How to manage debt?

When an individual falls into a debt related problem then he or she must be very careful about how the situation is treated. In the present situation of the global financial credit crunch you may unwittingly find yourself in this situation and suddenly you have to face the hard facts of debt problems. One of the options that the individual in crisis has is to agree to an IVA - Individual Voluntary Arrangement which is a legally binding agreement between the debtor and the people to whom the debtor own money, i.e. the creditors. In this agreement the debtor basically mentions an agreed monthly sum to the Insolvency Practitioner who acts as a Supervisor. The Supervisor then dispenses this amount to the creditors of the debtor. Individual Voluntary Arrangements are generally a final settlement of all debts and in this aspect it differs from a lot of other debt management schemes.

Once the Individual Voluntary Arrangement is agreed by both the debtor and the creditors then there will be an end to the accruing of further interest on your unsecured debts. The debtor will no longer have to deal with their credit or store card debt card by card. Rather the debtor will simply have to pay the monthly amount agreed. With the help of a good Individual Voluntary Arrangement or IVA the debtor has to pay an amount which they can afford and which will also do justice to the creditors.

The main purpose of Individual Voluntary Arrangements is to achieve a settlement over an agreed period of time generally within 3 to 5 years. The amount that is paid by the creditor is something which he or she can afford. In this way the debtor is able to present his or her true financial situation in front of the creditors. If the creditors see that the debtor is in no position to make a full repayment then they generally agree to the IVA.

However, one must also beware of a few risks involved in Individual Voluntary Arrangements. If one is unable to pay the declared monthly amount then the debtor may be declared to be bankrupt. The debtor will be able to obtain credit after six years of entering into the Individual Voluntary Arrangement with the creditors.

To learn more on the pros and cons of Individual Voluntary Arrangements it is best to contact Just Debts. They offer free debt related advice on consumer credit Individual Voluntary Arrangements. They will make an intensive assessment of their client’s situation and then give them the appropriate advice based upon it. Their fee for preparing the Individual Voluntary Arrangements and supervising it has to be agreed with the creditors and is taken from the funds paid into the IVA. They analyse the income and expenditure of the debtor before stating the monthly amount he or she might have to pay when the Individual Voluntary Arrangements has to be prepared.

About the Author:

Gareth Taylor is author of this article on IVA. Find more information about IVA here.