I've observed a concerted effort by solution providers to steer individuals toward debt management solutions or IVAs. The reasons are obvious upon reflection. For a DM solution, the provider may deduct the first two months' contributions, averaging £250 per month, followed by a monthly administration fee of 17.5%. The company will be responsible for communicating with creditors and attempting to persuade them to accept reduced payments over a longer period of time, as well as suspending interest. This is invariably effective, and for some individuals it is a suitable solution when debts can be settled in a brief period of time. However, many debt management programs call for payments to be made for ten to twelve years in order to pay off balances. The issue with this solution, however, is that it is dependent on the goodwill of each creditor, who may at any time initiate or continue legal action against the debtor.
For the IVA solution, the provider will determine what the debtor can afford, and the IP's fees will be deducted from the debtor's contributions prior to their distribution to creditors. Typical fees for setting up the arrangement are £2,500, and monitoring it for the next five years can cost around £5,000. This is very lucrative for the IVA provider if the agreement is maintained for its complete term. Many will argue that this is irrelevant because the debtor pays what they can afford and the creditors are willing to agree to these fees to assure compliance with the arrangement. I hold a distinct opinion. During my tenure in this industry, I observed a progressive increase in the amount of monthly payments creditors demanded from debtors before agreeing to an arrangement. As a result, many individuals in urgent need of debt relief agreed to make unsustainable monthly payments to an IVA. One thing to remember about an IVA is that unless all 60 payments are made, the IVA is not considered to have been completed, and if it fails, you will still owe your creditors the total amount owed, less any payments they have received. The """"rewards"""" of up to 75% of the debt being written off do not accrue until the arrangement has been completed; however, based on current statistics, only 60% of arrangements are completed, and these numbers will inevitably worsen.
Although the aforementioned are viable solutions for some people in some situations, I believe that many more individuals should consider bankruptcy as a viable option.
As soon as the bankruptcy order is issued, all dischargeable debts are immediately canceled. The fees are reasonable at only £495 per individual. The Official Receiver assumes control of your business, so he will handle all creditor claims. In most cases, you will be discharged from bankruptcy within a year, or even sooner if your financial situation is particularly straightforward.
Critics assert that bankruptcy carries a stigma and that it will be advertised in the local newspaper. True, but I always advise my clients to consider whether or not they recall seeing these advertisements. None can! Others assert the residence will be lost. If there is no equity in the home, it can be returned for as little as £250. If there is equity, the Official Receiver will demand that it be extracted and transferred to him. For many individuals who do not own property, a bankruptcy will have no property-related repercussions.
Lastly, as a bankrupt, a person cannot serve as a company director, and certain professions, such as the police and the military, take a dim view of bankruptcy. However, for the vast majority of individuals, bankruptcy will have no effect other than to promptly release them from debt.
The phrase ""Steve Thatcher""
" - https://www.affordablecebu.com/
