Wednesday 9th of December 2009
Getting your questions on individual voluntary arrangements (IVA) answered could be a more sensible option than turning to a high-interest payday loan to see you through until you receive your next wage.
If you have debts of over £15,000, you may have been aware that IVAs are one way to clear such credit levels but through fear of losing a home or facing court action, you may have avoided asking for help and instead resorted to payday loans.
However, lovemoney.com says payday credit is not as "convenient" and "easy" as the adverts suggest.
Instead, borrowers will be stuck with high interest repayments. For every £100 borrowed a fee of around £25 is levied. An interest rate of 25 per cent for just one month is equivalent to an annual percentage rate of 1,737 per cent.
"These fees can soon stack up and you could find yourself plummeting further into debt and desperate to borrow even more money," the website asserts.
However, taking the step to obtain IVA answers can be less difficult then you think. Under an IVA, creditors should not contact you or threaten you with legal action, while as long as you keep up with repayments your home and other possessions may stay safe.
By Kim Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Trying to pay back your personal loans? IVA answers may offer a helping hand
