there are, the less stigma there is.
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. No public notification is required, though it could be noted on credit check files.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. No public notification is required, though it could be noted on credit check files. Your home may be at risk if you are unable to meet repayments. We would recommend that you consult an Independent Financial Advisor before taking this step.
A DEBT MANAGEMENT PLAN enables to you repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. This does not prevent action by creditors so County Court Judgments, charging orders or even bankruptcy petitions could follow.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually for a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. IVAs must be requested from the Department of Trade and Industry, so your entry could be found in DTI records. An IVA affects an individual's credit rating. Click here to find out more about how credit rating agencies deal with IVAs.
Filing for BANKRUPTCY means all your creditors are informed by a notice published in your local newspaper as well as a publication called the London Gazette.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
What are my options?
Your debt solution choices depend entirely on your individual circumstances. That's why it's important to consult an expert, preferably a Licensed Insolvency Practitioner. But here is a brief description of some of the options that may be available:
A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. If the monthly payment is one you can afford, taking into account your mortgage and any other secured debts, this may be the right option for you. These loans are more suitable for lower levels of debt, between £1,000 and £25,000.
RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. Your ability to re-mortgage will depend on the size of the loan versus the value of your property. Loan values are seldom for the full 100% of the property value. Re-mortgaging is also dependent on your ability to pay. One bank recently advertised extending mortgage loans for six times the annual earnings of the householder, but these deals are rare and your home will be at risk if for any reason you are unable to meet repayments in the future. Before taking such a step, we would recommend that you consult an Independent Financial Advisor to identify the most cost-effective lender and to clarify any additional financing charges.
A DEBT MANAGEMENT PLAN enables to you repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. This is a good option for you if you have lower levels of debt (between £1,000 and £25,000) where a consolidation loan is not available. You should find out which of your creditors will stop charging interest, rather than merely defer interest for a limited period. You also need to check the length of the repayment term.
An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and you creditors in which you agree to make manageable payments every month, usually for a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. Typically, you would need debts in excess of £18,000 and an ability to make a monthly contribution of at least £200 for an IVA to work. Creditors generally expect you to have at least three other creditors before they will approve your IVA proposal.
Filing for BANKRUPTCY is available for all levels of debt over £750. It is often the right choice for those who have debts of £15,000 or more and little or no spare cash each month after their cost of living has been deducted. The bankruptcy period normally lasts for one year and requires the publication of a notice in your local newspaper and in a publication called the London Gazette.
If you have a court judgment against you and total debts of less than £5,000, you can apply to court for an ADMINISTRATION ORDER. This will involve you making a monthly payment to court, which will charge a handling fee of up to 10% for distributing the money to your creditors. Whist the order is in place, no creditors may take action against you. However, if you miss a payment the order may be revoked, although you can apply to court to change the order if your circumstances change.
Get immediate free debt advice from an IVA expert by calling Debt Lifeboat on 0800 917 3328
For free advice from an IVA expert about solving your debt problems call Debt Lifeboat now on 0800 917 3328
