When thinking about debt, the solution that springs to mind is most often bankruptcy. Though this certainly serves its purpose as a last resort solution, there are other options open to you that are important to consider.
Debt management professionals will be able to help you make the final decision when it comes to resolving your debt problems. They have access to insolvency software that is used to assess your income, assets and expenditures to recommend the best way forward. They also have years of experience with insolvency and have been certified by a regulator to show that they are capable of dealing with your debt.
What options are open to me?
There are a number of debt management solutions out there, but the most popular and commonly used include Individual Voluntary Agreements (IVAs), Debt Management Plans (DMPs), and Bankruptcy. This infographic will demonstrate the pros and cons of each solution to best illustrate your options.
Understanding Your Debt Management Options infographic was brought to you by the team at Logican Solutions
Is an Individual Voluntary Agreement (IVA) right for me?
An IVA might be suited to you if you are a resident of England, Wales, or Northern Ireland and you are technically insolvent. This basically means that you have the ability to repay some of your debts, but not the entire amount. In order to be considered for an IVA, you will need to be in debt to more than one creditor, and generally speaking you will be more than £15,000 in debt. For an IVA to be a realistic route for you, you’ll need to have a regular monthly disposable income.
If your IVA request is accepted, you will have to live on a very rigid budget, but you will not experience the same restrictions that you would should you opt for a bankruptcy. Once your IVA is complete, after approximately six years, your remaining debt will be written off and the IVA will be wiped from your credit report. To find out more about IVAs, get in touch with an Insolvency Practitioner, who are experts in this area.
Is a Debt Management Plan (DMP) right for me?
Whether or not a DMP is right for you will depend on a number of factors. Consider the extent of your debt. If the amount is in excess of £7,000 and comprises of unsecured debts including store cards, credit cards, and overdrafts, then this route might be right for you. You won’t have to release equitable interest over to your lenders, but as a DMP is an informal agreement, there is always a risk that your creditors might change the terms of the agreement or back out altogether.
Unlike an IVA, you will pay off all your debts with a DMP, which means they usually last longer than an IVA. If the amount you owe is far larger than £7,000, it is worth considering another option, as it will take a lot of time to repay this amount with a DMP.
Is bankruptcy right for me?
Most debt management professionals would recommend looking at bankruptcy only when you have exhausted all other options. Determine whether or not you can feasibly repay your debts in any other way. Do you have any assets you might be able to sell to repay your debt? Might your financial situation change in the near future? If not, then you can get in touch with an Official Receiver to arrange bankruptcy. All your possessions will be taken into account and potentially sold to cover your debts. When you consider the restrictions that will be placed upon you on top of this, then bankruptcy can appear a truly daunting option – unfortunately, for some, it is the only option available. There is no minimum amount required for you to go bankrupt, and like any other financial indiscretion, it will be wiped from your credit report after approximately six years.
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