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Debt Consolidation Loans

Consolidating your existing debts into one smaller monthly repayment can often be all that is needed to put an end to the stress-inducing demands made by nagging creditors.

But consolidating existing credit commitments should not be considered a cure-all. If used properly it can help you get debt free faster. But if there are more serious underlying problems, then it may only grant temporary relief before the creditors start their hounding again.

When a debt consolidation loan can be the answer

• If you're paying high interest charges on your existing debts and want to switch to a cheaper alternative.
• If you need to reduce the size of your monthly payments, perhaps because of a reduction in income.
• If you need to release additional money to meet unexpected commitments, freeing up extra cash from your home whilst ensuring your montly repayments don't increase.

Individual Voluntary Arrangements

When debts become overwhelming, it is common for thoughts of bankruptcy to be seen as the last resort. However, there is an alternative which is far less restrictive but can be just as beneficial for the debtor ... Individual Voluntary Arrangements.

Simply, an IVA is an arrangement between the debtor and his/her creditors to repay a percentage of the debt over the life of the IVA, usually 5 years. This is to be done under the watchful eye of an insolvency practitioner. At the end of the IVA any outstanding debt is usually written off.

Who can make an Individual Voluntary Arrangement?

Normally only a debtor can initiate an IVA, but if the debtor is an undischarged bankrupt the trustee, Official Receiver or even the bankruptcy courts can do so.
When hearing a debtor's petition, the court is required to consider whether an IVA might be more appropriate than bankruptcy.

It should be borne in mind that IVAs, just like bankruptcy, are restrictive. It is not simply a matter of setting up an IVA, paying off a percentage of your debt and just walking away from the rest of what you owe. There are some Key Effects on your current and future finances which should be considered before making a decision.