A lot of people believe that bankruptcy is an easy way of dealing with the debts they have incurred over time. Other debt solutions for those who appear to have gone beyond the point of debt return, are available and offer a less drastic, individually structured debt repayment scheme, such as an IVA. An IVA acts differently from bankruptcy, effecting your rights differently and in turn effecting your future differently.
Before you decide if you are going to go through with an IVA read these five essential tips first:
1. Read Up!
Read all our online information about IVAs and understand the full implications. You can talk to other people online in IVA forums, or read about peoples experiences to know what you’re getting into.
2. Investigate Alternatives
In a tragic case of personal debt escalating out of control, it was reported in the press last week how an American woman had been driven to suicide due to threatening and menacing phone calls from her angry creditors.
Things are bad – really bad. You can’t manage your debt and as it mounts still higher making even the minimum payment on all your obligations becomes increasingly difficult or impossible. Facing the fact that you are in over your head you may start looking at your options for debt management including the dreaded bankruptcy.
When you have an IVA life may be a little hard, you may think that you are missing out on the more exciting things in life because you have got a large monthly repayment that you must pay!
However here are a few tips to living with an IVA and how it really isn't all that bad
IVA tip 1
When Jilly Jacobs died last year, the bank informed her daughter that her mother had an unpaid debt of £149 in bank charges on her account.
Sally Jacobs ignored this comment from the bank as she thought that all of her mother’s outstanding debt was wiped after her death. However, three months later, the debt had grown to £393.69 due to the bank charging administration fees for direct debit cancellations. She was also charged for overdraft interest and £35 for an unpaid cheque.
Hundreds of families up and down the country are trying to combat personal debt in a bid to keep their children in private schools.
Even though they are pushing themselves to the limits by holding down two or three jobs and taking out consolidated loans, they feel that it is a worthwhile investment.
Over 33% of parents in the UK will be turning to their children to help them out of debt and into a retirement home in their old age.
A quarter of British parents interviewed were convinced that their financially better off sons and daughters would support them in their golden years.
Most people start out with the belief that debt will not entrap them, but talk to some of these people several years later and debt will have taken a hold and changed a positive outlook without debt into one of misery and despair seeking IVAs and other debt solutions.
Laura's debt story
Lenders should be made more responsible for curbing debt in the UK by offering debt management advice to borrowers who are having difficulty meeting repayments.
This should apply to lenders who are not associated with banks. The Banking Code stipulates that banks should fully support borrowers who are experiencing financial difficulties. However, this rule does not apply to individual lenders.
As the amount of Individual Voluntary Arrangements (IVAs) in the UK continues to increase, a lawyer has issued a warning that IVA providers need to be more careful with their advertising. The amount of misleading advertising on IVAs was first highlighted by Debt Free Direct, and has now prompted many industry professionals to agree.
Studies show that consumers benefit more from receiving debt advice than from being given money to help them through tough financial times.
It is said that over 45% of Britons are prepared to give money to family and friends who need help, but perhaps telling the person about debt solutions like an IVA, would be more beneficial.
The amount of CCJs (County Court Judgement) awarded to people in debt in the UK has peaked to its highest point ever, trebling the average for the nation.
Thousands of women are choosing an Individual Voluntary Arrangement (IVA) over bankruptcy because of its stigma, a study has shown.
The study has managed to highlight the gender gap when it comes to insolvency. Despite many women being recommended bankruptcy by debt advisors, it would appear they would prefer to lodge an IVA instead.
A recent survey had Britons listing health problems and their sex lives as preferable topics of conversation over money, debt management and finances.
Are debt and drinking connected? Whilst reading articles connected to Alcoholics Anonymous, a pattern formed which showed how the compulsive behaviour of a drinker is similar to that of someone in debt.
If you're serious about getting rid of your debt, you have to get serious about getting rid of expenses that are doing you more harm than good. If you've already looked at your budget and cant figure out why your finances are still heading toward an IVA despite the fact you've curved your expenses - it's time to quit smoking.
The number of Brits seeking debt advice for major debt problems raced to an all time high during 2006.
One free debt advice company calculated that a fifth of calls were related to cries for help regarding debt and over 6,000 calls were taken per day.
Bankruptcy may seem a worthwhile option for those of us who wish to clear debt within a year and start anew but many are exploiting this form of debt help.
Hundreds of teenagers are falling into debt as they become addicted to gambling.
Addiction to fruit machines, make it easy for youngsters to play with just 10p for a potential pay out of £5.
Ministers are concerned that the new Gambling Act will pave the way for children to become lured into a world of debt, drugs, gambling and crime.
After rising early in the morning and slogging through a long hard day, most people trundle their way home to relax. However, as debt looms in many households, there are those who come home only to go straight back out to work again in a second or even third job.
If you’re considering getting a debt consolidation loan as a way to end your debt, watch out that you don’t unwillingly end up buying protection you don’t want.
A new study found that over half of the loan providers they contacted automatically included and charged optional Payment Protection Insurance (PPI) in their quotes.
Debt amongst the over-60’s is not showing any signs of slowing, according to statistics accumulated in the past year. Over the year, debt problems for the group increased faster than any other age bracket.
Q) “I've been declared bankrupt. What now?”
Desperate to clear debt, Anne was told that a property investment seminar would change her life. It certainly did, but not for the better.
After some very enticing talks, Anne was persuaded to invest £6,000 in a three day property investment seminar.
Rising debt is forcing young people to abandon pension schemes and rely on their properties to increase in value to support them in their twilight years.
The amount of young people investing in a savings scheme has dropped by half over the past decade. However, figures for the 55 to 64 age bracket have remained unaltered when it comes to pension contributions.
Bailiffs collect debt for local authorities, landlords and magistrates courts but do they operate within the law?
Working as an undercover trainee bailiff, reporter Jim Whebble shadowed another bailiff, who worked for CSS Enforcement Services to find out just how law abiding bailiffs really are.
They were sent to visit the wife of a man who was in a lot of debt. The bailiff decided to scare the debtor’s wife by climbing up a ladder and peering into her bedroom window.
Tabloids claim that people opt for bankruptcy because it is an ideal way to wipe out debt and start again after five years, but is this really the case?
Whilst many of us stroll through life, coping with the stresses and strains of everyday debt, something from around the corner could shake our very existence. An unexpected life change could make our present debt levels intolerable to cope with and even push us to bankruptcy.
People often receive conflicting messages regarding how an IVA will affect the equity on their property.
To understand this, it is important to view the matter from the eyes of creditors, who want to retrieve as much of your outstanding debt as possible. This means that they could look into any assets you may have.
Alarming figures reveal that more and more people are declaring bankruptcy in Brighton and Hove.
The city is said to be in the brace of a ‘credit crunch’ as people seek bankruptcy as the only way to clear debt.
The latest government figures show that 470 people opted for bankruptcy during July, August and September 2007 which is an increase of 69 people in comparison to April, May and June.
Many people think that once the bankruptcy process has begun, it is impossible to have it cancelled. However, a bankruptcy can be annulled under very special conditions.
People on debt management plans are taking one month longer to pay their debts.
The average length of time for paying off a debt management plan is usually twelve years and two months but the time is increasing as debt becomes larger.
Debt consolidation is a way of condensing a number of debts into one affordable monthly debt management plan.
A debt management company will not pay off your outstanding debt but it will negotiate with your creditors so as you can make more affordable payments.
What other services could these companies offer?
They could offer debt consolidation, debt counselling or debt management.
Do I have to pay?
Bankruptcy is a quick way to clear debt and make a fresh start. There are two ways that you can be forced into bankruptcy:
One is through a debtors’ petition which means that you voluntarily make yourself bankrupt. You will need to find your nearest county court which deals with bankruptcy and ask them to send you a petition for Bankruptcy and Statement of Affairs documentation.
You may also want to confirm the court fee is which is about £475 per person.
What is the standard definition of bankruptcy and does it exist in other countries?
In many countries there are two types of bankruptcy that a company can fall into:
1.A business that has fallen behind with repaying debt due to lack of funds in the bank
2.A business that has liabilities (debt) which are equivalent to its assets
Bolton tax dodgers are likely to face bankruptcy, if they refuse to pay their fines.
This stark warning was announced by Bolton Council after they reported that £6.2 million remained outstanding in council tax arrears. Some of the figures date back to the 1990’s.
Bankrputcy proceedings were introduced in June 2006 as a means of recovering this outstanding debt. In just over a year, seven people have been forced into bankruptcy through non-payment of council tax.
A 34 year old gambling addict found himself in deep water when he owed £50,000 in gambling debt.
Ian Cobble was picked up by police as they carried out routine checks on vehicles on a Scottish motorway. The officers found over £300,000 worth of cannabis resin in the boot of his car.
Cobble tried to defend himself by saying that he was a courier and was transporting the packages from Manchester to Glasgow for a client in return for £400.
Higher costs of living and increase in debt have been held responsible for a massive amount of UK households with two breadwinners. Over 3.5 million UK households with dependant children are reliant on two salaries, a new study has found.
Recent research has found 83 per cent of Britons would change their bank if new monthly or annual account fees were introduced on current accounts.
A debt advisor has been sacked from her job for saving the life of a woman who was contemplating suicide.
The 58 year old advisor was dismissed from her duties after being told by her boss that she had breached customer confidentiality by calling the distraught woman’s GP.
Halifax bank was accused of constantly harassing a customer for a debt accumulated from an overdraft.
This customer was often reduced to tears by the unprofessional way that staff hounded her for payment with continual letters and phone calls. Although Halifax agreed to waive the £775 overdraft fee, a mix-up in communication lead to the company sending her constant threats and demands which became a nightmare and caused her a tremendous amount of stress and anxiety.
We all know that feeling of overspending and letting money slip through our fingers like water as we run up debt like it was going out of fashion.
Debt consolidation can be a giant leap forward in getting to grips with debt and saving a large amount of money in interest repayments.
Debt consolidation involves merging an accumulation of debt into one single low interest rate loan. Figures show that by sticking to a plan over the course of three years, a British householder could save a whopping £605 which will sit in their banks rather than line the pockets of creditors through inflated interest charges.
Finance phobia is a condition that stems from a fear of money. This could be from an intense fear of potential debt or a debt related incidence from the past.
The statistics are in: 6.6 million people withdraw on average £809 in cash on their credit cards every year. New research has found that rate increase on cash withdrawals add at least £41 million in interest charges to cardholder credit card bills – although this figure could be as much as £334 million – and a pretty easy way to get yourself into debt.
An Italian newspaper revealed that the legendary Italian operatic singer Luciano Pavarotti died with debt in the region of £18 million.
The bank accounts of the famous tenor were said to be overdrawn by £11 million and he was in debt with unpaid loans amounting to £7 million.
There are thousands of conmen all over the world prepared to sell you a dream if you will listen but who gains the debt and who makes the millions?
Huge cultural changes have put debt on the map for England.
People approaching retirement age are being forced to dip into their savings and work beyond their sixties. Also, many couples are opting to remain childless to avoid taking on the huge financial pressure of raising a family.
As debt becomes too difficult to manage, many will have to move to smaller accommodation, change location or increase the life of their mortgages which will add additional interest charges.
New applicants who wish to claim jobseekers allowance or income support are being left with severe debt, as a new phone system holds up payments.
Ken Bates has victoriously won back his position as chairman for Leeds United, and has made arrangements with the clubs creditors to start settling their outstanding debt.
With around 10,000 people per month predicted to seek IVA help or bankruptcy advice this year, consumers should start looking at their outstanding debt and prioritise which creditors should receive precedence.
Organising your debt into a hierarchy of importance will stop you from going to prison, losing your home or having to pay out unnecessary fines and summonses.
At present, the IVA is receiving mixed reviews and consumers rely on information from friends and family regarding IVA advice, but five fundamental IVA points can be found within this article.
1. If you have any equity on your property or own any other valuable assets, you may be asked to release some or all of the money as part of your IVA agreement.
2. An IVA is only suitable for people who have unsecured debt to the value of £12,000 or more.
Last year, over 107,000 people became insolvent with 44,000 people opting for an IVA and 63,000 people choosing bankruptcy.
Figures show that the IVA has a larger growth margin in comparison to bankruptcy as people are still afraid of the social stigma attached to becoming bankrupt.
House repossession can be stopped with an IVA (Individual Voluntary Arrangement). Usually those in debt, start finding it difficult to keep up their mortgage repayments and fall into arrears.
If you are thinking about an IVA, one of the most important things you need to do is to be open and honest with your IVA provider. You absolutely need to lay all your financial cards on the table – be open about how much money you owe, how much money you earn and how much money you can realistically pay back every month, according to the terms of your IVA.
Being in debt myself, I have learnt a lot about the stigma that used to be attached to it. I was worried that I would be outcast by my peers; however this was not the case.
The main thing about struggling with your debts is that it can mount up and get worse. Some people, including myself, will fall into the trap of borrowing to make the payments on more borrowing. This should be the biggest alarm bell you will ever have and the time to get help.
One Saturday afternoon, my partner and I were sitting at home, reading through the local paper. Advertised was a litter of 8 week old kittens, for twenty pounds each. I begged and pleaded with my partner to buy me one of the kittens. He informed me to take into consideration, the costs of owning a pet. I thought to myself, what is twenty pounds and £2.50 a week on food. Never did I think it would be the icing on the cake for my debt
I find it extraordinary that I pay £350 a month on trains and don’t even get a seat. Yes the price for being a London commuter and living outside is high. This began when the railway being split up and privatised. The Train Operating Companies have to pay the government so much money for running trains & then they have to pay their share holders then they have to make a profit to boost the company.
If you are in debt and struggling, please get debt advice . The stress and worry can seriously damage your health.
Ignoring debt does not make it go away, it just adds to the problem. Your creditors are more likely to negotiate terms with you if you are up front and admit to having problems before they have to start chasing you.
Individual Voluntary Arrangements are very serious matters, they are not a quick fix, nor are they a complete solution to debt problems.
You might have gained a rather too optimistic view of what an IVA can do for you, depending on which adverts you've seen. Last November Debt Free Direct, the UK's leading IVA provider, complained to the Advertising Standards Authority (ASA) about several IVA companies falsely claiming they could write off up to 75% of a persons debt. The ASA found Debt Free Directs claims to be true and told IVA companies to only make claims they can substantiate.
Do you qualify? Your debt needs to be at least £15,000 and you need to provide proof that you are in a position to make minimum repayments of at least £200/month.
You will need to find an insolvency practitioner, your local Citizen's Advice Bureau is probably a good place to start, both for good initial advice and to help you find a practitioner.
An IVA (Individual Voluntary Arrangement) is drawn up by an Insolvency Practitioner. It is an agreement to pay a set amount each month and usually lasts for 5 years. The interest on the debt is frozen and if the debtor keeps to the agreement, the debt will be cleared after 5 years. 75% of the creditors must approve before IVA can be set up.
Although you will have to change your Lifestyle during an IVA. Don’t think that just because you are in the midst of an IVA doesn’t mean you have to miss out on a yearly holiday.
The best advice anyone can give regarding debt is to stay out of debt entirely. Yet, if you are reading this, you are most likely already in debt that is possibly putting a stranglehold on your life. Getting debt advice from a qualified and impartial representative is an advisable first step toward breaking free of difficult debt situations.
Because debt often starts small then grows every month as minimum payments do not match continued spending and growing interest on loans, many borrowers find themselves in tight situations.
‘Keeping up with the Joneses’ is such a well-known phrase but are your neighbours leading you into bankruptcy?
If debt has forced that dreaded red letter from a gas or electricity company to fall through your letterbox, you could expect a disconnection notice shortly afterwards.
Nearly 2.5 million households are in debt to their energy supplier at an average sum of £150.
Thousands of people across the UK have faced the devastation of flooding, and will now continue to feel the effects financially.
If, like me, you are in a bit of debt and are trying your damnedest to get out of it you will know that no amount of debt solutions or debt advice will help you have a good time at a birthday, a house warming, a baby shower, an anniversary, a leaving do or even a bar mitzvah when you are broke and worried about money!
There has been an alarming rise in the acquisition of IVAs (Individual Voluntary Arrangements) in recent years. Personal debt problems have seen personal insolvencies increase quite dramatically. In 1998 there were 24,500 insolvencies registered, of these 5000 were IVAs, the rest were bankruptcies.
I have always been in debt, since I was about 3 I think! No obviously not at 3 but you know what I mean, debt has been a real issue in my life and I have honestly struggled with it. It started after university when I left with a rather large amount of debt (thank you student loan!). I didn't worry too much about it then as I assumed that everyone was in the same position but of course that was just misguided naivety.
It's not really a matter of knowing that you need an, IVA it is more a matter of understanding an IVA and knowing the consequences of entering into something that is essentially a serious commitment. When you enter into a debt solution like an IVA I would seriously advise that you make sure you know exactly what your entering into.
Honestly you can't get through a day without hearing about an IVA, whether its on the television, the radio, in the press, there is no denying it IVAs are everywhere! In fact its hard to remember a time when you weren't bombarded by IVA advertisements.
An IVA or Individual Voluntary Arrangement is an agreement which can be made with your creditors if you are struggling to repay debts of more than £15,000 to 3 or more creditors. It can be a better alternative to bankruptcy if your circumstances are right.
An IVA must be made through an Insolvency Practitioner and once it is made is legally binding - this means that you must stick to the repayment terms agreed but it also means that your creditors must do likewise and cannot therefore renege on any agreements they make with you, or take any further action against you.
IVA’s or Individual Voluntary Arrangements are becoming an increasingly popular form of debt management in the UK and provide an option that are often used before an individual is forced into bankruptcy through an overwhelming level of debt.
Below we will take a look at the advantages and disadvantages of what an IVA provides to an individual, a sole trader or partnership.
IVA Advantages
There are no restrictions regarding personal credit, however in reality it can prove difficult to be accepted;
Getting married can easily cost well over £10,000 these days. The reception, church, bridal gown, along with all the other costs involved, build up rapidly. Jewellery for bride, groom and bridesmaids can cost more than many people can afford. This is especially true with the large amount of current economic problems and people’s fears of redundancy, increasing debt, etc. It’s necessary to cut back where possible. However, there are savings to be made.
Everyone may unfortunately have times in their life when they need to borrow money (how many of us can buy a house without taking out a mortgage, for example?). However, it is all too tempting to get into a lot of debt for things that you don’t actually need. When you are in debt your stress levels can skyrocket, pursuing and IVA or debt consolidation program are complications most people could do without. With all this in mind, here are some tips for helping you to avoid unnecessary debt that can pile up very quickly.
If you are struggling to pay bills and keep up with payments due to redundancy, illness or any other reason and are behind of creditor repayments, applying for an Individual Voluntary Arrangement may be a solution to those problems.
With an IVA, you can freeze existing debts and prevent your creditors contacting you regarding an overdue balance. This will also put a hold to interest charges and fees which you would have continued to accrue on your debts. Furthermore this will also stop CCJ’s being added to your credit file and prevent bailiffs visiting your property for assets.
If you are struggling financially and are finding it hard to make repayments to creditors, pay for every day living and cannot find a way to help improve the situation, getting debt advice would be a very wise step to take. By speaking with a debt professional, they will advise you of what options are available in order to help improve your financial standing. Each person will have differing levels of debt and personal circumstances so each case will need to be looked at individually. Below we take a look at how you can start to look for debt advice.
An IVA stands for Individual Voluntary Arrangement, and is one of a number of debt solutions available to individuals who are struggling to pay their debts.
IVAs were introduced in the UK from the 1980's. Since then, they have become quite common amongst those with high levels of unsecured debt. An IVA is a legally binding contract for repayment of debt made between the borrower and his or her creditors.
What is an IVA and can I get one?”, is a sentence i hear quite often. An IVA is a debt solution to people who essentially are over £15,000 in debt. An IVA is a very complicated financial situation that if you were to enter into, it must be taken very seriously as it is legally binding and you are contracted to it.
What is an IVA? I hear you cry, 'Well' I reply, if you are in debt, more specifically over £15,000 of debt then an IVA is a positive alternative to bankruptcy. Unlike bankruptcy, when you arrange an IVA you do not loose all your assets that you would with bankruptcy. Yes, that means you get to keep your home, your car and ultimately all your personal belongings.
It has been revealed that pensioners in Britain have accumulated debt to the grand sum of £57 billion and many are still struggling with mortgage repayments as they slip into retirement.
Over one million OAPs have mortgage debt of around £38,000. One in eight pensioners still owe at least £50,000 and the total amount of unsecured debt is estimated at around £5,900.
Besides the burden of large debt, many OAPs have family members who are financially dependant upon them and are struggling to cope with a period of tremendous financial rises.
Gamblers are rolling the dice to serious debt and prefer to feed their addiction online, rather than through the bookmakers.
Two in sixteen are funding their fixation by using overdrafts, debt consolidation loans and credit cards. Nearly 15% of gamblers said they were currently borrowing money to stake bets.
One in three people admitted to having a flutter at least once every month and spend around £21.37. However, this varies from person to person and at least 75% of men and women admitted spending between £50 and £150 per month on gambling addictions.
When you are in debt it is hard to know who to turn too! You can sometimes feel like the world is on your shoulders when you are in serious debt, every time that you try to get out of it, something unexpected will put you straight back in it again.
Debt should be looked at as a challenge not something to fear. It is completely understandable that significant amounts of debt can leave you feeling helpless, nervous, full of anxiety and unable to sleep but you just have to think of it logically in that it is only debt and you can beat it!
Tackle Debt Today!
This is a tricky question as there are so many debt solutions out there available to you! The best way of knowing what is the right debt solution for you is to firstly work out how much you owe. Once you have that total figure written down you can then start to evaluate your options.
Anyone can consider an IVA so eradicate their debt problem. The purpose of IVA’s is to aid and manage a debt problem. Normally, any unsecured debts can be included within an IVA. These include but are not exclusive to the following;
• Store cards
• Catalogues
• Credit cards
• Personal loans
• Student loans
• Overdrafts
• Outstanding balances after home/vehicle repossession
• Business loans for which you are personally liable
If you are in large amounts of unsecured debt, then an IVA may be a suitable solution to these problems – but how exactly do you go through the IVA application procedure?
There are a number of different criteria that must be met to be eligible, but you must also be represented by a trained professional if they are to apply for the procedure on the individual’s behalf.
Arguably most debt is unnecessary and should be avoided. However, life isn’t quite that simple and it’s difficult to differentiate between a debt which is necessary and one which isn’t.
There are various companies/professionals that offer 'debt advice' in this country. Since the very well documented credit crunch many people have sought such advice.
My mother in law has always been terrible with money and owes somewhere between £30,000 - £60,000 to various credit card companies. I don't think even she knows how much she owes. She hides statements from the rest of her family, paying the minimum amount when she can and when she can't - paying nothing and incurring massive fees. I'm sure that around 90% of what she owes must be charges and interest fees.
Whether a person gets the right debt solution will depend heavily upon their own level of knowledge and general intelligence. There is a tendency to want to believe the first answer you hear as debt problems can be so overwhelming.
My eldest daughter's boyfriend asked me for a chat this week. He said that he couldn’t really talk to his mum or dad and all his mates his own age didn’t really understand what he was going through.
The first step towards successful debt management is admitting to yourself that you are in fact in debt.
Debt is debt; it doesn’t matter whether it is £10 or £1000 - it's money that you owe to someone and you're trying to pay it back.
Of course, our biggest debts are usually our mortgages, but we will leave that aside for the moment.
What I'm talking about here is arrears, large credit card bills, personal loans and generally living beyond our means.
With debt in Britain rising to incredible levels many families are suffering extreme distress as a result. Many people feel embarrassed and too ashamed to discuss the problem with their partner and allow the problem to escalate.
If you have an IVA and your financial situation changes, the first thing you should do is notify your Insolvency Practitioner (IP). It’s really important that you keep talking to your IP – even if you feel embarrassed or shy or a bit intimidated by them. Remember, THEY are working for YOU! To help make Creditor Phone Calls Stop!
