There are a couple of roads you can go down when it comes to serious debt problems, the first is bankruptcy for which many people have heard of and the second is an individual voluntary arrangement which is less well know.



The first option of being declared bankrupt or also known as being insolvent is where a trustee is appointed to manage your case. Any assets you have will be sold off to pay for the bankruptcy costs and any remainder used to clear your debts. You will also usually be forced to make payments towards you debts from any ongoing income you have, say from your current employment. Bankruptcy does not clear all your debts and you will still have to pay them off.

The second option is an individual voluntary arrangement which is an agreement between you and you creditors to clear your debts. It is a private and legal agreement where you will make reasonable repayments to clear your debts over a set period which is usually 5 years or 60 monthly payments.

After the 5 years all your unsecured debts will be cleared even though you may well have not repaid the full amount of debt. You will however have to repay the monthly payments you agreed to in your IVA. You will not lose your personal possessions, household contents or if you own a house that will still be secure. You may however have to use any equity from the house to go towards repaying your creditors. This is done via a re-mortgage on your house to free up the equity.

Whilst you are in the IVA period the people you owe money to will not be allowed to contact you either by post or phone to ask for money. During this time any charges or interest will be frozen so your debt will not increase in size. This is often a great weight off peoples shoulders as it can be that the interest charges alone on many debts are unmanageable.

Whilst neither bankruptcy or an IVA are a pleasant or easy option out of debt it does give you a light at the end of the tunnel. The burden of debt can cause marital problems and ill health and so freeing you from the burden of debt can help get your life back on track. IVA's are a solution to debt that will help you get control back and let you concentrate on living your life