An IVA or Individual Voluntary Arrangement is a Government approved scheme that allows you to turn your loans, credit cards, store cards and other debts into one affordable, single monthly payment so that you can pay off your debts and get on with your life.

family-photo It is a formal agreement between you and your creditors whereby you repay what you can afford, usually over 60 months. After which, the outstanding debt is written off. By accepting the IVA, creditors agree to accept lower payments, not to pursue any legal action against you and to write off any outstanding debt at the end of the IVA. You agree to pay as much as you can afford for the time agreed.

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Bankruptcy is often considered the last resort for people struggling with debt because there are other debt solutions to consider first. It is a legal declaration for people who cannot afford to pay their creditors. A state of Bankruptcy can be declared by creditors in an effort to reclaim in part money that is owed to them. A majority of Bankruptcy cases are initiated by the individuals who feel they cannot pay their debts.

Bankruptcy will free you from your debts with creditors, but you must consider all the consequences seriously and explore potential alternatives.

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Debt Relief Order (DRO) only applies to individuals who have unsecured debts under £20,000, your personal belongings (assets and savings) must be less than £1000 in total – not including a car, which can be worth up to £1,000 and disposable income must be below £50 per month.. If you own a property then you are not eligible for a DRO even if the property is in negative equity.

A period of 12 months will be granted during which all debt payments and interests are frozen by your creditors if after 12 months your situation has not changed then your unsecured debts will be written off.

A Debt Management Plan is an informal arrangement between you and your creditors, where you make an affordable monthly payment to repay your unsecured debts e.g. credit cards, store cards, loans, and overdrafts. Your monthly payment is calculated by deducting your expenditure e.g. household and personal from your income.

Your debt management provider will put together a plan which will go to your creditors. By making just one affordable payment each month, your debt management provider will then distribute this to each of your creditors (after deducting fees if they are a private company or it’s free if it’s through a charity) and will continue to negotiate to reduce or freeze interest and charges on your accounts.

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