These days people are incurring more debt than ever before and it sometimes becomes more than they are able to manage due to illness, unexpected expenses or a job loss. Fortunately, there are many tools today to help manage your debt problems. It is important to fully understand the options available to you as each one is appropriate for a particular set of circumstances.
IVA (Individual Voluntary Arrangement)
With an
IVA, or Individual Voluntary Arrangement, you can legally write off part of your current debt and repay the remainder. This allows you to reach a more affordable monthly payment and upon completion, be debt free. It also protects your assets (such as your home) while stopping interest and penalties from accruing. This type of arrangement is appropriate for individuals with substantial unsecured debt that they are unable to pay.
Repayment Plan
A repayment plan, also known as a
debt management plan is usually only appropriate for individuals with temporary financial difficulties and debts of less than £10,000. While in a debt management plan, high monthly fees are often charged and interest and penalties will continue to accrue.
Debt consolidation Loan
As a home owner you may be able to utilize a
debt consolidation loan to manage your debt. In many cases you can borrow up to 100% of the value of your home and utilize the funds to repay your unsecured debts. This can be an excellent choice because you can often lower your total monthly payments, but it is also important to consider that you are using your home as collateral.
Bankruptcy
The final option in dealing with overwhelming debt problems is
bankruptcy however, before considering this as an option you should ensure that all other options have been fully explored. In a bankruptcy, your assets will be sold off and the proceeds will be distributed to your creditors and all debt will be cleared. Your bankruptcy will be advertised in your local newspapers and the London Gazette.
