IVA or debt management plan

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IVA or debt management plan - which one?

Date Added: December 16, 2009 10:10:38 AM

Author: Melanie Taylor

Either debt solution could allow an individual to lower their monthly debt repayments, reduce (or freeze) the interest on their debts and find an affordable route out of debt.Similarities between IVAs and debt management plans1. Both debt solutions deal directly with an individual's unsecured debts (such as credit cards), while making sure they can meet payments to their secured debts.2. They both help people struggling to keep up with their current debt repayments.3. They both involve speaking to a professional debt adviser, asking them to negotiate with creditors on the borrower's behalf.4. Both debt solutions help to simplify an individual's finances - by replacing several debt repayments with just one. This sum is paid to the financial organisation, which will share this money amongst creditors as agreed (however, it is important to note that some debt management organisations may not offer this particular service).Differences between IVAs and debt management plans1. a. IVAs are legally binding formal agreements - meaning that once an IVA begins, creditors and borrowers can't change the terms (unless an IVA variation is accepted). However…b. Debt management plans are informal agreements, meaning that once a debt management plan begins, creditors and borrowers can change the terms - if, for example, their circumstances change and it affects their ability to make repayments.2. a. IVAs are designed for people with a high level of unmanageable debt that they can't afford to repay within a realistic amount of time, but who can commit to making regular reduced monthly payments. On the other hand…b. Debt management plans are intended for people with debts that they are able to repay within a realistic amount of time.3. a. An IVA usually lasts for 5 years. When it comes to a successful conclusion, any remaining unsecured debt will be written off. But…b. A debt management plan doesn't have a set length. It depends on a wide range of factors. For example, how much money the individual owes, whether or not the interest on the debt has been frozen and whether the individual's circumstances change during the course of the debt management plan. Debt management plans and IVAs - who are they suitable for?Everyone's circumstances are different, and different debt solutions will suit different people. Reading through a checklist alone isn't enough to see which debt solution is right for you. Therefore, it is important to get personalised debt advice from an expert adviser before agreeing to anything.Click here for information on debt management or IVAs in the UK.

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IVA or debt management plan - which one?
If you are struggling to manage your finances, and your debts have become hard to control, then an IVA (Individual Voluntary Arrangement) or a professional debt management plan could help.