However, one industry expert has recently claimed that those with a relatively high level of unsecured debt who cannot make repayments could do far better by considering an IVA, or Individual Voluntary Arrangement, as this could provide a number of benefits over other possible solutions such as bankruptcy or Debt Relief Orders.

The advice came from Pat Boyden, personal insolvency expert at PricewaterhouseCoopers, who said that one of the main reasons why an IVA could prove so beneficial compared to the other options was because this was a plan that provided far more structure for those in debt, enabling them to both improve their own finances over a period of time and return at least some of the money that they owe to creditors.

IVAs are known as a softer alternative to bankruptcy, and should not be entered into lightly or without thought. However, for those that really are struggling with a large amount of unsecured debt with a number of creditors these plans can provide structure and financial relief.

Boyden stated: “A massive 35,682 people entered into personal insolvency in the first three months of 2010, showing that the record number of personal insolvencies reached last year is showing no signs of slowing as the UK economy comes out of recession. The UK consumer continues to struggle with personal debt and will do for some time yet.”

Those in debt should consider IVA over bankruptcy is a post from: Glitec

The figures were released several weeks ago by the Insolvency Service, and reflect just how dire the financial situation has become for many people as the recession continued to deepen.

The Insolvency Service report showed that during the first three months of this year there were over nineteen thousand bankruptcies and nearly eleven thousand Individual Voluntary Arrangements across England and Wales.

There was some light at the end of the tunnel, with the number of companies that were going bust in England and Wales falling over the first three months of the year, although the figure was still over 50 percent higher than the same period last year.

One insolvency expert said that the level of personal insolvencies across England and Wales could soar to 125,000 this year. He said: “This reflects both the stresses of high levels of personal debt and rising unemployment and a record number of entrepreneurs going bankrupt on the back of their business’s failure.“

Another said that the recently introduced Debt Relief Orders would play a big part in the increase in insolvency numbers this year, as these will make it cheaper and easier for many people to declare themselves insolvent.

He said: “What we are seeing is actually record levels of personal insolvency. Debt Relief Orders introduced just a month ago are going to add to what makes these figures and take them to even higher levels.“

New record for bankruptcy levels is a post from: Glitec

However, all of this could change as a result of debt advice and debt management companies and debt charities being given new powers that could allow them to take more control no matter what the lenders think. Under the new powers, which are in the Tribunals, Courts and Enforcement Act passed last year, these debt companies and charities will be able to write off a portion of the client’s debt themselves no matter that the lender thinks of the situation.

In other changes that come as part of the act, utility companies that are owed money will not be able to cut off the supply of consumers that are clients of these debt companies. Likewise lenders will not be able to petition for bankruptcy if the consumer is a client with the debt company or charity. The debt firms will also be able to enforce a repayment schedule with the lenders, even if the lender is not happy about the schedule.

There are currently around 70,000 in debt management plans with these debt advice firms and charities, and with household finances becoming increasingly strained this figure could rise. In the past some consumers have found that lenders have refused to accept certain offers even if they have been put forward by their case officer at the debt firm. However, the lender may soon no longer have a choice.

One official from the Justice Ministry stated: ‘Such schemes depend on the voluntary participation of the debtor and creditors and operate without any form of regulation. There is currently no power to compel creditors to adhere to the terms of a debt repayment plan.’

Once the plans have been reviewed the Justice Secretary, Jack Straw, will provide licensing to approved debt agencies and charities so that they can utilise these powers when setting up debt management plans for their clients.

This is just one of the measures that the government is bringing in to try and help consumers with high levels of debt. Later this year a more simplified version of the IVA (Individual Voluntary Arrangement) is due to be brought in, and this could help more people to find a suitable solution to deal with their debts. In April of next year and simplified form of bankruptcy filing known as a Debt Relief Order is to be brought in, and this can help those with under £15,000 of unsecured debt.

Recent additions:

• Darling wants banks to help vulnerable families
• Debt relief orders could make bankruptcy too easy
• Is debt consolidation the answer?
• CAB reports rise in enquiries relating to mortgage arrears and debt
• Options That Can Help Clear Your Debts
• Wipe Out Debt Problems With A Low Rate Loan

Debt advice companies and charities get new powers is a post from: Glitec

However, there is a clause in the IVA agreement with relation to homeowners. Whilst those that have entered into an IVA do not have to sell their home in order to go through this process, the clause states that in the final year of the IVA the homeowner must use any equity in the home to put towards the outstanding debt, and this could result in these consumers facing crippling interest rates. Experts state that it means the homeowner will have to take out finance against the equity in the home, and this will probably be at a far higher rate than when they originally took out their mortgage.

IVA homeowners will also face a second blow, as their poor credit profile resulting from the IVA means that they will have to pay an even higher rate of interest on the money they borrow, which could make the repayments crippling.

One industry professional stated: ‘There is a problem here. People in an IVA will be remortgaging into something significantly more expensive. Not only are mortgage rates higher than when these people bought their houses, but they could well be classified as sub-prime – that is to say as riskier borrowers who need to be charged more to compensate for that risk.’

Recent additions:

• Options That Can Help Clear Your Debts
•  Will IVAs become more transparent?
• IVA homeowners face soaring interest rates
• Wipe Out Debt Problems With A Low Rate Loan

IVA homeowners could face problems is a post from: Glitec

Experts have urged those in debt to remember that burying your head in the sand is not the answer, as the situation will only get worse until you end up in court, and in the meantime your physical and mental health could suffer, not to mention your home life, your relationships, and other aspects of your life. It you are finding it increasingly difficult to keep up with your repayments then you need to address your debt problems right away so that you can find the best solution.

There are a number of options that are available, which could help you to clear your debts more effectively. Simply going through a debt counsellor to learn how to better manage your finances could help, as these counsellors are trained to provide financial and debt help. You could consider a debt management plan, where you can make one affordable monthly repayments to be distributed by your case officer to each of your creditors on a pro rata basis.

You may prefer to handle the situation yourself and contact each of your creditors with a view to coming to an informal arrangement about the amount you pay each month and over what period. By coming to an arrangement with your creditors with regards to reducing your repayment and extending your term to accommodation the reduction you could effectively ease your debt problems.

If you want to clear your existing high interest debts, ease financial management, and reduce monthly outgoings you may find that a consolidation loan will do the trick, and this will not affect your financial future or credit. You can use the loan to repay your current debts, and enjoy one lower rate loans with just one convenient repayment to make each month.

There are also other possible solutions for those looking to get help with their debts, and those in serious debt may wish to consider an

or bankruptcy, which – whilst not encouraged because of the long term effects on your future – may be the only option for some people because of the level and severity of their debts.

No matter which solution you decide to opt for, it will be a positive move in helping you to deal with and clear your debts. The worst thing that you can do is to bury your head in the sand and hope that the problem will go away, as it will simply continue to get worse, and can affect all areas of your life.

Related Articles:

• Will IVAs become more transparent?
• Is A Secured Loan The Right Choice?
• IVA homeowners face soaring interest rates [news March 2008]

Options That Can Help Clear Your Debts is a post from: Glitec

An IVA is known as a softer alternative to bankruptcy, and enables borrowers to repay a set amount each month, which is then distributed between the creditors. This is paid for a fixed period, which is usually five years, and after this period any remaining balance on the debt is written off. In order to be eligible for an IVA you or your partner must be employed full time, and you must have at least £15,000 of unsecured debt. The majority of your creditors must also agree to the IVA before it can go through.

Over recent years there have been concerns that whilst many debt agencies have been pushing IVAs with their advertisements and marketing materials, consumers were not being told enough about the risks of this process. In addition, many creditors were clamping down on IVAs, rejecting many applications and forcing borrowers who were unable to repay their debts to take other courses of action. With more and more people trying to go down the IVA route after the mass influx of advertisements – which many said made the process sound like an easy way out of debt – creditors became even stricter about accepting IVAs.

However, a new IVA protocol has recently been developed, where debt agencies, creditors, and campaigner have all worked together in order to put together a protocol that could make this process more transparent, and could see a drop in rejections from creditors.

The Insolvency Service has been involved in drawing up the protocol, and one official from the service said: “The Insolvency Service has facilitated a process which has successfully produced a voluntary code for IVAs to reflect the changing needs of the market. It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format. Today’s protocol is a significant achievement for everyone involved.”

The move has also been welcomed by the banking industry, and a spokesperson from the British Bankers’ Association said: “The BBA, the Insolvency Service and the participating IVA providers are united in support for this agreement, which should provide customers with the reassurances they need in order to make the right choice for their financial futures.”

An industry professional added: ‘All this does is tighten up and simplify what’s already in place. I’m not sure we will be forwarding more people for an IVA, but this means that more people should be accepted and less will have to resort to bankruptcy.

Will IVAs become more transparent? is a post from: Glitec

First of all it is important to remember that an IVA is not something that should be taken lightly, as the consequences can be long term and can really impact upon your financial future. There are many other debt solutions available that will not cause such long term problems, and these should be looked into before an IVA is considered. However, there are cases where the borrower has no real chance of paying off their debts, and this is where the IVA route can prove invaluable.

There are a number of benefits that borrowers can enjoy when going through an IVA, but it is important that you ensure that an IVA is the right course of action for you. You can do this by speaking to a specialist debt counsellor or even by discussing the issue with an adviser from the Citizen’s Advice Bureau. If you decide to go down the IVA route you should make sure that you can honour this legally binding agreement, otherwise you may find that the creditors are no longer prepared to accept you on an IVA program.

The benefits of an IVA include:

Easier financial management: You will only have to make one payment each month rather than making separate payments to a range of creditors, and this can make it far easier to manage your finances. You will make one set repayment each month to your IVA case officer and this will then be distributed amongst your creditors depending on how much your original debt with each creditor was. Payments will be made on a pro-rata basis.

Increased affordability: Your monthly repayments will be set at an amount that you can comfortably afford without overstretching yourself, and will be based on your income and outgoings. This amount will be set by your IVA case office at the start of the plan, so you know exactly how much you will be paying out each month and you will only have to make on payment, which will then be distributed amongst your creditors on your behalf.

Getting out of debt faster: With an IVA plan in place you could be free of debt far quicker. In most cases the IVA is set up for a period of sixty months, and once you have made the set repayment for that sixty months any remaining money owing to your creditors will be written off, and the debts will be cleared.

Related articles:

• Wipe Out Debt Problems With A Low Rate Loan
• Keeping up with your secured loan repayments

The benefits of an IVA is a post from: Glitec