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IVA - Individual Voluntary Arrangement

Description

An IVA is an arrangement with your creditors. It's entered into with the assistance of an Insolvency Practitioner, who will work to secure the agreement of your creditors to a payment proposal.

Eligibility

Typically carrying consumer debts of £15,000 or more, you will be struggling to meet current repayments to your creditors. You may be able to pay a certain reduced amount per month towards your debt, or you may be able to release a lump sum through remortgaging your home or sale of another asset.

Advantages
  • Takes the pressure off
  • One affordable payment per month to your creditors
  • A large amount of your debt can be written off
  • Fixed repayment period (normally 60 months or less)
  • Creditors freeze future interest and charges
  • Less stigma and publicity than normally caused by bankruptcy
  • You are involved in the choice of assets made available to creditors
Disadvantages
  • Usually only suitable if you have £15,000 of unsecured debt or more
  • During the IVA active period you will be unable to borrow further funds without the permission of the arrangements supervisor
  • The IVA may appear on your credit file and affect your future credit rating
  • Should the IVA fail, you may still be made bankrupt
  • 70%, in value, of your creditors who vote (on the proposal) must agree to your proposed arrangement.

Trust Deed (only available in Scotland)

Description

A Trust Deed is an agreement with creditors. It's entered into with the assistance of an Insolvency Practitioner.

Eligibility

Typically carrying consumer debts of £5,000 or more, you will be struggling to meet current repayments to your creditors. You may be able to pay a certain reduced amount per month towards your debt, or you may be able to release a lump sum through remortgaging your house or the sale of another asset.

Advantages
  • Takes the pressure off
  • One affordable payment per month to your creditors
  • A large amount of your debt may be written off
  • It may be possible to make more favorable arrangements than under sequestration to retain assets such as the family home
  • Fixed repayment period (normally 36 months)
  • Your creditors cannot take further action against you, arrest your earnings, or continue to charge interest
  • Trust Deeds are usually more flexible and cost less to administer than sequestration.
Disadvantages
  • Home owners may be forced to sell if creditors cannot be paid from other sources
  • Debtors cannot trade on their own account or hold directorships of a limited company
  • Existing arrestments and other diligence continue to be effective
  • The arrangement is binding on you as well as your creditors
  • If you were to default on the arrangement then the Insolvency Practitioner can petition for your sequestration

 

Debt Management

Description

Your monthly income and outgoings will be assessed. Based on your surplus income available to pay creditors, your debt management advisor will negotiate with them to arrange a lower regular payment. Your debt management advisor also deal with correspondence from your creditors on your behalf. You make one affordable payment per month which is distributed to your creditors.

Eligibility

You will be struggling to meet current repayments to creditors. Your debt level may be below the amounts usually required to enter an IVA (or Trust Deed in Scotland). You must have a certain amount that you can pay on a regular basis to clear your debt.

If you can afford to pay £100 per month or more, a debt management plan might be a good option for you.

Advantages
  • Takes the pressure off
  • Your debt management advisor will attempt to negotiate to reduce or freeze your interest payments
  • Good option for people who can afford to make regular payments to their creditors and want an easy, hassle free way to pay
Disadvantages
  • If you miss payments on a credit debt, this will be recorded on your credit reference file by your creditor. This will usually make it harder for you to get credit in the future.
  • Some creditors may ask for a note to be put on your credit reference file to say you are on a Debt Management Plan
  • A Debt Management Plan requires long term commitment from you to pay off all outstanding debt which can take many years dependent on the amount of debt and disposable income
 

Bankruptcy

A person petitions for Bankruptcy when they cannot afford to pay their debts and need to start afresh. Bankruptcy is a formal solution that you can solicit yourself at the court. It’s rare that a creditor will petition the court to make you bankrupt as it costs them money but it can happen. Typically bankruptcy lasts 12 months and then you are discharged i.e. you are released from the restrictions imposed on you. It can however last much longer – from 5 years up to even a maximum of 15 years. A Bankruptcy Restriction Order is applied beyond the initial 12 months in cases where the bankrupt was dishonest or especially blameworthy for the bankruptcy. Such cases include when the debt was incurred through gambling, fraud or negligence. However misconduct prior to 1 April 2004 will not be taken into account.

 

BestDealPlease.com News

Latest News 11/03/2010 at 11.58 GMT
 
In a survey conducted by Norwich Union they have found that up to seven percent of their policy holders provided false information about their health when applying for life insurance and critical illness policies.

The company wrote to 5,000 customers requesting that they validate any information that they may have entered incorrectly on their application. Roughly fifty percent of the applicants responded to the initial request with the approximately seven percent of the applicants admitting to providing misleading information which ultimately could invalidate their policy.

Some of the major falsifications of information included things like denial of being a smoker when the applicant was and giving incorrect information about their weight or pre existing health problems.

In a separate poll by Norwich Union they concluded that up to fifteen percent of applicant’s submitted false information when applying for insurance.

The general consensus from most life insurance companies is that it is just not worth falsifying information on their application form because if you are found out you risk having the policy invalidated. This ultimately means that the insurance company has the right to withhold payment on their policy because false information was supplied.
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