The Alternative To Bankruptcy

The amount of money currently owed by people in the UK stands at ?1.43 trillion. This ?personal debt? is at an all-time high, and it's rising.

With the ?credit crunch? and its fallout affecting more and more people's lives, you may be feeling the pinch too. According to Credit Action, a national money education charity, 292 people will be declared insolvent ie unable to pay what they owe, every day in May 2008.

You may think you could be one of them.

But don?t worry. Help is at hand.

If you've got serious debt problems, you may have thought about declaring yourself bankrupt. But did you know there may be more appropriate alternatives. One of the most popular is an Individual Voluntary Arrangement (IVA), because it avoids you being labelled as a bankrupt, and you don?t have to lose your home, which is one of the things that can happen in Bankruptcy.

So what is an IVA?

An IVA is a legally binding contract between the debtor, ie you, and your creditors, ie those you owe money to.

On the plus side, this means that, instead of making payments each month to various creditors, you make one affordable payment, usually over 60 months, to what's known as a licensed Insolvency Practitioner, who arranges and manages IVAs. The moment the arrangement is in place, your creditors have to legally stop adding interest or charges to the money you already owe, and they must also stop demanding any money from you. Any debt that is still outstanding at the end of the IVA is written off by the creditors.

On the negative side, and just like Bankruptcy, an IVA will affect your Credit rating (ie your ability to get loans etc in the future) for up to six years.

So who can get an IVA?

Anyone who is struggling to pay back unsecured debts of ?15,000 or more should consider an IVA. An unsecured debt could be for a store card, bank loan, mobile phone bill, bank overdraft, utility bills (such as gas and electricity), or credit card bills. And if you're self-employed or run a business, Income Tax and VAT can be included in an IVA too.

Another benefit of an IVA is that it doesn?t matter if you own your own home or are a tenant. If you are a homeowner, the good news is that you can protect your home with an IVA, as your mortgage or loan repayment (and any arrears you're paying) is treated separately from your monthly IVA payment.

Please note, however, that you may have to remortgage your home towards the end of the IVA, releasing some of the money tied up in the house to give to creditors.

On a final note, while over the past few years the stigma of Bankruptcy has been reduced due to changes in the law, it is still seen as a harsher choice than an IVA. In addition, those taking the Bankruptcy route are prevented from taking up many professions, such as an accountant or a solicitor to name but a few and can not act as a director of a company. It really does make clear sense to consider an IVA over Bankruptcy, as it lets you avoid the restrictions that bankrupts face.

Whilst we make every effort to ensure this article is as up to date as possible, Accuma cannot be held responsible for changes in legislation or developments in case law since this article was produced and published. Article produced on 24th June 2008.

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How to Stop a Bailiff in 1 Hour

There seems to be an explosion at the moment in new bailiff companies cropping up and more importantly, cases of serious harassment to members of the public by them. Now although the majority of people have ideas of bailiffs as large bouncer types, turning up on your doorstop at 5am and being allowed to take all your possessions away after kicking the door down, this is simply not true.
Bailiffs, have no right to enforce anything.
Now contrary to what they may tell you, they are not allowed to bully or intimidate you. In my experience on this subject matter 90% of companies that you owe money to will use the ,'...a bailiff has been instructed to knock on your door in 72hrs..', purely to scare you. However, if bailiffs do actually contact you, below is a list to help you understand your rights and what powers you can use to stop them:
If you call the police, make sure you speak to them before the bailiff has a chance to, and make it clear to the police that YOU called them, and remind them that they are there only to ensure that there is no breach of the peace and that your rights are respected.
If the bailiff calls the police, then you should, again, make it clear to the police that you know your rights and their powers in this situation and that they are only there to ensure there is no breach of the peace.
Whatever you do, do not allow the police to let the bailiff into your property or let the police talk you into doing so.
I hope this helps to show you that bailiffs do actually employ tactics to achieve their goal,as they simply don't have the powers they would like you to believe they do!

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Is A Debt Management Plan For You?

Rising food and fuel prices are making many more people struggle to pay their debts so don't worry you're not alone. Are you one of the many thousands of people with too much month left at the end of the money?

Does this situation sound like you?
Paying off a credit card only to then use that same money to pay a catalogue or a store card. Or perhaps you have to decide each month which cards you're going to pay and which debts you're going to prioritise.

Do you need someone to help sort out your debts and payments and talk to creditors for you?

Would you like to make one simple affordable payment each month, in order to pay off all your debts, and not take on more debt in order to do this?

If this all sounds like you then you might want to look into a debt management plan.

What Is A Debt Management Plan?

Essentially a debt management company negotiates with your creditors, tries to get them to freeze interest and charges, and works out at an affordable plan for them to get all their money, and you to get less headaches. Everyone agrees how much you can pay each month, you then pay that amount to the debt management company, who then passes it on to your creditors for you.

How Do I Set Up A Debt Management Plan?

You will approach an agency that handles this sort of thing. The national debt line, the citizen's advice bureau, and other charitable debt advice agencies can offer excellent advice on a reputable agency for you to use.

What Do I Have To Watch Out For With A Debt Management Plan?

Firstly you need to make sure that the company you are considering having a plan with his reputable. You need someone to your creditors have heard of and will work with, as they are under no obligation.

Secondly you will want to find out if the agency makes any charges, as if they charge it will take longer for you to pay off your debts. Remember there are charities that either make no charges or very minor charges so they may be the first place you want to look.

Thirdly you should be aware that a debt management plan will probably affect your Credit rating. Some creditors may ask for a note to be put on your file to say that you're a debt management plan. Some creditors will still report your account as being in default even though you're on a debt management plan, as you are making reduced payments rather than your full contracted amount.

Who Is A Debt Management Plan Suitable For?

If you feel your situation will improve within a year than a debt management plan may be suitable for you. But if you feel your situation is either not going to improve or maybe even worsen over the next 12 months then you may need to look into alternative solutions. You may also find a debt management plan is suitable to give you a breathing space to assess what you can do and to explore all the options available to you.

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Advice on Payment Protection Insurance

Payment protection insurance is a rather difficult subject for a lot of people especially as there so much talk about the miss-selling of such plans. This article will quickly give you a clear picture of what is payment protection insurance, why it's important. Let's begin with the basics. Payment Protection Insurance also known as PPI, Loan Protection, Employment Cover, Illness and Accident cover. This type of policy is usually sold when taking out Loans, Credit Cards or any other form of Financial Agreements including Hire. So, if you want a PPI you have to Purchase. When you take out a loan, usually lender asks to for the payment protection insurances loan around to get the best deal.
It has been observed that sometimes Payment Protection Insurance is mis sold to the borrowers, which means selling it to them without their knowledge. PPI is mis sold through an individual or an advisor. There are several scenarios in which PPI may have been mis sold. But the biggest reason is that the policies that the lenders sell are not designed to meet the individual needs of each borrower. Instead they are sold to realise the maximum profit for the lender. You could be just one of around 20 million people in the UK today who this affects. A PPI claim will not be approved for self-employed, retired, and unemployed borrowers which are why insurance should never be sold to them to begin with.
If you believe you have been mis sold PPI you need to contact one of the many firms of solicitors who are offering their help in pursuing such cases, and you may find that you are one of many with a right to claim back unlawful charges. These firms are experienced at dealing with these problems, and are very successful at earning you the compensation you're owed. Most of them have an Internet website and you can start a claim by filling in a short form on their website. You are also able to pursue your mis sold payment protection insurance claim by contacting the Financial Ombudsman and get the information needed to file.

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Debt Consolidation: A Wise Choice

Being in debt can cause a lot of stress in your personal and professional life. No one likes to be broked. In addition nobody appreciates to go to work each day thinking that all their hard earned money are getting used to pay of their debts. At the end of the day, all of us want some sort of financial relief by consolidating the debts.

Debt consolidation allows the consumers to combine their assorted unsecured debts into one payment. Being in debt can be stressful and harmful to your credit. If you are struggling to pay your bills and meet your minimum monthly payments, then you should know that becoming debt free is a good option, and you need not have to live with your debt forever.

If you have many small loans with several financial institutions and companies, you can make things a lot easier for yourself by combining them into one monthly repayment. The easiest way you can do so is by acquiring a debt consolidation loan. This helps you to combine all your debts together and make one monthly repayment to one financial institution. One good reason to consolidate your debt is that, you are able to save a considerable amount of money besides paying off for your Credit Cards and other loans that you owe.

The process of debt consolidation begins with a research of various credit counseling agencies. This helps the debtor to be certain whether these agencies are honest and willing to work for them. Once the debtor has chosen a credit counseling agency, he simply makes a phone call and gets in touch with a well trained certified counselor to discuss his personal finances. The debtor needs to answer a number of questions regarding his personal unsecured debts and personal finances. The counselor then gets in touch with the creditors and settles on a periodical negotiation. The counselor is basically acting as a mediator between the debtor and the creditors. Once the required paper works for payment schedule are done, the credit counseling agency pays off the creditors.

Debt consolidation is a tool to assist a person who is unable to make even minimum payments on their unsecured debt. It is a method to help those for going bankrupt and completely ruining their credit. In other words a debt consolidation loan takes all of your bills, those of Credit Cards, household bills etc. These are all combined into one monthly payment which is lower than the sum of payments on individual debts. As long as you are able to make this one monthly payment, your credit history will improve and you cam work towards the goal of getting your bills paid off.

The credit counseling agency also offers educational resources on debt consolidation, paying bills on time, budgeting, money management, and other financial issues that will help the person in debt to learn how to better handle their money. Counseling and money management course will help you to ensure that you do not fall into the debt hole again and that you can save money for future.

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Routes To A Debt Free Me

Are you having trouble imagining a "debt free me"? Do your debt problems just seem too big to ever escape from? Well the good news is that however large your problems are there is always a way to get out of them. I'm not going to say that the things you have to do are always easy or without pain, but if you're determined to escape your problem then you WILL be able to.

A Debt Free Me - Through Declaring Bankruptcy

The easiest way to prove that you can escape from your problem is to give the example of Bankruptcy. In the UK you will be able to declare Bankruptcy if you have a significant issue with credit and all of your personal loans, Credit Cards etc. (excluding secured lending like mortgages and car loans) will be gone. It's not a decision to be taken lightly, but it does get rid of all of your problems immediately.

Through Credit Counseling

A counseling program may be able to help negotiate reduced interest payments/accept lower monthly payments. It might even be able to write-off some of the outstanding balances. This will make it easier to repay but will have an impact on your credit score.

Through Hard Work and Budgeting

If you are in work and have income that you can use to pay off your outstanding credit then it's surprising how quickly you can start to make a difference. Do a full budget and try and cut down on your spending wherever you can - use the extra money to pay it off more quickly. Always pay it off in order starting with the highest rate of interest first.

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