IVA alternatives include a debt management plan, a debt consolidation loan or bankruptcy. DebtConsolidation.co.uk explains the differences to help you decide which option may be best for your situation.
An Individual Voluntary Agreement (IVA) is a popular choice for those hoping to pay off debts, as anything they can't realistically afford is written off. However, an IVA is only available if you have unsecured debts of £12,000 or more, if you're prepared to carry on repaying creditors over the next five years, and if your creditors agree to the IVA. If you do not qualify for an IVA or would prefer an alternative method of paying off debts, there are several options available.
The IVA is in fact an alternative to bankruptcy. You can still apply for bankruptcy, and there are benefits; a chunk of your debts could be written off, and it only lasts 12 months compared to an IVA which lasts 60. However, the loss of control over your finances and the stigma attached to it means bankruptcy is not a very popular choice.
If you're a homeowner, you can take out a debt consolidation loan. Although your home will be at risk if you fall behind on payments, the loan is secured so you can benefit from lower interest and lower monthly payments. All those high-interest unsecured debts such as store cards, credit cards, hire purchase or personal loans can then be consolidated into one easy monthly payment, making budgeting much easier.
One low-risk alternative to an IVA or loan is a debt management plan, ideal for smaller debts. Again, your debts will be consolidated into one monthly payment, but it is unsecured, meaning your home is not at risk, and non-homeowners are eligible. The debt management company will negotiate with your creditors to make your repayments more affordable, and if you stick to your plan, you'll have a date on the horizon when you'll be debt free.
For further information about an IVA or its alternatives, contact DebtConsolidation.co.uk today and speak to one of our debt management experts.