Alternatives To Bankruptcy

If you’re suffering a financial crisis due to debt, you may be considering declaring bankruptcy. This of course should only be used as a last resort and not something that you should jump into straight away. A better alternative to declaring yourself bankrupt, depending on your situation might be an Individual Voluntary Arrangement or an IVA as they are more commonly referred to. By taking on an IVA, you don’t declare yourself bankrupt and can still have a large portion of your debt written off that you cannot afford to pay. You will also not have the hassle of creditors chasing you day in day out for funds you simply don’t have.

Of course, getting into a position where you even require an IVA is completely avoidable. It’s all about managing the debt you have effectively and not getting yourself into any deeper debt than you can afford. The key to good money management is to know what you’re paying and when. You should also know what portion of the amount you pay each month actually goes to paying off the debt itself. More often than not people find themselves paying significant amounts of money each month for nothing. Their monthly payments are swallowed up whole by interest payments, debits and other additional / bolt on charges. Only a small portion of the funds paid actually goes towards servicing the debt. This is what you want to try and avoid.

If you have however found yourself in a financial position that no matter how much you restructure your finances, you can’t seem to get a plan in place to be debt free, your best option would be most certainly the IVA. If you’re in £50,000+ worth of debt then you should seriously consider taking the IVA option. Monthly interest payments on a debt of that total alone would be enough to make most people in the UK struggle to make the payments. You’re not alone. Don’t ruin your credit rating and pay the debt collectors more money than you have to. Consolidate or take out an IVA, pay what you can afford and eventually be debt free.