How IVA Can Help You Get Out of Debt

More and more residents in the UK are experiencing an overbearing amount of debt. It’s not uncommon for individuals to have difficulty paying off their debts, and when this happens they often think that bankruptcy is the only option. However, there are other financial tools at your disposal such as an IVA (individual voluntary arrangement) that can help you get out of your debt for the long term.

Why You Need To Pay Your Debt

Paying off your loans tends to be an inherent compulsion that most of us have, we borrowed money or purchased an item and therefore we need to give that resource back. We don’t often consider what will happen if we just don’t pay our debt, and there’s more than a few reasons why we need to. For one, debt collection agencies that are hired by companies to collect outstanding payments are not the nicest of people. They may harass and call you at work, or threaten that you’ll have to face criminal charges. These are not legal forms of debt collection but they are tactics that are still employed today. In the event they are unable to collect payment they may take you to court where a bailiff is appointed to collect the debt.

If you don’t pay a local fine, you’ll probably receive a reminder notice known as a charge “certificate”. This will inform you that you need to pay the amount or potentially pay an increased charge. Different fines from different forms of municipal government have differing standards of reminders but it may result in you being brought to court. If you’ve had difficulty paying your parking ticket, you probably don’t want an increased amount added onto your ticket. There are financial options like an IVA that can be used to help you out in these situations.

I Can’t Afford To Pay My Debt

If you can’t afford to pay debt to a debtor, you probably want to talk to a financial debt advisor on what your options are. If you’re having trouble paying locally issued fines you might also be experiencing debt problems in other areas of your life. You can always call the company/authority who delivered the fine and let them know you’re experiencing financial difficulty. This might get you off of paying a fine, but in many circumstances this option does not work. There are alternative debt solutions that you can look into, likely consolidating debt and including the fine.

Options To Paying Your Debt

Everyone can end up in a situation where paying for their debt becomes a difficult scenario and you shouldn’t feel bad for wanting to take responsibility for your finances. An IVA can be an attractive approach for helping you get out of a portion of your debts. An IVA is an agreement where an insolvency practitioner will renegotiate with your creditors an affordable amount that you can pay back. If you were to apply for bankruptcy and an adjudicator were to accept your application, a creditor may not receive any of their funds back. Because of this, many creditors will accept the terms that come with an IVA.

How An IVA Helps With Debt

As we mentioned earlier, an IVA can reduce the total amount that you have owing to creditors. A portion of your payments will be used to pay for the insolvency practitioner and application service that you used. This is still a much better alternative than attempting to pay high monthly payments that you’re having trouble making. An IVA can also establish budgetary habits that can make it easier for you to avoid bad habits that may have created a debt predicament.

Should I Use An IVA?

There are some stipulations with using an IVA, and you’ll be committed to the contract for at least five years, if not more. Your credit score will be reflective of this for the next six years. Ultimately you should speak to a financial debt advisor before enrolling in any commitment with debt. They will be able to review your current financial situation and inform you if an IVA is the correct option for you, they may suggest another form of debt management.

Even though an IVA takes place over a years-long period of time, in the long term it can be a saving grace for those unable to pay their debts back. There’s a lot of responsibility with obtaining an IVA, but it can help reduce the amount that you owe on your debts. Being able to pay an affordable amount on amounts owed while budgeting, is a great way to get out of your debt.