Wednesday 14th of July 2010
Asking individual voluntary arrangement (IVA) questions before the impact of pay freezes and job cuts hits a household could prove to be a wise step to make.
Combined with a rise in VAT to 20 per cent next January, the Debt Advice Foundation says more Brits could end up struggling with debt as they will have less money to go around.
In order to avoid the potentially serious consequences of bankruptcy - which can occur when finances spiral out of control - money problems could be dealt with sooner, rather than later, by asking IVA questions.
While paying off unsecured debts of more than £15,000 can take around five years through an IVA, the hard work involved may be viewed by people as a better alternative than burying their heads in the sand, leading to debt piling up.
"For many people, the reality of debt doesn’t hit home until their financial situation reaches crisis point. Unfortunately this often means that they delay asking for help, which can result in the situation spiralling out of control," explains David Rodger, managing director of Debt Advice Foundation.
He adds unexpected events like a job loss, serious illness or relationship breakdown can tip a household’s coffers into the red.
If an event such as this would lead to people not being able to afford bills and debt repayments, it could be a sign that finances should be dealt with as soon as possible to avoid a complete meltdown.
IVA questions could provide the answers Brits need to get their finances on track before life’s unexpected events risk derailing them.
Many people could be relieved to hear that as long as the reduced-rate monthly IVA repayments are kept up with, a family home should remain safe and creditors should stop sending letters, phoning and arriving on doorsteps under the agreement.
Posted by Mark Waterman
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- Personal loan rates are on the up - is it time to ask IVA questions?
