Finance The UK is drowning in personal debt. Figures from Credit Action, the national money education charity, suggest that as of July 2010 Britain’s total personal debt stood at almost £1.5trillion, or to put it another way, individuals now owe more than the country as a whole produces in a year. Not only that but it would appear we’re finding it increasingly difficult to deal with our debt, according to Citizen’s Advice they’re handling 9,000 new free debt advice cases every day. Whilst personal bankruptcy may seem like an attractive option if you are one of those hit worst by circumstances outside of your control that have lead to joining the millions of people struggling with personal debt, it can be a bitter pill to swallow. For some it can lead to the loss of their home, loosing a much loved job, and long term issues with obtaining credit. So what are the alternatives? Individual Voluntary Arrangements (IVAs): An IVA is a legally binding agreement between an individual debtor and their creditors. Individual Voluntary Arrangements are governed by the Insolvency Act, and were designed for individual debtors with significant amounts of unsecured debt to be able to agree a formal arrangement with their creditors, to allow for them to pay reduced monthly repayments. Such payments are based on what the individual can afford, rather than the amount owed by them. In return all creditors will agree to cease all further legal action to recover the debt, as long as the terms of the arrangement are met by the debtor. Because an IVA is a legally binding agreement, it must be setup and administered by a licensed Insolvency Practitioner (IP). The IP must secure agreement from three quarters, in value, of the individuals creditors for the IVA to come into effect. An IVA typically lasts for sixty months, and as long as the debtor maintains their payments, when the IVA is concluded they will be free from any outstanding debt. Non payment may lead to further legal action, and probably result in bankruptcy for the individual. The aim of an Individual Voluntary Arrangement is for the individual to repay what they can now afford, rather than what they were contractually obliged to pay under the original loan, credit card, and finance agreements they had. They are also not made public as bankruptcies are, and so afford some privacy, and do not require employers to be informed or place restrictions on company directors, or professional qualifications. However an IVA is only an option if you have at least fifteen thousand pounds in unsecured debts, and after completion of the IVA it will show on your credit file for up to six years so you will probably struggle to obtain credit for up to eleven years from the date of taking the IVA out. As a legally binding agreement it is advisable to gather as much IVA information as possible and seek professional advice as early as you can, to asses if this is a suitable option for your circumstances. Debt Relief Orders (DROs): Debt Relief Orders were introduced on 6th April 2009 as an alternative to an IVA or bankruptcy, for non homeowners, with little or nothing in the way of assets, and relatively low income and debt. A DRO gives similar legal protection to an IVA and prevents enforcement by creditors, but usually lasts only 12 months and does not involve any repayment of debt. Debt Management Plans (DMPs): Debt Management Plans are an informal form of agreement, and so do not follow any prescribed form. In general they are an agreement for an individual to pay a reduced amount to each creditor, and in this respect are similar to an IVA, however not being a legally binding agreement there is no guarantee that interest and charges will be frozen by creditors. Debt Management Plans can be setup by the individual themselves but are often setup via debt management company or debt charity. Whilst an informal agreement to reduce the monthly amount you pay will help with short term income and expenditure each month, it may mean that the time to repay the debt is greatly increased, especially if interest charges and not stopped. A debt management company will normally retain all or some of the first few payments as a setup charge for the Debt Management Plan, as well as an ongoing charge each month. Though many people find this an acceptable consequence of not having to deal with their creditors themselves. About the Author: 相关的主题文章: