DebtOptions

IVAs

An IVA is essentially an agreement which operates for a fixed period of time, typically at least 5 years, with a commitment for a monthly payment to be paid throughout that time. Once the IVA has become legally binding, you gain certain benefits providing you keep to its terms. These include a ‘freeze’ on any further interest or charges. There are no notices announcing an IVA in the local papers, which is exactly what happens in bankruptcy. IVAs may prevent you becoming bankrupt and in some cases, losing your home (although not all). As long as you keep up your monthly payments, an IVA will prevent you from bankruptcy, and protect your home.

At the end of the IVA, outstanding debts and interest are written off. There may need to be some initial negotiation with creditors to arrive at a workable solution, and this can be done using one of our Insolvency Practitioners (IPs). This can allow for a professionally managed ‘buffer’ zone for contact between you and your creditors. Once legally formalised, IVAs also have the effect of stopping phone calls/letters from creditors demanding payments, and any new court actions by them.

IVAs are not a DIY option, as they are a formalised process recognised in law. The input of one of our expert debt advisors to help explain more about IVAs and whether one would be suitable for you is therefore essential.

Debt Management Plans

If you owe a minimum amount of £5,000 or more, which you owe to 2 or more creditors, a Debt Management Plan may be the solution for you. You need to have a disposable income of at least £100 available each month – £100 left over after essential living costs and normal bills (your mortgage/rent, food, travel costs/petrol, childcare, gas/electricity, etc). It is essentially a plan that is made with a third party who manages the debts for you. They should help you work out an affordable plan for one simple repayment each month, and then negotiate for you with the creditors. Again, this provides something of a professional ‘buffer’ between you and direct contact with creditors. You make payments to the Debt Management Plan provider who distributes funds to those creditors. Like IVAs, whilst they have some benefits, you should gain professional expert advice to decide whether this is the correct option for you.

Trust Deeds

Trust Deeds apply in Scotland and are legal agreements created with a licensed Insolvency Practitioner (IP).The IP creates a proposal on your behalf to present to creditors, which is usually a 3 year payment plan. Creditors must agree to the Trust deed for it to be binding. In a ‘Protected Trust Deed’, the creditors agree to cease direct contact with you during the Trust Deed’s operation and ‘freeze’ any further interest or charges. Due to the specific nature of both types of Trust Deeds, professional advice is vital to ensure either option is the best one for you.

Bankruptcy

Bankruptcy is often regarded as the least desirable solution, yet the reality of the situation will depend on the individual circumstances. Since bankruptcy is an option with highly formal and legally binding requirements, it is best only ever contemplated with proper impartial advice.

A declaration of bankruptcy is legally binding and involves the appointment of a Trustee. You will need to declare your assets, including property. The Trustee completes a thorough review of your financial situation, including meeting your living costs before distributing payment to creditors. The Trustee becomes responsible for the sale of realisable assets outside of everyday use (‘liquidation’) to make payments and decides distribution among creditors. Entering bankruptcy excludes you from certain trading activities and being a business director until your bankruptcy is discharged. Details of bankruptcies are also more of a public affair in some senses and any future creditors must be informed until you are discharged from bankruptcy.

Founded by company principles with over 11 years experience supporting people with serious debt problems, we are able to provide information and advice on IVAs, Debt Management Plans, Trust Deeds and bankruptcy. Our services are not affiliated to, nor funded by any lenders, so we are perfectly placed to offer independent and impartial advice.

We are licensed under the Consumer Credit Act (1974) and strive to find the best option for you, without making inflated and unrealistic promises to ‘wipe out 95% of debts’ and so on. We aim to find you the most appropriate legal solution to your individual circumstances.

You can apply for our services online or call one of our advisors on 0800 234 3605 for a free and confidential discussion to begin planning your route out of debt.