Are there alternatives to IVAs?
An IVA is not the only option if you're struggling financially.Here are some alternative
debt solutions you may wish to consider:
Informal Agreement
An informal agreement can be arranged between you and your creditors if you feel like you are struggling to meet monthly repayments on your
debts. This is set up without the involvement of a third party. As a result a more manageable budget for repayments may be possible.
Bankruptcy
Bankruptcy is an option that needs to be considered very seriously and thorough advice should be obtained from
bankruptcy experts before making any decisions. Essentially, going
bankrupt will mean you will completely be rid of your
debts. However this option has serious implications. For example, it could mean there is a big possibility you could lose your home or any other assets. Furthermore,
bankruptcy is published in the 'London Gazette' as well as local newspapers where you live. Bankruptcy may affect any professional status; you cannot work in the financial services or be a director of a company.
Debt Management Plan
A
Debt Management Plan is not a legally binding option and is set up by a third party between you and your creditors. It involves a negotiation where
debt repayments are evaluated according to what you can actually afford to pay back. The interest on your
debts may be frozen but this is up to the creditor and as the terms are not legally binding, it may change within the duration of the scheme. There is no fixed time scale for a
Debt Management Plan as it depends on how long it takes you to
pay off your debts. For more information on
Debt Management Plans, please visit
www.debtfixers.co.uk.
Debt Relief Order
A DRO is a form of insolvency proceedings designed to help individuals who have relatively low debt, few or no significant assets and little surplus income.
A DRO will last for 12 months and in this 12 month period no creditor named in the order can take action to collect their debt without the permission of the Court. After the 12 month period has concluded you will no longer be liable for the debts included in the order, unless your circumstances have significantly improved. It is generally recommended that DRO's are not for home owners, but each case should be reviewed on its own merit and in order to qualify for a DRO you must meet the following conditions:
- You must be unable to pay your debts.
- You must owe less than £15,000.
- You can own a car to the value of £1000 but the total value of other assets must not exceed £300.
- After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.
- You must be domiciled (living) in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.
- You must not have been subject to another DRO within the last 6 years.
- You must not be involved in another formal insolvency procedure at the time you apply
DROs do not involve the courts. They are run by The Insolvency Service in partnership with approved intermediaries, who will help you apply to The Insolvency Service for a DRO. Some debts can not be included and restrictions are placed on individuals in a DRO.
Debt Consolidation Loan
A consolidation loan can be taken out in order to pay off all your existing unsecured debts (e.g. credit cards). It may mean stress levels are reduced as you will not have to worry about paying numerous creditors. Consolidation loans may be taken out against a property and over a long period of time so it is vital to keep up with repayments and not risk losing your home. (This avenue is only suitable for you if you have a relatively low level of debt.)
Full and Final Settlement Offer
A
Full and Final Settlement Offer is an offer of partial repayment to your creditors in the form of a one-off lump sum payment in return for having the remainder of your debt written off. A Full and Final Settlement Offer is a suitable strategy to clear your debts if you have access to a lump sum of money, eg an inheritance or redundancy payout.
To find out how the various options compare to each other go to
Is an IVA right for me?Free initial debt advice
We can give you advice on the best
debt solution for you. Call us on freephone
0800 16 999 46 or simply fill in the application form on the right.
Insolvency Practitioners at Money Debt and Credit Ltd act without any personal liability
Money Debt and Credit Ltd, Registered in England & Wales No.05588842.
Registered Office: 45 Clarendon Road, Watford WD17 1SZ