How do I cope with huge debt?
Alternative means of handling financial crisis
I had a successful career and decided to start my own business. However, I hadn't really expected to earn so little for the best part of a year and now I find myself in debt of around 53,000. I don't know where to turn. I've heard about Individual Voluntary Arrangements as an alternative to bankruptcy. Would this be right for me?
An Individual Voluntary Arrangement (IVA) is an agreement between you, the debtor, and those people you owe money to, the creditors. An IVA does allow you to avoid going bankrupt to pay off your debts, instead you pay off a proportion of the debt over a fixed period. However, you really need to get advice on your particular circumstances before deciding on your course of action. It may not be the best thing for you.
An IVA allows you to pay off your debts over a number of years. Some of the debt may be written off and you may be able to keep assets like your home. It begins with a formal proposal to your creditors to pay part or all of your debt and if agreed is legally binding on all your creditors, they cannot change their mind. The downside is that if you have equity in your home or valuable assets you may have to release them.
Also you MUST be able to afford to make the offer of repayments and keep them up; if you fall behind you could end up much worse off and in greater debt because the costs of your failed IVA, which can be quite high, will be added to your debt.
And your creditors will be able to take action against you and you could then end up bankrupt. This article is intended as a guide only. Please do not rely on this guide for advice in your personal situation. If you have any specific concerns or questions about how the rules could help you, then the Sudbury and District Citizens Advice Bureau may be able to help.
The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing advice and information and influencing policymakers.
The advice provided by Citizens Advice is free, independent, confidential and impartial and open to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
Sudbury and District Citizens' Advice Bureau, Belle Vue, Newton Road, Sudbury CO10 2RG, telephone 01787 374671, fax: 01787 881564, email: contact@sudburycab.org.uk.
Further information on other debt, welfare and consumer issues can be found on www.adviceguide.org.uk.
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Wednesday 08 February 2012
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