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Alternatives to an IVAWhile IVAs are designed as a solution to help those experiencing financial difficulties, they are not the only debt management option available and as a consequence may not be suitable for all circumstances. Before entering into an individual voluntary agreement it is important to be aware of the alternative options available to you and their respective suitability to your needs. Depending on your disposable income, your employment status, the total amount of money you owe and the number of creditors to whom you are making repayments there may be a number of alternative solutions that better fit your situation. These include budgeting, debt consolidation, informal arrangements, debt management and bankruptcy. If you are unsure whether an IVA is best for your individual circumstances, speak to us today! |
We could help you write off up to 75% of your debt.
These are just some of the lenders we have successfuly negotiated with in order to reduce debt for our clients...
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Budgeting
When looking at your monthly income and expenditure, if you notice that your necessary outgoings (i.e. loan repayments, rent, insurance, food etc) are less than your monthly income it may simply be the case that by 'cutting back' on spending and carefully budgeting your money you are able to afford your loan payments without the need for formal action.
To calculate your personal budget you should begin by listing all of your monthly outgoings - look at recent bank statements to ensure you are being accurate. Include regular amounts owed such as rent, loan repayments and bills, everyday items such as food and petrol and also one off items such as birthday presents. You should then make a list of your regular income; include wages, benefits, and rent from lodgers. Once you have done this you will be able to work out your true monthly disposable income and identify areas where you could save.
For more information on budgeting visit www.direct.gov.uk.
Debt Consolidation
If you are paying a high rate of interest on your debts, such as that charged by many credit and store cards, consolidating your debts with a lower rate loan may be a suitable option. By paying a lower rate of interest on the money you owe you may either choose to make the monthly payments more affordable or to pay the same amount and clear your debts in a shorter period of time. Additionally, consolidating your debts into one loan may enable you to reduce your outgoings to one monthly payment that is easier to manage.
It is however important to be aware that by consolidating your debts you are not actually reducing the total amount you owe, only the number of creditors to which you owe funds and, if you choose a consolidation option with a lower interest rate to the one you are currently paying, the monthly amount you are paying in interest. It is possible that by consolidating your debts you may end up paying more overall and over a longer period. These are all valid points to consider when deciding if consolidation is right for you.
For more information on debt consolidation visit www.directgov.uk.
When looking at your monthly income and expenditure, if you notice that your necessary outgoings (i.e. loan repayments, rent, insurance, food etc) are less than your monthly income it may simply be the case that by 'cutting back' on spending and carefully budgeting your money you are able to afford your loan payments without the need for formal action.
To calculate your personal budget you should begin by listing all of your monthly outgoings - look at recent bank statements to ensure you are being accurate. Include regular amounts owed such as rent, loan repayments and bills, everyday items such as food and petrol and also one off items such as birthday presents. You should then make a list of your regular income; include wages, benefits, and rent from lodgers. Once you have done this you will be able to work out your true monthly disposable income and identify areas where you could save.
For more information on budgeting visit www.direct.gov.uk.
Debt Consolidation
If you are paying a high rate of interest on your debts, such as that charged by many credit and store cards, consolidating your debts with a lower rate loan may be a suitable option. By paying a lower rate of interest on the money you owe you may either choose to make the monthly payments more affordable or to pay the same amount and clear your debts in a shorter period of time. Additionally, consolidating your debts into one loan may enable you to reduce your outgoings to one monthly payment that is easier to manage.
It is however important to be aware that by consolidating your debts you are not actually reducing the total amount you owe, only the number of creditors to which you owe funds and, if you choose a consolidation option with a lower interest rate to the one you are currently paying, the monthly amount you are paying in interest. It is possible that by consolidating your debts you may end up paying more overall and over a longer period. These are all valid points to consider when deciding if consolidation is right for you.
For more information on debt consolidation visit www.directgov.uk.
Become Debt Free after just 60 months!
Debt Management
An informal debt management arrangement may be suitable for those who have low levels of disposable income and as a consequence are unable to meet their regular loan repayments. They consist of a settlement formed with your creditors under which you agree to continue to meet monthly payments but for a lower, more affordable amount of your loan.
Informal agreements are not officially regulated and while this means they are flexible to your circumstances and relatively simple to set up, it also means that they are not a legal agreement. Therefore, your creditors are still able to include additional interest and charges to your debt, to review, and alter the agreement periodically and even to revoke the agreement.
For the above reasons, this type of solution only tends to work in reality when you owe money to a small number of creditors, not least because all creditors must agree (and continue to agree) to the informal agreement for it to be deemed valid.
Bankruptcy
Bankruptcy is a possible solution when you are unable to repay your debts. It is a court order that stops creditors taking court action against you and frees you from your debts, while still allowing you to keep a reasonable amount to live on.
However, when you are declared bankrupt you will be subject to some rather imposing restrictions. For instance once you are made bankrupt it can be difficult to apply for credit, you may have to sell your home, car or other luxury items and depending on your profession, your employment status may be affected. Additionally, your credit status is likely to be affected even after your bankruptcy has been discharged (ended).
You can either declare yourself bankrupt voluntarily, be involuntarily declared by a creditor to whom you owe money. If a bankruptcy order has been taken out against you, you should cooperate fully in order to try and reach a settlement before the matter reaches court.
Whether bankruptcy is a suitable option for you will depend on the severity of your debts and your realistic capacity to pay. Because of the long term repercussions associated with bankruptcy you should thoroughly research your options before taking action. It is important to be aware that some loan varieties such as student loans will not be cleared by bankruptcy.
For more information on bankruptcy visit www.direct.gov.uk.
An informal debt management arrangement may be suitable for those who have low levels of disposable income and as a consequence are unable to meet their regular loan repayments. They consist of a settlement formed with your creditors under which you agree to continue to meet monthly payments but for a lower, more affordable amount of your loan.
Informal agreements are not officially regulated and while this means they are flexible to your circumstances and relatively simple to set up, it also means that they are not a legal agreement. Therefore, your creditors are still able to include additional interest and charges to your debt, to review, and alter the agreement periodically and even to revoke the agreement.
For the above reasons, this type of solution only tends to work in reality when you owe money to a small number of creditors, not least because all creditors must agree (and continue to agree) to the informal agreement for it to be deemed valid.
Bankruptcy
Bankruptcy is a possible solution when you are unable to repay your debts. It is a court order that stops creditors taking court action against you and frees you from your debts, while still allowing you to keep a reasonable amount to live on.
However, when you are declared bankrupt you will be subject to some rather imposing restrictions. For instance once you are made bankrupt it can be difficult to apply for credit, you may have to sell your home, car or other luxury items and depending on your profession, your employment status may be affected. Additionally, your credit status is likely to be affected even after your bankruptcy has been discharged (ended).
You can either declare yourself bankrupt voluntarily, be involuntarily declared by a creditor to whom you owe money. If a bankruptcy order has been taken out against you, you should cooperate fully in order to try and reach a settlement before the matter reaches court.
Whether bankruptcy is a suitable option for you will depend on the severity of your debts and your realistic capacity to pay. Because of the long term repercussions associated with bankruptcy you should thoroughly research your options before taking action. It is important to be aware that some loan varieties such as student loans will not be cleared by bankruptcy.
For more information on bankruptcy visit www.direct.gov.uk.
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© 2007 IVAExpert.org. All rights Reserved.
Registered office: Systems Technology Park, Elettra Avenue, Waterlooville, Hampshire PO7 7XW.
© 2007 IVAExpert.org. All rights Reserved.