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What if an IVA isn't suitable for me?

An IVA (Individual Voluntary Arrangement) could be suitable for you if you cannot keep up with your monthly unsecured debt repayments - and doubt you will be able to repay your debts in full at any point in the foreseeable future.

On top of this, however, you should be able to commit to lower monthly payments - so you'll need a reliable source of income every month. Your employment status doesn't usually matter as long as you have enough each month to meet your lower payments.

If you meet these criteria, and enough of your lenders agree to the proposed terms, your IVA can start. Your monthly repayments will be reduced to a more manageable level, and interest and charges on your debts will be frozen. There are other advantages too: for example, you will be protected against further legal action from your unsecured lenders, and you will be guided through the process by an Insolvency Practitioner.

Remember there are also some disadvantages to an IVA. For example, if you are a homeowner you may have to release some equity in your home. An IVA will also stay on your credit rating for six years.

You can find further information on qualifying for an IVA here.

What if my situation isn't bad enough for an IVA?

If you can't afford your monthly payments but can afford to repay your debts in full, a debt management plan might be more suitable.

There are certain aspects of debt management that are similar to IVAs. For example, you will make smaller, more manageable payments each month - usually over a longer period of time. Debt management is an informal agreement, however, and unlike an IVA your debts won't be written off. Plus, making smaller payments will affect your credit rating, but not as much as entering an IVA would.

If you're not really struggling with your debts, but you would like to make it simpler to repay them each month, it might be best to consolidate your debts with a 0% credit card. This could help bring all your different unsecured debts, with varying interest rates, into a single monthly sum - and it could save you a lot in interest.

What if my lenders won't accept my IVA?

If your lenders won't accept your IVA, you may be able to enter bankruptcy.

Bankruptcy has a number of disadvantages. For example, you may lose your assets (such as your home) and your credit rating will be damaged for six years. If you feel as though you have no other option, however, it may be the best way for you to free yourself of your debts. Unsecured debts are written off upon successful completion of bankruptcy.

You can find more information about bankruptcy on this page.

What if my income is too low?

If your income is too low to meet the repayments required in an IVA or debt management - and you can't afford the fees involved in entering bankruptcy, a DRO (Debt Relief Order) might be more appropriate. A DRO could suspend your unmanageable debts for a year, then if your situation hasn't improved sufficiently, the remaining debt will be written off. Like bankruptcy, a DRO will affect your credit rating for six years.

There are very specific criteria for a DRO; find out if you might be eligible on this page.

Different debt solutions are suited to different people - and if one of them is right for you it could well be the best way for you to become debt free.

Fill out the callback form for some expert debt advice.

By Daniel Culpan.

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Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for at least 6 years. Homeowners may be required to release the equity in their property.