IVA or Debt Management?
Deciding between an IVA or debt management plan can be a daunting task and there is no right or wrong answer. However, both can be a good option in different situations therefore knowing the pros and cons of each will help you make a more informed decision.
The first criteria which will make your choice extremely easy is that you can apply for an Individual Voluntary Agreement only if you have a minimum of £15,000 in debt to at least 3 creditors while a Debt Management Plan limits you to a minimum £8,000 in debt to 2 creditors.
One of the most important differences between the two, especially if you qualify for both, is that with an IVA you will be debt free in five years, regardless of how much you have paid off, whereas with a debt management plan you can end up paying it off for the rest of your life if the monthly repayments are small. Also, the fact that an IVA is a legally binding agreement means that your creditors cannot back out of it any time they feel like it, while a debt management plan carries little judicial weight. However, this legal character of an IVA means that if you cannot keep up with payments then you will most likely end up being made bankrupt. There is a very fine line between the good and the bad in this case.
On the other hand with an IVA you will be making monthly payments that can vary according to your earnings, in other words the more you earn the more you will be paying, whereas with a debt management plan you pay only the amount you want and feel can afford which is then fixed for the duration. One big problem with a debt management plan is that most of the companies who help you organise it require that you have an income and own your home which will be used as surety against your debts, while an IVA will protect large assets such as your residence.
Depending on your situation both plans can be a good choice. However, if you are in deep debt then maybe an IVA is your best option so that you can see the light at the end of the five year tunnel.
How to Find an IVA Company
Individual Voluntary Agreements are administered by Insolvency Practitioners and as with any service provider some are better than others. Often, people choose to speak to an IVA arrangement company which will asses your situation and recommend the best I.P. For your situation which raises another problem. How to find a good IVA arrangement company?
As with any service provider your best option is to speak with family and friends to see if anyone is in a similar situation to yours and can recommend the IVA company they worked with. Even if you are uncomfortable revealing your situation to your family remember that the loss of pride is not going to hurt you as much as losing a lot of money because you made the wrong choice.
Another option open to you is to use the Internet and attempt to find honest reviews of the various IVA companies on the market. However, there are some tips that can help you judge if the IVA company is a good fit for you or not.
- Nothing in life is certain except death and taxes so be leery of a company that guarantees you your IVA will go through and without a hitch. The only IVA that is absolutely certain is the one that has already been signed by all the involved parties.
- Avoid companies who charge for doing your paperwork. There are companies who will do this for you for free and a company that charges makes one wonder about their success rate if they have to charge to do your paperwork.
- If your IVA company doesn’t seem to be looking to thoroughly at your particular situation and hasn’t given you many options then maybe you should get a second opinion from a company who is focused on you and not applying a cookie cutter solution that is not applicable to you.
These are just a few ideas to help you on your way to finding an IVA arrangement company that will handle your case with the highest degree of professionalism. After all, you are paying for their services so you deserve the best. Don’t feel guilty or embarrassed about your situation and allow yourself to be badgered into something that feels uncomfortable because, remember that without you these companies would be out of business.