IVA

 

IVA – Individual Voluntary Arrangement

If you are committed to taking control of your personal debts, keeping your home and avoiding bankruptcy then an IVA, could be the best solution to your debt problems.

An IVA is a simple, flexible and effective way of getting rid of all your debts. You can expect to write off up to 75% of your unsecured personal debts with an IVA. The amount of debt that you can write off with your IVA will depend on what you can afford to pay.

An IVA is a legally binding agreement between you and your creditors. The agreement states that you will make fixed monthly payments each month into your IVA, and in return they will accept lower payments over a fixed term, usually 5 years, and write off any debt that has not been repaid in this time.

If you own your home, you will need to pay a percentage of the equity (calculated at today’s value) into the arrangement. Your creditors cannot demand any additional payments from you unless your financial circumstances improve during the life of the IVA. During the IVA, the creditors are legally bound to freeze the interest on any outstanding debts and to cease adding late payment charges to the debtor’s accounts. Once an IVA has been successfully completed any outstanding balances must be written off by the creditors, in many cases as much as 75% leaving the debtor debt free. The IVA is drawn up by one of our panel of licensed Insolvency Practitioners.

Whether you qualify for an IVA depends on how much you owe, what assets you have, what you can afford to pay into the IVA and the stability of your income to enable you to maintain payments.

Is an Individual Voluntary Arrangement right for you?

Applicant must be insolvent

This means the inability to repay debts as they fall due, and these debts total more than the applicant’s available assets. An IVA is not possible should personal wealth such as property or other assets be worth significantly more than the debts.

Residency of Applicant

Applicants must be resident in England, Wales or Northern Ireland.

Debt levels and Number of Creditors

Applicants need to owe more than £10,000 to creditors (minimum three lines of credit from two or more creditors) and be able to afford at least £100 per month towards their debts in order to potentially qualify for an IVA.

An IVA proposal is a legal document so the applicant must provide suitable evidence to support the proposal such as payslips and bank statements.

Benefits of an individual voluntary arrangement (IVA)

• Consolidate all unsecured debts into in single monthly payment
• Once IVA is complete you will be Debt Free (usually 5 year term)
• Pay only what you can afford
• Interest and charges are frozen
• It is a legally binding contract which creditors cannot break if payments are maintained
• Creditor demand letters and phone calls will stop
• Bailiffs and debt collection companies will stop legal action

Potential drawbacks of an individual voluntary arrangement (IVA)

• Legally binding agreement usually for 5 years.
• Your details will be recorded on the insolvency register.
• Further credit will be restricted within the term
• Failure to comply with the IVA may lead to bankruptcy.
• Your credit rating will be affected for six years.
• Secured debts including charging order will remain outstanding.

Bankruptcy

Bankruptcy

What is Bankruptcy?

Bankruptcy is often considered the last resort for people struggling with debt because there are other debt solutions to consider first. It is a legal declaration for people who cannot afford to pay their creditors. A state of Bankruptcy can be declared by creditors in an effort to reclaim in part money that is owed to them. A majority of Bankruptcy cases are initiated by the individuals who feel they cannot pay their debts.

Bankruptcy can occur when an individual’s debts are greater than his or her assets. Declaring bankruptcy means an individual is financially insolvent and can be relieved of outstanding debts. It is often considered as a last resort for people with serious and ongoing debt problems.

The bankruptcy proceeding has two aims:

To free the individual from the pressures of creditors (people they owe money to) and to enable him or her to make a fresh start.

To ensure that all assets (such as property and investments) are distributed fairly among the creditors.

The Courts are officially responsible for making a bankruptcy order against an individual, although this is done at the request of either the individual or one of his/her creditors.

The assets of the bankrupt individual then fall under the control of a trustee. This will be either the Official Receiver (a civil servant and officer of the Court), or a licensed Insolvency Practitioner. Whoever is appointed becomes responsible for uncovering as much as possible about the debtors assets and liabilities and then maximising returns for the creditors from the assets available, within certain guidelines.

Once a bankruptcy order has been made against you your creditors can no longer pursue you for payment. Payment becomes the responsibility of the Trustee.

What are the disadvantages of bankruptcy?

No more credit

Whilst you are bankrupt, you can’t apply for more credit.

Housing

If you own your own home, it might have to be sold (but you may be able to apply to your local authority for re-housing).

Possessions

Some of your possessions might have to be sold, for example, you will usually lose your car and any luxury items you own.

Employment

Some professions don’t let people who have been made bankrupt carry on working.

Business

If you own a business, it is more than likely that the Official Receiver will close down your business, dismiss your employees and sell off the assets.

Immigration

Going bankrupt can affect your immigration status.

Bankruptcy restriction order

Even when you are no longer bankrupt you could have another order, called a bankruptcy restriction order, made against you.

These orders can be made, for example, where you did not co-operate with the Official Receiver, or you took on debts knowing that you had no hope of paying them back.

They can last for 15 years and will make your financial affairs very restricted.

Debts

Even when you are no longer bankrupt there are some debts such as court fines and student loans that will never be written off.

Exposure

You cannot keep your bankruptcy private. All people subject to bankruptcy in the UK have their name advertised in two local newspapers and the London Gazette.

Court Examination

You can be publicly examined in court.

Credit Rating

Your credit rating will be damaged for a long time, up to 6 years.

Bankruptcy is a severe consequence of debt and shouldn’t be entered into lightly. However, for some people bankruptcy may be the only solution.

Debt Mmanagement plan

Debt Management Plan – DMP

Reduce your monthly outgoings with Debt Management

How DMP works

If you can’t afford your monthly payments to credit cards, store cards, loans and overdrafts, our debt management plan can replace them all with a single affordable payment. We could possibly stop demands from creditors and even reduce or freeze interest and charges on your debt with creditor’s agreement.

Debt management can be the easiest and quickest solution to your debt problems. If you take out a debt management plan with us, we will review your financial situation and determine the best repayment scheme available to you. This means, how much you are able to pay over a certain amount of time.

We will then act on your behalf to negotiate these repayment terms to every party you owe money to. This means you no longer have to deal with creditors (the people you owe money to), bailiffs or anyone else demanding money.

What a debt management plan demonstrates to your creditors is that you are very serious and committed to repaying your debts in full. It gives you peace of mind that you are dealing with your debt problem in a structured way and can now see the route forward to a debt free life.

Whilst it is true that creditors are not bound by a debt management plan, because it is not a legally binding agreement like an IVA, many of your creditors prefer this type of arrangement because it reduces the cost of their collections, and they get a better financial return than if you enter an IVA or are declared bankrupt.

Allowing us to set up your plan means we will handle all communications with your creditors and if you do continue to get any letters in the mail, simply forward them to us and we will deal with them. Our comprehensive service means you no longer need to discuss your debts with a bank or credit card company, instead you can relax with confidence – your finances are under control.

How Debt Management Helps

Lower payments.

Payments are based on disposable income once essential outgoings such as rent and food are budgeted for. Many non-obvious items can be included as essential living expenses, please contact us for full details.

One payment.

Less hassle, you pay us and we forward payments to your creditors.

No need for creditors to contact you.

You can advise your creditors that NDC are dealing with your debts and you may refer any correspondence from your creditors to us.

Flexibility.

If your financial circumstances change for the better or the worse, you may adjust payments accordingly.

No charges for late or missed payments.

Often we can achieve to have interest payments stopped at the point of entering the debt management plan.

No need to get involved in legal proceedings

Unlike an IVA, debt management is an informal agreement, not involving the courts nor requiring minimum debts.

Does not put your home at risk

Unlike a secured debt consolidation loan, you do not run the risk of having your home repossessed should you not be able to make payments.

Why NDC?

We handle thousands of enquiries per month, and as one of the UK’s leading debt solution companies, offer a range of solutions. Therefore you can be assured we recommend debt management only when it is the most appropriate solution for you. Our qualified advisors will give you information and advice on our Debt Management services and they will illustrate how they could potentially help you.

What happens once DMP is set up?

Our work is not complete once the Debt Management Plan is up and running it’s just the beginning. Throughout the life of your plan our customer services team with deal with your case, communicate with your creditors or the collection companies and if you have issues or concerns they will be on hand to help, support and guide you.

We will conduct a review of your plan annually; this is to ensure that the Plan is tailored to suit your individual circumstance. If your circumstances change prior to the review, please notify us immediately so our advisors can undertake the review and make any necessary changes to your Debt Management Plan.

The benefits of a Debt Management Plan (DMP)

• Make one low affordable monthly payment
• Possibly freeze or reduce interest and charges (with creditors approval)
• We will deal with your Creditors (Demand letters and calls)
• Debt advice and support throughout your plan

Drawbacks of a Debt Management Plan (DMP)

• It is not a legally binding agreement
• Creditors can still contact you
• DMP can take a long time to complete
• Your credit rating will be effected

Debt Management plan