Our calculator will help you to decide whether an IVA is right for you.
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.