Friday 23rd of April 2010
Individual voluntary arrangements (IVAs) are only suitable for those people who are able to pay back a specified percentage of their unsecured debts.
Many individuals with store and credit card debts of more than £15,000 may have researched IVA answers, rather than bankruptcy, because of the seriously negative consequences being declared bankrupt can have.
Bankruptcy can prevent people from working in certain sectors such as accountancy, as well as the potential for the details to be reported in the local press.
IVAs are not an easy option - people have to rein in their spending for at least five years before they can enjoy being debt-free.
And as Chris Tapp, director of Credit Action, explains, IVAs are only suitable for certain debt-riddled Brits.
"You must have the ability to pay back a certain amount of your debts to qualify for an IVA. Bankruptcy is a more severe solution aimed at people who don’t have very much at all," he says.
As long as the reduced-rate monthly IVA repayments are kept up, people can be reassured their store and credit card debts are no longer a burden on their household coffers.
By Rachel Powell
- 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
- Information on IVAs may give workers a way out of their debt problems
