What are the alternatives to an IVA?
Individual Voluntary Arrangements (IVAs) can seem like an attractive solution to solving your debt problems. They can put a stop to the endless letters and phone calls from creditors and allow you to pay back a proportion of what you owe at an affordable rate. However, they are not necessarily suitable for everyone. They will damage your credit rating for six years and if you do not make the agreed payments, you can be forced into bankruptcy.
There are alternative debt solutions if you cannot or do not wish to enter into an IVA. The suitability of each alternative will depend on your personal financial circumstances and level of indebtedness.
A Debt Management Plan is a way to deal with smaller debts. In return for one payment to a debt management company, they will negotiate with your creditors so that you make affordable monthly repayments to your creditors.
If your debt is less than £15,000, you might be able to obtain a Debt Relief Order. This will protect you from creditors for one year while you make agreed repayments. At the end of this year, any remaining debt is written off.
Bankruptcy is the final option if your debts are completely unmanageable. It will involve the sale of any assets you own by the Official Receiver and usually lasts for one year.
If you live in Scotland, you can use a Trust Deed to manage your debts. It is essentially the same as an IVA in that your repayments are fixed at an affordable rate for a fixed period of time.