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