Coping With Debt
Tips for handling your debts
IVA
An IVA, or Individual Voluntary Arrangement, is a formal agreement between you and your creditors over how you will repay your debt over a period of usually 5 to 6 years. You may be able to negotiate lower monthly repayments, lower interest, or a reduction in the debt by cancelling previous interest charges.
An IVA must be drawn up by a qualified insolvency practioner, and most debt advisors can arrange this.
Once an IVA has been made, it has the backing of the courts. Provided you keep to the terms agreed, you are protected from any further recovery action on your debts.
However, should you fail to make the repayments agreed, your debtors can apply to make you bankrupt.
Bankruptcy
Bankruptcy rates have rocketed in recent years as people have increasingly seen it as a way of escaping from debt.
When you are made bankrupt - either voluntarily or by a court action - you lose control of your assets, which will be shared out among your creditors. In return, you will have a 'fresh start' with your debts cleared.
There are also restrictions imposed on you for the period of your bankruptcy - for example, you cannot act as a company director, or work as a chartered accountant. These restrictions will last until your bankruptcy is discharged, usually after 2 or 3 years for a first bankruptcy.
Your credit rating will also be very badly affected by bankruptcy, and you will find it difficult to get credit, especially unsecured credit, for years to come.
Bankruptcy is the most drastic way of dealing with debt, but if you can see no other way of keeping up your repayments, you may want to explore the possibility by consulting with a professional debt advisor.
Home - Bad Credit
