{"id":1319,"date":"2013-12-17T12:09:41","date_gmt":"2013-12-17T12:09:41","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=1319"},"modified":"2019-11-18T12:42:42","modified_gmt":"2019-11-18T12:42:42","slug":"pay-off-my-debt","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/pay-off-my-debt\/","title":{"rendered":"Ways to pay off debt"},"content":{"rendered":"\n

Oscar Wilde\u2019s claim that a man who pays his bills on time is soon forgotten is probably as true today as it ever was. He also claimed that it was only by not paying one\u2019s bills that one could hope to live in the memory of the commercial classes.<\/p>\n\n\n\n\n\n\n\n

The massive increase in personal indebtedness has led to a corresponding increase in the numbers of insolvent persons looking for ways to address their debts. Most such persons will choose to enter into an Individual Voluntary Arrangements (IVA) or to opt for Bankruptcy (BKY) or will enter a Debt Management Plan (DMP). A crucial factor in either an IVA or BKY is that a portion of the debts are written off i.e. some of the debts are \u2018forgiven\u2019.<\/p>\n\n\n\n

IVA or Bankruptcy<\/h2>\n\n\n\n
\"Debt\"<\/figure><\/div>\n\n\n\n

In an IVA, creditors accept repayment of a portion of the debts and in return agree to forgive the remainder. Typically most IVAs offer a yield to creditors of between 20% and 50% of the debt with the amount being forgiven usually falling between 80% and 50%. In BKY, even less debt is usually repaid and frequently creditors may receive nothing at all from the estate of the bankrupt after trustee and other fees are paid. In many cases debts are almost totally forgiven although that does not mean that the debtor gets off scot-free. The substantial costs of bankruptcy often totally consume any payments the bankrupt has to make to the trustee such as via an income payments order or through the sale of assets such as the debtor\u2019s home.<\/p>\n\n\n\n

Debt Management<\/h2>\n\n\n\n

In a Debt Management Plan however, there is usually no debt \nforgiveness although some creditors may choose to suspend or freeze \ninterest and penalties for the duration of the plan or for some limited \nperiod.<\/p>\n\n\n\n

While creditors may forgive debts to some extent, particularly when \nthey have little or no alternative choice, they do not forget. For \nexample, when you enter into an IVA all unsecured accounts automatically\n go into default, given that you have ceased to comply with the terms \nand conditions of the relevant credit agreements. Some of your accounts \nmay already have been in default prior to that time. All defaults are \nrecorded on your credit files which are maintained by credit reference \nagencies such as Experian and Equifax. Access to and publication of such\n personal financial data relating to insolvent individuals is not \nprohibited by the Data Protection Act.<\/p>\n\n\n\n

The business of the credit reference agencies is to retrieve such \ndata, record it on your credit file and sell it to interested parties \nprovided they have a consumer credit license. The record of such \ndefaults remains on your credit file for six years from the time that \nthe default occurred. If you enter into an IVA, default data will not be\n removed from your credit file for six years, even if you successfully \ncomplete your IVA and obtain a Certification of Completion (of your IVA)\n from your supervisor.<\/p>\n\n\n\n

There is then a price to pay for your creditors not forgetting about \nyour debts, long after they have forgiven them, so to speak. In \nconsidering any request for credit facilities, whether during the life \nof your IVA or following its successful completion, creditors will \nnaturally check on your credit history via your credit file. You may be \nrefused credit by some lenders if your credit file still carries records\n of your defaults. If you are granted credit, you may have to pay \npremium interest rates. If you were to seek to take out a mortgage for \nexample, lenders would be likely to seek a higher deposit than if you \nhad a clean credit history and you could be quoted interest rates as \nmuch as 6% to 8% greater than high street rates. On the positive side, \nyou will certainly find it easier to access credit after completing an \nIVA than you would if you had just been discharged from bankruptcy.<\/p>\n","protected":false},"excerpt":{"rendered":"

Oscar Wilde\u2019s claim that a man who pays his bills on time is soon forgotten is probably as true today as it ever was. He also claimed that it was only by not paying one\u2019s bills that one could hope to live in the memory of the commercial classes.<\/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":[6],"tags":[],"class_list":["post-1319","post","type-post","status-publish","format-standard","hentry","category-general-debt-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1319","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=1319"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1319\/revisions"}],"predecessor-version":[{"id":12587,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1319\/revisions\/12587"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=1319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=1319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=1319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}