Debt Management Programme
Debt Management frequently asked questions.
In this section we will go into some detail about debt management frequently asked questions.
Money Advice Direct is a confidential and non-judgmental service. We advise clients to enter into a debt management programme of their case suggests this would be the best advice.
The advantages of an IVA
An Individual voluntary arrangements, or IVA, allows a debtor to stave off bankruptcy by coming to an agreement with his creditors to pay off a percentage of his debts over a given period.
There are no hard and fast rules — an IVA is negotiating process between the individual, the insolvency practitioner and creditors. Generally, though, the debtor will pay a lump sum upfront to the creditors and the insolvency practitioner, followed by a series of monthly payments.
The repayments are calculated through an analysis of the debtor’s income and expenditure. Once agreed, the repayment programme forms part of a legally binding contract, although the creditors can still force the debtor into bankruptcy if he does not meet his side of the deal.
There is one other catch: an IVA can go ahead only if creditors representing more than 75 per cent of the debt agree to the deal.
But for the debtor, an IVA also offers many attractions. He avoids the stigma of bankruptcy and the severe penalties. For people whose careers could be put at risk by bankruptcy, such as lawyers and financial practitioners, the IVA is particularly attractive.
The government introduced the IVA in 1986 in legislation called The Insolvency Act
The Government has its own interest in encouraging uptake.
IVAs are dealt with by insolvency practitioners rather than the office of the Official Receiver at the DTI, so the greater the uptake of these, the less pressure on the Government’s resources.
While there are about 9,000 bankruptcies each quarter, only a tiny fraction of that figure enter into IVAs. One reason for this is that many people go straight to the court and file for bankruptcy, without looking at their alternatives.
Another problem has been the number of organisations who set up agreements that are totally unrealistic. They have tarnished the reputation of the IVA. We therefore advise avoiding debt advice organisations seen advertising on "pay per click sites", on TV, Radio or in the tabloids because they tend to be too sales led.
The key for those considering an IVA is to take professional advice early on. That is why Money Advice Direct has launched The IVA Helpline service which will only recommend the most suitable solution for client’s debt management requirements.
If we feel that a debt management programme is not the best way to deal with your debts we will recommend an IVA for your debts.
An IVA, unlike a debt management plan is legally binding. Money Advice Direct has an established IVA advice team in the UK and clients will be pleased to know that a dedicated case adviser will be provided for all debt management programmes set up.
Our main criticism of a debt management programme is sometimes the debt amounts can grow because they are not legally binding.
Our advice team will carry a detailed money advice assessment and at the end of the analysis our advice team will only recommend a debt management programme once we are sure it is the right option for you.
Whether our clients opt for a debt management programme, an IVA, or bankruptcy we will guarantee best advice is provided at all times.
Please note that when you enter into a debt management programme a monthly payment based on your disposable income will be worked out by one the dedicated debt advice team who will review the clients financial problems before contacting the creditors. The debt management programme will then offer the separate creditors a pro rata payment based on what the client can comfortably afford. The debt management programme then communicates with creditors and asks them to halt interest on the outstanding debts. The programme will ask the creditors to stop any further legal actions and management charges.
Money Advice Direct is a fully licensed debt management programme adviser who follow debt management guidelines. We know that some “direct response debt advice adverts” are very tempting because your debt situation may be due to unemployment, divorce or another unforeseen reason. Even though your debt situation might make a debt management programme might seem the ideal way to reduce the stress of debt problems.
The main points of a debt management programme are the following:-
- A debt management programme is supposed to consolidate all of your outstanding unsecured debts into one easily affordable monthly payment.
- A debt management programme is not legally binding
Get online debt management programme advice on our website or call 0800 074 6918.
IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]