{"id":1616,"date":"2013-12-18T11:10:04","date_gmt":"2013-12-18T11:10:04","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=1616"},"modified":"2020-09-22T11:16:26","modified_gmt":"2020-09-22T10:16:26","slug":"debt-management-or-iva","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/debt-management-or-iva\/","title":{"rendered":"Debt Management or IVA"},"content":{"rendered":"\n

Deciding what solution to go for is a serious business for the insolvent debtor. The usual choices are Bankruptcy \u2013 often described as the last resort option, an Individual Voluntary Arrangement (IVA) \u2013 seen as a relatively new solution although IVAs have actually been about for almost twenty five years now \u2013 and a Debt Management Plan (DMP). <\/p>\n\n\n\n\n\n\n\n

These are the three principal options available to address personal insolvency. Other options include Debt Consolidation, Debt Relief Orders, Administration Orders, re-mortgaging or selling assets such as a house and using the equity released or sale proceeds to settle debts with creditors. It may be that family or friends may be able to advance funds to the insolvent person to help address debts but a great many people would not be so lucky as to be able to avail of this. <\/p>\n\n\n\n

In deciding which option to pursue, the debtor should seek advice from service providers such as ourselves, Stepchange, CAB and Payplan or from any of a large number of commercial providers of insolvency services. More than one such provider should be approached to ensure that not only is the best advice obtained but the full range of solutions is adequately explored and researched.<\/p>\n\n\n\n

\"DMP<\/figure><\/div>\n\n\n\n

Let us consider the main choices. For many people, the stigma of \nbankruptcy is still a major impediment to going down that route and if \nruled out the choice is then between an IVA and a Debt Management Plan. \nKey factors to be considered are affordability, duration, \nsustainability, acceptability to creditors, restoring credit worthiness \nand sufficient light at the end of the tunnel to offer some hope of \nbeing debt free within a reasonable period of time.<\/p>\n\n\n\n

For example, suppose the debts amount to \u00a330,000 and the debtor\u2019s \ndisposable income is just \u00a3275 per month. In an IVA lasting five years \u2013\n the normal duration for most IVAs \u2013 the debtor would contribute \u00a316,500\n comprising 60 monthly payments of \u00a3275, and the remaining \u00a313,500 of \ndebt would be written off. In one more year the debtor\u2019s credit file \nwould begin to be repaired. This ticks all the boxes for the key \nfactors.<\/p>\n\n\n\n

If the same debtor opted for a Debt Management Plan instead, the full\n amount of the debt would have to be repaid and at \u00a3275 per month, that \nwould take nine years and two months \u2013 assuming all creditors agreed to \nfreeze interests, penalties and other charges, which cannot be taken for\n granted in a Debt Management Plan, given the lack of legislation \ngoverning the process. While the full debt is ultimately repaid, the \nrestoration of the credit file would be at least ten years away.<\/p>\n\n\n\n

A Debt Management Plan then does not tick nearly as many boxes as an \nIVA and it does not have the full weight of the law behind it. From the \ndebtor\u2019s point of view, an IVA can be a much more attractive option than\n a Debt Management Plan. Certainly, if the projected duration of the \nDebt Management Plan is five years or more, then the IVA alternative \nshould be fully explored and considered.<\/p>\n\n\n\n

A reputable Insolvency Practitioner will of course outline all \navailable solutions and options for the insolvent debtor and provide the\n pros and cons of each solution. It is best to shop around as no \nprovider has a monopoly of wisdom or experience.<\/p>\n","protected":false},"excerpt":{"rendered":"

Deciding what solution to go for is a serious business for the insolvent debtor. The usual choices are Bankruptcy \u2013 often described as the last resort option…<\/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":[4,7],"tags":[],"class_list":["post-1616","post","type-post","status-publish","format-standard","hentry","category-debt-management-articles","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1616","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=1616"}],"version-history":[{"count":5,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1616\/revisions"}],"predecessor-version":[{"id":13506,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1616\/revisions\/13506"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=1616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=1616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=1616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}