Other Debt Solutions
When people get into serious financial difficulties, they often think of the extreme cure-all of bankruptcy as their only effective solution. However, what many people still don't realise is that there are far more effective solutions currently available that will not have the same devastating effects of bankruptcy that include being stripped of their assets and their ability to raise credit in the future.
The three main alternatives to bankruptcy are: Debt Consolidation, Debt Management and the very popular IVA or Individual Voluntary Arrangement. Debt Consolidation is when your many unsecured debts are exchanged through a third party for one single loan. For this reason, it is sometimes in fact known as a Consolidation Loan. This clears up all of the high interest credit cards, store cards and your other unsecured loans. It replaces them with one loan, over a fixed period of time with its own agreed repayment and interest rates.
Debt Management is similar to Debt Consolidation. However, in this case, a third party act on your behalf to negotiate repayments to the people you owe money to, your creditors. They work out how much you can afford to repay per month and make a proposal to your creditors to divide that amount amongst them.
The third and final alternative is an Individual Voluntary Arrangement, known as an IVA. This is still a form of insolvency, but allows you to make one single affordable monthly repayment that is spread amongst your creditors for a maximum of five years, after which all Since this is a legal agreement, it involves barring your creditors from making further charges or interest against you on these original debts. Using a third party to negotiate on your behalf, your creditors are offered a proposal, your creditors can choose to accept or decline this offer. If they decline it, you can make a new proposal or consider another alternative. This is by far the most popular choice with those with serious debts (of £15,000 or more) and allows you to walk away from existing debt (minus your sixty months of regular payments) and restart building your credit.
It is by far best to speak to a professional about which of these three alternatives or indeed bankruptcy might be best for your own personal circumstances.
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