DebtOptions

Online information about Individual Voluntary Arrangements can be confusing as a great deal of hearsay and myths about IVAs circulate on the Internet and in everyday life.  Sometimes, less scrupulous ‘debt management’ companies make wild promises or consumers post justifiable concerns about misleading ‘debt management’ claims.

We believe the best form of support is impartial, independent advice tailored to individual situations – and understanding the common myths about IVAs may help you before contacting us for in depth advice.

Myth: An IVA will ‘wipe out your debts by 95%’.

Reality: They typically won’t ‘erase’ as much as 95% of problem debts. Instead, an IVA will last 5 years or more, with a manageable repayment plan. At the end, debts they applied to are written off, but only if their terms and conditions have always been met. Be wary of any company offering inflated promises to ‘wipe out debts’.

Myth: An IVA is a ‘Government loophole’ to avoid paying back your debts.

Reality: IVAs were first introduced under Part VII of the 1986 Insolvency Act as a workable solution to individual insolvency and these days represent a routinely used legal debt solution to serious debt problems.

Myth: An IVA is a ‘new’ solution that can solve almost all debt problems.

Reality: Again, Individual Voluntary Arrangements came into insolvency law in 1986 and so, they are a well established and legal route to manage debts.  Figures from the government show that over 270,000 people have entered into an IVA since 1986.  Furthermore they don’t necessarily apply to every kind of problem debt. Individually tailored debt management advice is vital for a genuine assessment of whether they could apply to your particular debt problems. In Scotland, Trust Deeds operate in a similar manner and again, do seek independent advice on their suitability.

Myth: ‘The debt companies all charge massive extra fees’.

Reality: We would provide access to an Insolvency Practitioner whose fees would simply be incorporated into the monthly repayment plan instead, at highly competitive rates.

Myth: IVAs are more beneficial to the creditor than to the consumer.

Reality: Creditors may accept an IVA proposal because it could mean that they will receive more repayments than during a bankruptcy. However, there are key consumer advantages and the arrangements should reflect the individuals’ reasonable everyday living expenses.

Myth: The fees are higher than bankruptcy charges but you keep your home.

Reality: There are certain circumstances in which a homeowner’s equity may be excluded from the arrangement; but whatever the arrangement, the fees are often cheaper than bankruptcy.

For genuinely impartial IVA help, call us in confidence on 0800 234 3605 - we are not linked to any lender and will provide our honest assessment of all available debt options you could chose.