Tuesday 18th of May 2010
Asking individual voluntary arrangement (IVA) questions may be beneficial if you’re relying on personal loans to get by, but are concerned about how expensive they might become.
It was recently revealed by the Competition Commission that it’s decided to ban all forms of payment protection insurance (PPI) - apart from retail PPI.
This is typically sold at the same time as a credit card or personal loan and, according to director of the Motley Fool David Kuo, is where lenders make most of their cash.
Without PPI, however, borrowers now face steep interest rates whenever they are lent money so that the creditors can take a profit, he says, which could add to Britons’ worries if they already have large unsecured debts.
Asking questions on IVAs as soon as possible may be a wise idea if you owe more than £15,000 on credit cards and personal loans and expect to find yourself paying over the odds as a result of this ban.
IVAs can help you chip away at the money you owe, while protecting the equity on your family home - leaving you with the peace of mind your property may not be repossessed.
What’s more, they don’t require details of your financial woe to be published in the local newspaper, potentially making it a better alternative to bankruptcy, which does.
David Kuo adds that consumers "are going to be stung twice" by the new prohibition - as it will be more difficult and more expensive to take out a personal loan.
Seeking IVA answers could be the important first step on the road to becoming completely debt-free and you could find the period of hard work and discipline IVAs demand - around five years - leaves you with a renewed control of your finances and a determination to not fall back into the red by relying on credit to get by.
By Mark Waterman
- 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
- Michael McIntyre reveals 40k debt - a sum an IVA could reduce
