Debt Management Part Six: Formal Arrangements
by: Lee Smith
Total views: 193
Word Count: 408
IVAs are formal arrangements made between you and your creditors through the auspices of a licensed insolvency practitioner. To qualify for an IVA you must owe a minimum of £15,000 and you must be able to afford repayments towards your outstanding debts of at least £200 a month. The arrangement is made through a county court. If you are able to take out an IVA it is possible that your debts will be reduced by 80%. This means that for each £1.00 you owe you will only need to repay 20p. It is not surprising that creditors are not always willing to agree to an IVA and are only likely to do so if they think that this is the best way in which they will get back at least some of the money that you owe them. At least 75% of your creditors must agree to your offer of an IVA. This means that creditors that account for 75% of your total debt in monetary terms.
In general the arrangement will be for five years after which time your debts will be written off. Although you will have got out of debt your credit rating will have suffered a severs blow and obtaining any credit for at lease six years after the end of the agreement could be extremely difficult. Probably this will not worry you as the last thing you will want is to get into debt once again.
The only remaining option is bankruptcy (apart from a DRO which is a sub category of bankruptcy that we will deal with later). You can chose to declare yourself bankrupt or one or more of your creditors can file for your bankruptcy. The upside is that all your debts will be written off in a year. The downside is that you could lose just about everything you own, including your house. Also your credit rating will be bottomed out for many years to come and certain business activities are curtailed.
Although in some cases bankruptcy can't be avoided, it is seldom a pleasant experience and the consequences are severe.
Article Source: http://www.ArticleStreet.com/profile/lee-smith-14603.html
About the Author
There are now plenty of sources for debt advice to help individuals and businesses through these tough economic times. Being debt free is the goal of the majority of people and this can only be achieved through professional help and good financialplanning.
Rating: Not yet rated
Latest articles contributed by "Lee Smith"
1: Debt Management Part Four: Debt Prioritisation2: Debt Management Part Three: Problem Debt.
3: Debt Management Part Two: Budgeting