What is an IVA?

IVA Alternatives

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:

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.