Many ‘debt advice' websites will simply say that the criteria needed to benefit from a debt management plan will be less than £15,000 worth of debt and can afford £100 per month or more, and that the IVA criteria is more than £15,000 worth of debt with £200 per month disposable income. However, the reality is that deciding on the most suitable debt solution means taking account of all local factors unique to the individual person in question. There is simply no ‘one size fits all' set of criteria when it comes to a debt management plan or IVA.
People considering IVA as a means of clearing debt need to understand a number of points. Yes, the debt level normally will need to be above £15,000 to qualify, but that's just the start of it. The debtor will usually need at least £200 per month spare disposable income, at least 2 creditors (of which 70% need to agree to the proposal), and if they are a homeowner then the level of equity they have in their home must be between certain levels to qualify. Also, unlike a debt management plan, IVA's are a FORMAL arrangement and must be adhered to, as the consequences of failure include bankruptcy and house repossession. Debtors need to be aware that if a creditor accepts their monthly repayment through an IVA, this monthly payment must be kept up with on time, every month for (usually) five years and if 3 payments are missed (not necessarily consecutively) then this can lead to failure of the IVA. So, although eye catching adverts promising to ‘write off 70% of your debts' can seem attractive, especially to those suffering debt problems, the reality is not normally so rosy as the IVA providers would like you to believe.
In comparison, a debt management plan is similar to an IVA in that its success is based upon firstly agreeing an affordable monthly payment for the debtor but carries less risk, is less formal and can be altered at any time to suit the client's needs without too much fuss. As no debt ‘write off' is agreed at the beginning, a debt management plan may take longer than an IVA to complete and with both debt solutions, a person's credit score will be affected adversely and this is unavoidable. As it is an informal arrangement, creditors need to be contacted at the beginning to inform them that the debtor can no longer afford the original agreed repayments, but can afford a lower monthly payment. Debtors must offer what they can afford towards their debt management plan, but there is no minimum monthly payment needed. Unlike an IVA, failure of a debt management plan will not have direct consequences such as bankruptcy or house repossession, although clients need to be aware that lenders could enforce court action if debtors fail to pay their debts over a long period.
For further information on IVA or Debt Management Birmingham, London, Manchester, Glasgow or Belfast contact UK Money Solutions who will explain all the pros and cons of both with no obligation.
People considering IVA as a means of clearing debt need to understand a number of points. Yes, the debt level normally will need to be above £15,000 to qualify, but that's just the start of it. The debtor will usually need at least £200 per month spare disposable income, at least 2 creditors (of which 70% need to agree to the proposal), and if they are a homeowner then the level of equity they have in their home must be between certain levels to qualify. Also, unlike a debt management plan, IVA's are a FORMAL arrangement and must be adhered to, as the consequences of failure include bankruptcy and house repossession. Debtors need to be aware that if a creditor accepts their monthly repayment through an IVA, this monthly payment must be kept up with on time, every month for (usually) five years and if 3 payments are missed (not necessarily consecutively) then this can lead to failure of the IVA. So, although eye catching adverts promising to ‘write off 70% of your debts' can seem attractive, especially to those suffering debt problems, the reality is not normally so rosy as the IVA providers would like you to believe.
In comparison, a debt management plan is similar to an IVA in that its success is based upon firstly agreeing an affordable monthly payment for the debtor but carries less risk, is less formal and can be altered at any time to suit the client's needs without too much fuss. As no debt ‘write off' is agreed at the beginning, a debt management plan may take longer than an IVA to complete and with both debt solutions, a person's credit score will be affected adversely and this is unavoidable. As it is an informal arrangement, creditors need to be contacted at the beginning to inform them that the debtor can no longer afford the original agreed repayments, but can afford a lower monthly payment. Debtors must offer what they can afford towards their debt management plan, but there is no minimum monthly payment needed. Unlike an IVA, failure of a debt management plan will not have direct consequences such as bankruptcy or house repossession, although clients need to be aware that lenders could enforce court action if debtors fail to pay their debts over a long period.
For further information on IVA or Debt Management Birmingham, London, Manchester, Glasgow or Belfast contact UK Money Solutions who will explain all the pros and cons of both with no obligation.
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