IVA Debt UK
Introduction to IVA Debt UK
More and more people in the United Kingdom are getting into debt. There is a greater chance than ever before of being granted a loan or being issued with a credit card and once accepted the limit on the card will be put up and up. While this does not mean that you have to use it, many people do and suddenly find that they are not able to pay it off. As unemployment rises, this will spread and companies are starting to get worried. They can see that the money they have lent out so easily is not going to be coming back in as they hoped it would.
There are many organisations such as the Citizens Advice Bureau and often some small organisations funded by local councils who will be able to give you advice as to what your options are. For small amounts they will have certain suggestions, but if you owe more than £15,000 and have more than three creditors it will be looking more likely that the options are bankruptcy or an IVA – an Independent Voluntary Arrangement. There is the option of a loan to pay off all creditors and just leave you with one monthly payment but with regard to larger debts an IVA is often the best choice.
Why Will an IVA Help Me?
Once you take on an IVA you will immediately stop accruing any more interest on your debt. Your advisor will go through all your outgoings with you and try to negotiate a different contract. They will take into account all your household bill such as mortgage, gas, TV licence etc and then work out what you have left. You need to be totally honest as if you try to pay too much back you could fail and if you make out that you can only make a very small repayment each month your creditors may refuse to accept the offer. Once a figure is agreed this needs to be kept as if you renege again the deal will fall through.
If there is a change in circumstances either for better or worse you must advise your adviser to allow them to renegotiate the terms. If you are worse off the creditors may accept a lower payment but if your finances improve it is only fair you should pay more.
What Must I Do?
- Stop using your credit card. You are not allowed to accrue any more debt while you have an IVA.
- Tell your landlord if you have one. They may not be concerned but it is best to let them know your situation.
- You will be required to have your house surveyed as any equity you have can be taken into account.
You should find out as much as possible about the commitment you are making as it is going to affect the financial decisions you will be able to make for some time in the future. Although you will be debt free after 5 years, you will not have paid everything back to the companies you borrowed from, so it is very likely that you will not get credit from them in the future. Even other companies may not wish to lend to you or will want to charge a high rate of interest if they do. |