For many UK citizens a formal, legal and binding agreement with creditors – an IVA, or Individual Voluntary Arrangement – may be the best solution for debt problems. These arrangements provide a flexible alternative to bankruptcy, allowing the individual to repay as much as they can afford. IVAs usually run for a number of years, after which any outstanding debts will be written off.
A very large number of people in the United Kingdom have problems with debts which they have difficulty repaying. These can include mortgage and rent arrears, hire purchase debts, utility bill arrears, store and credit card bills, personal loans and bank overdrafts.
Being in debt can be very upsetting and stressful, especially when aggressive and threatening demand letters are received, and when visits are made by debt collection agencies. Some people make the mistake of borrowing more money to repay creditors, and simply sink further into debt. Others make the mistake of paying the creditor who sends the most threatening letters.
The important thing for those who have debt problems is to realize that there are ways to get help. Charities and some commercial organizations offer debt counselling services, and lenders are obliged by law (e. G., The Banking Code) to act in a reasonable way towards those who get into financial difficulties.
A review by a credit counsellor should identify a person’s assets, living expenses, priority debts and non-priority debts. A plan can then be devised to resolve the problems. Priority creditors (e. G., rent, mortgage) are paid before non-priority creditors (e. G., credit card bills), and the debtor should always be left enough income to cover basic living expenses.
Credit counselors are trained to choose the appropriate solution from a range of possibilities. Where money is available after covering basic living expenses and priority debt repayments, the counselor may propose either a Debt Management Plan, or an Individual Voluntary Arrangement.
If an IVA is set up, then the debtor will enter into a legal contract with his or her creditors. Agreed payments must be made for the specified length of time – this will be no more than 5 years – and after that time has elapsed any outstanding amounts will be written off.
Handling your own debt management can be a real struggle at times. If you need help, contact the debt management experts at deltadebtmanagement.com.