An IVA is a formal agreement which needs to be reached between the debtor and 75% of the creditors. Its terms are registered with the local county court. Because of its formal nature, the IVA needs to be drawn up by a professional – an insolvency practitioner – who will also negotiate its agreement with the debtor and administer and monitor all payments made in accordance with its terms.  

The role of the insolvency practitioner is to persuade the creditors that every effort is being made, from the funds available, to satisfy the outstanding debts. Those funds under consideration will include not only all income but also any available assets. Nevertheless, those assets which are considered essential to the debtor’s basic needs (for example, housing, the means to travel to work and other daily essentials) would not have to be sold to repay the debts. This reflects the kind of safety net which would in any case be preserved by the courts in the alternative event of the debtor’s bankruptcy. Indeed, a basic selling point to creditors of the IVA is that it should secure at least as good a repayment of their debts as forcing the debtor into bankruptcy.  

After an agreed period of time, any remaining balance of debt is wiped clear and the debtor has no further obligation to the creditors.  

An IVA should certainly not be viewed as a means of “getting away” with debts and should not be the first or only course of action pursued by anyone with debt problems. An IVA carries its own costs and you should compare an IVA plan against other options such as debt consolidation and other debt management solutions before you go in the direction of an IVA.  

Your credit rating, for example, which has probably taken a setback or two while your debts mounted, will take a further blow the moment you agree an IVA. Furthermore, one of the conditions of the IVA will be your prevention from taking on any further credit agreements at least until the completion of the term of the IVA (since the IVA is designed to get you back on your feet again, and not encourage you to take on still further debt).  

The direct, financial cost of an IVA lies in the fee you will need to pay to the insolvency practitioner. This will be a solicitor, an accountant or one of the very many specialists you will see advertised on the internet. These fees are not insubstantial and will be added to the total amount recoverable under the terms of the IVA.  

As with all financial decisions, an IVA is not to be entered into lightly. Seek debt help and debt advice; compare IVA plans against other solutions such as debt consolidation; and generally research all your options so that you can get yourself free of debt in the easiest way possible.

In summary, an IVA offers those with more serious debt problems a way of wiping the slate clean and starting again without any debts. An IVA will: 

• Need to be agreed with 75% of your creditors;
• Will typically last between three and five years, at the end of which the balance of any remaining debt is written off;
• Some, but not all, of your assets may need to be sold to raise sufficient funds to satisfy your creditors; 
• Your credit rating will be adversely affected – but not as much as if you had a County Court Judgement or were declared bankrupt;
• Fees will need to be paid to the insolvency practitioner instructed to draw up and administer the IVA.

The author of this debt management and IVA article is Charles Wells. 

This article does not represent ‘financial advice’ as each individual's personal requirements will be unique to their specific needs. If there is something in the article which you wish to rely on, please check those details with the person with whom you arrange financial services such as IVAs, loans or debt management plans.

The views in this article represent those of the author and not those of Netbasic Limited.

The good news is that debt management – especially when done as an everyday, commonplace part of a personal budget – is not a complicated or long drawn out process. Even better news is that when you have done it once, and assembled all the information you need, then the process of debt management becomes steadily easier.

The core of any form of debt management is simply a question of setting out in one column all your sources of income each month and, in another column, all your outgoings.

Although that might make things sound very easy, it is important to keep the figures for both income and expenditure as accurate as you can for the debt management plan to be as useful as possible. Remember, for example, that although your credit card statements will demand at least a minimum payment each month, you should be aiming to repay more than that – the higher figure is the one you should include in your debt management plan.

Effective debt management should also try to take some account of those nasty surprises that crop up once in a while. Whilst it is difficult to budget for unexpected expenditure, the best management plans will include some provision for saving for such contingencies as surprise bills, parking tickets or unplanned travel expenses.  

Debt management is not a one-off process, of course. When you have listed your income and detailed your expenditure, it will have served little purpose if it is consigned to a drawer to gather dust. Look at it often, review it, and amend it with updated figures whenever necessary. Compare how the theoretical figures match up to the practice. Debt management should then become a question of fine-tuning.

If there is more money coming in than there is going out, for example, then you are in the fortunate position of being in control of your debts. If it is the other way around, however, then it is a signal that something needs to change, since debt cannot afford to spiral upwards indefinitely.  

Your personal debt management plan could also prove useful if you need to apply for credit. A check of your credit-worthiness will involve a similar balancing of income against expenditure, so you will be one step ahead of the game if you have already prepared the figures.

Similarly, if things do begin to go wrong and you need to seek debt advice or debt help in the future, your debt management homework will make the process of getting the most appropriate advice so much easier. Indeed, the figures you have assembled will help to show whether there are opportunities for debt consolidation to reduce the overall expenditure on the cost of borrowing. If you reach the stage where you need to discuss the rescheduling of your debts with your creditors, then a debt management plan will again be one of the first things they will need to see. If the difficulties have really piled up and you are considering an Individual Voluntary Arrangement (IVA) then the basic principles of debt management will again be core to the arrangement.   Debt management is an everyday process for comparing our outgoings against our income. It is important because it: 

• is an integral part of a personal budget of income and expenditure;
• is neither complicated nor long-winded; 
• can be used for fine-tuning a personal budget;
• helps to inform a credit-worthiness check;
• is useful when seeking debt advice or help;
• contains the information necessary for a more formal debt management plan.

Mike Magners has written this debt management article. 

This article does not represent ‘financial advice’ as everybody's individual requirements will be unique to their own specific needs. If there is something in the article which you want to rely on, please ensure you check those details with the person or business with whom you arrange a financial service.

The views in this article represent those of the author and not those of Netbasic Limited.  

Credit and debit card spending rose to £91.5 billion, up from £86.6 billion in the three months to last September. In total, credit card debt increased by £300 million in 2007.

Analysts are blaming the hike in spending on cheap credit card deals and the fact that they are readily and easily available and have warned that people using their credit cards to meet their monthly bills is the first sign of a spiral of debt trouble. 

The problem with using credit cards for everyday bill is that repayments of credit card debts are calculated by comparing the total amount of repayments to the total sums lent during the same period. This means you are paying back more than you have actually spent with the added cost of interest.  

The concern is that as people find their cash or current account balances dwindling, then they may start to look towards their credit cards to meet everyday family shopping costs. Some people may even be tempted to draw out cash of their credit card in order to then use this same money to make the minimum required payment of their credit card. 

Although some of the increased spending on food in December can be attributed to higher prices, recent figures show that the cost of food and drink has risen by only about 6 per cent in the past year.

The result of the increased use of credit cards and the associated increased credit card debt is that charities who advise people about credit card debt are now experiencing an increased number of telephone calls. This was particularly the case in mid January.

As a result, people are repaying more on their credit cards than they were five years ago.

But everyone knows that spending on credit cards is easy and that fact has always been reflected by the UK’s growing economy and despite the amount of debt people acquire using them, credit cards are not the enemy.   

Many credit card companies offer new cards with zero per cent interest introductory rates on balance transfers. These offers might actually help to alleviate debt through lowering interest payments over the period of the zero rate offer. However you are strongly advised to do the maths first. When considering balance transfers, don’t forget to read the fine print. The zero per cent introductory rates advertised will not last forever so take note of the duration. Also take into account the balance transfer fee and the credit card charges. A small charge can be offset by a longer zero per cent rate, so it pays to do the maths.   

Also keep in mind the most common mistakes people make when using credit cards such as withdrawing cash, using credit card cheques, overseas charges (conversion fees) and long-term borrowing. Also be mindful of the fact that if you do not pay your credit card bills on time it can have a detrimental affect on your credit rating.

This debt help article has been written by Charles Wells.

This article does not represent ‘financial advice’ as each person's individual requirements will be unique to their own personal needs. If there is something in the article which you may wish to rely on, ensure you check those details with the person or company with whom you arrange financial services.

The views in this article represent those of the author and not those of Netbasic Limited.

Debt charities have said that they have seen almost twice the amount of people seeking debt help since January last year.

More people have already decided to declare themselves bankrupt or have gone ahead with a petition for bankruptcy this financial year than in the whole of 2007.

The Citizen’s Advice Bureau (CAB) said that over the last few years it has seen the number of clients in debt increase significantly as people find their incomes drop or fail to rise with inflation.

The CAB said that while there is a lot of pressure on the household budget, people are managing to pay their rent or their mortgage, and put petrol in the car but they are leaving things like council tax and other mundane bills such as water and electricity.

The main concern of the CAB is that people who see their debts spiraling out of control could turn to loan sharks.

Loan sharks prey on the most vulnerable families, offering them the money they desperately need in the short-term before hounding them for sky-high interest rates.

Government research shows that around 165,000 households in the UK use illegal lenders. The North East, North West and Scotland have been identified as a loan-shark hotspots, where the number of people turning to the sharks is disproportionate compared to the overall population.

Illegal lenders regularly target people living in deprived areas, offering them a number of small loans to make ends meet and then piling on the pressure to get the cash back.

According to the Competition Commission (CC), loans sharks charge up to 1,000 per cent interest per year for loans. The average is said to be 177 per cent per year as around two million Britons fall prey to these sharks.

Many are those on the lowest incomes and with household budgets stretched to the limit.

UK household debt is rising at a faster rate than in the US and most major European countries and is well and truly into the billions.  

One major problem of debt is that many people choose to ignore it, waiting for more than a year to do something about it or seek advice. By then, they can find themselves in a far worse position and find it difficult to negotiate with creditors.

Debt counselors are advising people to seek help early, prioritise their debts and not to take out more credit to pay off existing debts.

The CAB has advised that people especially be careful around Christmas to prevent them starting the first few months of the new year paying it off and winding up with the ‘new year blues’.

The less obsessed Britain is with debt, the better our financial health in general and while most will find it completely normal or expect to find themselves in some amount of debt during their lives, they should always seek to control these debts and pay them off before acquiring more.

It is important that if you are having problems with debt you should seek help early and the advice of debt counselors. Prepare a budget to see what you can afford, prioritise your debts and do not borrow more money in order to meet existing repayments or pay off existing debts and always be fully aware of your financial situation, severe or not. 

The author of this debt help article is Mike Magners. 

This article does not represent ‘financial advice’ as the individual requirements of each person will be unique to their own specific needs. If there is something in the article which you would like to rely on, please ensure you check those details with the person or business with whom you arrange a financial service.

The views in this article represent those of the author and not those of Netbasic Limited. 

In many cases, creditors do not receive their full amount due from an IVA.  However, many recognise that it may be a more viable option than potentially receiving little to nothing if a borrower faces bankruptcy.  The benefits to creditors with the agreement include either a lump sum payment up-front, or consistent monthly payments over a period of typically three to five years.  This enables creditors to recoup some of the money they are owed.  

It can also save them on the costs and administration involved if they had to take legal steps to recover their money.   

Using this type of debt help solution is not an idea scenario for all people.  It does create a negative financing position for the debtor.  Lenders perceive the borrower as more risky afterwards.  However, it does create much greater possibilities in the future than a County Court Judgment (CCJ) or Declaration of Bankruptcy would.  More importantly, it offers a way out of the currently unmanageable debt scenario.  Some borrowers are so deeply in debt and have such troubling credit that no lender will work with them with a debt consolation loan or another form of direct debt help.  

There are several benefits to the IVA for the consumer, along with the ability to avoid more negative financial manouvres.  The arrangement is designed to provide a repayment plan that is manageable for the debtor based on his income.  Debt management, by definition, must be manageable in order for it to work.    

Perhaps the greatest benefit is that if the debtor fulfills the obligation of the agreement, the remainder of the debt is written off.  This sometimes leads to as much as 75 per cent of the original debt being avoided.  This is obviously a huge advantage to a debtor who can be responsible for the five years of the contract. It also allows them to wipe the slate clean and start afresh, without a CCJ or bankruptcy around their neck.   

The best way to avoid facing worst-case scenarios with debt is to avoid taking on too much debt to begin with.  For those that cannot make this decision in hindsight, debt advice and debt help can be especially useful.  Debt help assistance is needed to explore the best alternatives and potentially to compare IVA plan solutions.  Borrowers need to assess their situation and decide what their next step should be.  The reality of today’s debt and loan market is that debt management is accessible to those in financial distress.

George Gale is the author of this IVA and debt management article. 

This article does not represent ‘financial advice’ as each individual's personal requirements will be unique to their specific needs. If there is something in the article which you wish to rely on, please check those details with the person with whom you arrange financial services such as IVAs, loans or debt management plans.

The views in this article represent those of the author and not those of Netbasic Limited.

The best approach to debt management is responsible use of debt to the point where financial management is simple.  Unfortunately, this is a lesson that many people learn the hard way.  Responsible borrowing is tough for young people who have no experience with debt or the management of it.  Brits who do find themselves in overwhelming financial trouble should first look for non-intervention ways to deal with their debt.  Debt consolidation loans might be possible, depending on the credit history of the debtor.  This can be a great way to take higher interest unsecured loans, credit cards, overdrafts etc and reduce creditor obligations as well as lower interest payments.  

The reality for many people, however, is that lenders may not be willing to take on the risk of lending to bad credit borrowers or those already in desperate situations.  If they do, the loans are often offered at unfavourable rates and with high interest that preys upon the desperation of the borrower.  Many borrowers do sadly lose their homes by borrowing out of desperation.  For people running out of self-management options, debt help is available.  To begin with, there are many debt advice services that work with people to help them find the most appropriate debt management solution.  

County Court Judgments or Declarations of Bankruptcy are the worst-case scenarios for overwhelmed debtors.  Either of these legal moves potentially results in a consumer having a hard time ever getting financing in the near future.  Financial debt management solutions are available to help the most desperate borrowers avoid these legal actions.  IVA is generally referred to as the last best option for unmanageable debt.  IVA stands for individual voluntary arrangement.  

An individual voluntary arrangement is a government supported agreement between a debtor and his creditors that is facilitated by a qualified debt help provider.  Experts with debt help can compare IVA plan options for borrowers in any situation and help them develop the best solution possible.  In order for IVA to take effect, 75 per cent of creditors must agree to the repayment agreement.  The plans typically involve fast-track repayment or portions of the debt within five years. Any remaining debt after this period will be wiped off.  While creditors do not always get back the full amount they are owed, many recognise the benefits of getting lump sum payments or consistent payments for a period of time, as opposed to little or nothing.  

Financial debt management is not only vital to long-term financial health but to an individual’s general health too.  Many people become so overwhelmed by debt that their health suffers, their relationships suffer, and their general joy of life wanes.  The benefits of debt help solutions such as IVA, is that it offers a way out other than bankruptcy. 

The author of this debt management article is John Smith.

This article does not represent ‘financial advice’ as each person's individual requirements will be unique to their own personal needs. If there is something in the article which you may wish to rely on, ensure you check those details with the person or company with whom you arrange financial services.

The views in this article represent those of the author and not those of Netbasic Limited.

A sense of shame and vulnerability sometimes prevent troubled or desperate borrowers from seeking proper debt advice.  However, getting debt help before it is too late can potentially save the future financing viability of a borrower.  The problem with borrowers failing to seek out debt help is that many consumers are not aware of all the debt management programmes and opportunities available.  Unfortunately, borrowers who have positioned themselves in a situation where no lender wants to take on the risk of new loans for debt consolidation have limited options.

IVA stands for individual voluntary agreement.  While it is a government supported debt management programme, it provides less long-term negative effects to a borrower’s credit than a CCJ or bankruptcy would.  Essentially, it is a formalised agreement between a borrower and creditors to accomplish debt payoff that is satisfactory to the creditors, but manageable for the debtor.  Creditors must agree to the terms of an IVA.  That is, 75 per cent of a borrower’s creditors must agree to the terms, with the remaining creditors being obligated to abide by the terms.  While creditors would much prefer to have a borrower fulfill the original debt terms, a government supported individual voluntary agreement is a more favourable solution to possibly other debt management plans with the borrower.

The benefit to creditors from the IVA is that it provides either initial lump sum payments or reasonable monthly payments that are consistent for the typical 5 years of the plan.  Borrowers benefit in many ways, mostly because they can avoid the more serious bankruptcy consequence.  Working with plan specialists, borrowers can compare IVA plan options to find the best debt management solution.  The important feature is a manageable monthly payment.  The good news for the borrower is that once they meet the terms of the agreement, the remainder of the debt is written off.  This can mean huge savings for borrowers as well as the psychological benefit of having the financial slate wiped clean.

However, IVA is not the right debt management solution for all borrowers.  The best solution is preventative measures that lead to more responsible use of loans.  Borrowers struggling with moderate debt challenges are better off developing manageable self-monitored repayment plans with debt advice from qualified experts.  Eventually, though, borrowers who are facing the worst case scenarios of CCJ or bankruptcy should look for debt help and explore the best alternatives for an agreement.  For both creditors and borrowers, a well-developed IVA plan is often the best solution to an unmanageable debt situation faced by borrowers.

The author of this article is John Smith. 

This article does not represent ‘financial advice’ as each individual's personal requirements will be unique to their specific needs. If there is something in the article which you wish to rely on, please check those details with the person with whom you arrange financial services such as IVAs, loans or debt management plans.

The views in this article represent those of the author and not those of Netbasic Limited.

Debt management approaches vary.  The first step for someone who finds himself facing overwhelming debt is to get debt help or debt advice from knowledgeable experts.  There may be options initially for debt consolidation or other self-directed approaches to creating a more manageable opportunity.  Debt consolidation loans are a great way to reduce the number of creditors one owes, and to potentially turn higher interest rate debt into lower rate debt.  

Sometimes consumers are simply too deep into debt to find lenders willing to work with them directly.  Lenders who see desperate borrowers are cautious about taking on additional risk.  Borrowers who can neither repay their debt or find ways to manage it, must consider working with debt management programmes or service providers to find alternatives to bankruptcy.  Bankruptcy is a very negative financial manouveure that makes it extremely difficult for people to ever get financing.  

There are multiple debt help programmes.  The first step for the borrower is to get debt advice from experts more knowledgeable about all the options to manage debt.  These debt help programmes usually can take one borrower’s situation and help him to explore the best debt management solution.  

One alternative to bankruptcy that many borrowers are becoming more aware of is an IVA.  An IVA is an individual voluntary agreement.  By working with a debt help specialist, borrowers can compare IVA plan opportunities with other debt solutions.  These unique solutions have many great benefits compared to bankruptcy.  They often include significant write offs of existing debt.  They involve repayment plans that pay off the loan, in a manageable way, within five years.  Any outstanding balance is usually wiped out after this time. As importantly, there is less long-term negative impact on borrower credibility.  Borrowers need to carefully explore this important debt help opportunity with experts to get its greatest benefits.  

IVA as a debt management solution can be an attractive option.  However, there is no guarantee that a borrower can obtain this type of debt help.  IVA plans are government supported, which makes them extremely credible debt solutions.  The obstacle to getting one is that creditors must ultimately agree to the plan.  Debt specialists work with creditors to develop a plan that is beneficial to both parties.  Creditors would prefer to get repayment of the entire debt, but they also need to consider the advantages of collecting some of the debt versus none.  To be enacted, 75 per cent of a borrower’s creditors must agree to the developed IVA plan.  If 75 per cent approval is obtained, the other creditors must abide by the agreement.

John Smith is the author of this debt management article.

This article does not represent ‘financial advice’ as each person's individual requirements will be unique to their own needs. If there is something in the article which you may wish to rely on, ensure you check those details with the person or company with whom you arrange financial services.

The views in this article represent those of the author and not those of Netbasic Limited.

IVA stands for individual voluntary agreement and is one of the final alternatives for debt management that some people turn to in order to avoid getting a county court judgment (CCJ) or bankruptcy.   

So, at what stage do you think about IVA debt management? Unfortunately, some debtors find themselves in situations that they are not able to manage themselves.  Borrowers that are already overwhelmed may find lenders unwilling to take on the loan risks attached to conventional lending methods.  Even with secured loans or debt consolidation loans, some borrowers still cannot cover the monthly repayment costs if their loan amounts or interest are too high.  

Once people find themselves in situations beyond their control, they begin to look to experts for debt advice.  Many debt management websites are available for consumers to learn about sources of debt help.  The key for the borrower is to avoid a situation where bankruptcy is their only option.  Bankruptcy is a process that can put a borrower in a virtually irreparable financial situation.  Getting credit becomes especially tough for people who have gone through this process or have a CCJ attached to their name.  

An individual voluntary agreement is a plan under which 75% of an individual’s creditors agree to a settlement plan with the IVA provider.  This is a government regulated programme and it requires all the person’s creditors to abide by the plan if 75% do agree.  The purpose of the programme is to provide a government-supported debt consolidation option to help keep people out of bankruptcy.    

The borrower must commit to pay off as much as his or debt that he can, typically over a period of three to five years. Normally after this period of time, it is accepted by the creditors that any outstanding debt is then written off.

People often do not realise the options available for debt help.  Some consumers simply are too proud to get help.  Others just lack the knowledge to do so and do not realise how many alternatives there are.  This is why it is especially important that borrowers struggling with unmanageable debt do get debt help.  Industry experts can assist with finding the right debt solution for an individual’s personal situation.  However, as with all things, it is important to compare an IVA plan against other options to ensure it is right for the debtor.   

There are huge benefits to the IVA approach to debt management.  A large chunk of the debt is written off, which is a huge advantage.  This is obviously part of the challenge in getting some creditors to agree to the arrangement.  However, creditors ultimately understand it is better to get something than nothing.  It also reduces the number of creditors and the amount of hassle for borrowers, while positioning them to be debt-free in five years.

The author of this IVA article is John Smith.

This article does not represent ‘financial advice’ as each person's individual requirements will be unique to their own needs. If there is something in the article which you may wish to rely on, ensure you check those details with the person or company with whom you arrange financial services.

The views in this article represent those of the author and not those of Netbasic Limited.

Prior to looking to debt management programmes, many people attempt to manage their own situations.  Debt consolidation is typically a first step for people attempting to manage many sources of debt, several of which might be high interest.  Debt consolidation loans, such as secured loans or homeowner loans, are popular in the current lending market based on opportunities for low secured loan rates.  Many Brits are taking their high interest rate credit cards and unsecured debt, and paying them off through a debt consolidation loan.  This provides interest rate savings, but it also reduces stress for the debtor as they have fewer creditors to work with.  

Some borrowers find themselves in a position where they are unable to find any new loans sources, they simply cannot manage their debt under any conventional technique, or they are on the verge of bankruptcy.  This is when many consumers look for other debt management solutions.  There are many providers in the lending market who assist in various ways.  Some programmes simply offer debt advice to assist borrowers in managing their situations or finding debt help.  Others offer more aggressive debt solutions for those desperately looking to avoid declaring themselves bankrupt.  

For borrowers desperately trying to avoid bankruptcy, individual voluntary arrangements, or IVA plans are a commonly used option.  IVA processes lead to settlement with creditors that arranges for repayment of the bulk of an individual’s debt obligations over the course of five years.    

The best advice for consumers is to look for debt advice and avoid unmanageable debt situations and soltuions.  It is definitely true that it is easier to prevent debt trouble than it is to get out of it.  Consumers must only use debt for reasonably necessary purposes, and only when repayment is manageable.  Fortunately, for borrowers already in unmanageable situations, there are viable solutions that offer hope for the financial future.  

Debt management should be used to maintain the most affordable monthly debt obligations possible.  By using recommended debt-to-income parameters when taking on debt, consumers can protect themselves against unfavourable scenarios. The good news is that people do not need to bury their heads in the sand - by facing up to their situation sooner rather than later, it gives them the best chance of getting out of debt with the least damage to their credit rating.    

Debt help is available to those that find themselves needing assistance and guidance.  Individual consumers need to explore their best options with a debt management specialist or loan specialist.  Many consumers are unaware of the various approaches and options for dealing with debt.  Specialists can assist by matching an individual’s situation with the best available debt solution.

This debt management article has been written by John Smith.

This article does not represent ‘financial advice’ as the individual requirements of each person will be unique to their own specific needs. If there is something in the article which you would like to rely on, please ensure you check those details with the person or business with whom you arrange a financial service.

The views in this article represent those of the author and not those of Netbasic Limited.