![\"Is](\"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-content\/uploads\/2019\/08\/Fotolia_63363795_S-1.jpg\")
<\/figure>\n\n\n\nDebt Consolidation<\/h2>\n\n\n\n
Debt consolidation involves getting a loan with which you clear all \nother unsecured debts and then you have to make only one regular \nrepayment, usually monthly. The repayments of the consolidation loan \nshould be affordable. There are several types of consolidation loans. \nThey can be unsecured or secured on your property. If you consolidate \nall your debts in this way you need to be confident that all your \nunsecured debts are included and that you can afford to make the regular\n payments during the full term of the consolidation loan. You should \nalso refrain from obtaining any further credit while you are repaying \nthe consolidation loan. Remember that with this option you will be \nmanaging your own debt problems and dealing directly with your own \ncreditors. There are various pitfalls in going the consolidation route \nbut if you can answer yes to each of the following questions, then it \nmay be a viable option for you.<\/p>\n\n\n\n
- Do I have a regular income? <\/li>
- Do I have a reasonable level of disposable income i.e. the amount of income left over when I have paid my rent or mortgage, car HP, living expenses (including food, fuel, clothing, transport, energy, phone, council tax, insurances, car tax etc) for both myself and my dependents?<\/li>
- Do I have a decent credit rating?<\/li>
- Am I solvent?<\/li><\/ol>\n\n\n\n
Debt Management<\/h2>\n\n\n\n
Debt management involves making offers of repayments to your creditors based on what you can afford to pay back. Normally you would prepare a Debt Management Plan (DMP) which you present to your creditors and you seek to get their agreement to your proposed plan to repay your debts. You provide details of your income and expenditure and you show how you will distribute your disposable income to your creditors. Usually you will offer to repay each creditor in proportion to the size of the debt you owe to them. For example, if half of your debts are with one creditor, than you would pay half of your disposable income to that creditor and pay the other creditors on a similar proportionate basis. You do not need any professional assistance to establish a DMP but many debtors use the services of companies who specialize in DMP services.<\/p>\n\n\n\n
It is important to be aware that there is little legislative control of DMPs and for that reason it can be difficult to get all your creditors to accept your DMP proposal. Some may accept and some may not. Some may accept for a limited period of say six months. Some creditors may refuse to freeze interest and penalties on your debts during the life of the DMP. Finally a DMP does not offer you any formal protection from your creditors. <\/p>\n\n\n\n
Bankruptcy<\/h2>\n\n\n\n
Bankruptcy is a formal insolvency process and is considered to be a \nremedy of last resort. You can declare yourself bankrupt or one or more \nof your creditors may bankrupt you. Your local CAB can assist you in \nobtaining and lodging the necessary papers in court if you decide to \nbankrupt yourself, a process known as a \u2018Debtor\u2019s Petition\u2019. There are \nsome fees and costs which you will have to pay yourself when lodging the\n papers. Currently these total about \u00a3600 (in the UK). If the bankruptcy\n order is granted by the court, control of your assets passes to an \nofficer of the court, called the Official Receiver who will either deal \nwith your case himself or appoint an Insolvency Practitioner (who for \nthis process has the title of Trustee) to deal with your case. The \nOfficial Receiver\/Trustee then investigates your financial situation to \ndetermine your ability to repay your debts. If this is the first time \nyou have been made bankrupt and if you co-operate fully with the \nOfficial Receiver\/Trustee, you will be discharged from your bankruptcy \nwithin twelve months and any amounts still owing to your creditors have \nto be written off by law.<\/p>\n\n\n\n
Bankruptcy may well be the best solution for you if you have no \nassets, are not employed in a professional capacity and if you are on a \nlow income. If you have a high income you may prefer debt consolidation,\n a debt management plan or an IVA instead but if you opt for bankruptcy \nyou may be subject to an Income Payments Order for up to three years, \nnotwithstanding the fact that you will be discharged from bankruptcy \nwithin twelve months. Remember though that the purpose of bankruptcy is \nto protect you from your creditors.<\/p>\n\n\n\n
Individual Voluntary Arrangement (IVA)<\/h2>\n\n\n\n
An IVA is a formal insolvency process and is an alternative to \nbankruptcy. In an IVA you agree with your creditors upfront that you \nwill repay a certain amount of your debt over a fixed period of time, \nusually five years but it could be considerably shorter (as little as \nsix months) if a cash lump sum can be raised. The important point is \nthat at least 75% of your creditors (measured by the amount of your \ndebts to them) must accept your IVA proposal. If you obtain such a level\n of creditor approval at a meeting of your creditors the decision is \nbinding on all of your creditors, even those who chose to abstain or to \nvote against your proposal.<\/p>\n\n\n\n
To propose an IVA, you the debtor must be insolvent and your debts \nwould normally total at least \u00a315,000. You need to have a regular source\n of income and have a reasonable amount of disposable income left over \nafter taking into account your normal living expenses and the amount you\n need keep back to service your secured debts such as your mortgage and \ncar HP. This \u2018disposable income\u2019 is the payment you make each month to \nyour IVA and which is used to pay your unsecured creditors and to fund \nthe administration costs of your IVA.<\/p>\n\n\n\n
By law, you must utilize the services of an Insolvency Practitioner \n(frequently referred to as an IP) to assist in the IVA process. The IP\u2019s\n charges are clearly stated in the proposal and these fees and costs are\n deducted from the monies you contribute to your IVA. There are no \nupfront fees to be paid and if your creditors do not approve your IVA \nproposal, you pay nothing to the IP.<\/p>\n\n\n\n
If your IVA is approved, all of your creditors must cease all \nrecovery action against you and must, by law, suspend all interest and \ncharges. The IP assumes all contact with your creditors on your behalf \nand makes the payments to your creditors out of the monies you pay into \nyour IVA. <\/p>\n","protected":false},"excerpt":{"rendered":"
Most of us have personal money worries and want to do something about them. We know that there are solutions out there. The problem we have is that while we know that we need to do something, we don\u2019t know where to begin and some of us do nothing.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-11150","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=11150"}],"version-history":[{"count":2,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11150\/revisions"}],"predecessor-version":[{"id":11169,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11150\/revisions\/11169"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=11150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=11150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=11150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}