There are a number of debt solutions available for people in various situations. For people with unmanageable levels of debt, two of the most common debt solutions are IVAs (Individual Voluntary Arrangements) and debt management plans.
There is no specific age limit on an IVA or a debt management plan - after all, you must be over 18 to borrow money in the UK. Instead, your eligibility will depend on your circumstances, and what your lenders feel is the best option for them as well as you.
IVAs and debt management plans are similar in some ways, but there are key differences that mean they are more appropriate for different circumstances. Here`s a quick rundown of what`s involved in each.
A legally-binding arrangement in which the borrower repays as much as they can afford over a set period of time (usually five years), after which the remaining debt will be written off.
Although you won`t repay your debt in full, it`s not an `easy` option: you`ll have very little spare income for the duration of the IVA, and it will have a significant impact on your credit rating. If you`re a homeowner, you may also be required to release some of the equity in your home in the final year of the IVA.
You`ll only be eligible for an IVA if you have no realistic means of repaying your debts in full within a reasonable period of time, but can still commit to regular monthly payments.
This is an informal arrangement with your lenders in which you`ll repay your debts in smaller monthly payments, over a longer time period. Like an IVA, your payments will be based on the maximum amount you can afford once your other costs have been considered.
You may also be able to negotiate with your lenders for a freeze or reduction in interest and other charges, which can stop your debt from growing.
A debt management plan will continue until your circumstances improve, or until the debts have been fully paid off.
You`ll only be able to enter into a debt management plan if you can demonstrate that you can`t afford your existing debt repayments, but can afford to repay the debt over a longer period.
Remember: all debt solutions have their pros and cons, and you should always speak with a debt adviser to discuss which is best for you before making a decision. Click here or call 0800 195 2911 today to speak with one of our expert debt advisers.
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