If you can't repay your debt then bankruptcy could be the answer giving you a fresh start and instantly relieving you from debt worries .
If you haven't got a an expensive car, savings or house (over £2500) and if your job isn't affected, then bankruptcy may be better for you than an IVA.
Following bankruptcy no one can come after you for any money that you may have owed them in the past. So apart from some secured creditors you don have any more worries. There's no threat of bailiff action either.
You will no longer be bankrupt after a max of twelve months and depending on your circumstances possibly even sooner (you could be discharged after 5 or 7 months). All unsecured monies owed will no longer be owed and no-one will ask you for those amounts ever again. You will be free!! Think how that would feel!!
Individual Voluntary Arrangement (IVA)
If you have money coming in but don't know how to manage your debt an IVA could be the answer. In an IVA you only pay what you can afford and in return there will be no interest charges and the people you owe money should stop threatening you with court action.
If you have at least £5,000 of unsecured debt owed to two or more different people or companies.
An IVA also allows your creditors to get more money than they would if you were to go Bankrupt. An IVA can also stop you from losing your home, which could be a major factor if the property is worth more than your mortgage.
Debt Management Plan (DMP)
If you can keep up with monthly payments then a Debt Management Plan is another solution for you. Debt Management Plans are most effective in the a short term, otherwise the repayments could straetch for more than a few years.
If you know you'll bebetter off in the future, or you can reduce you debt if the repayments were less, then a Debt management Plan will help to get the creditors off your back and help to allow you to moke one payment every month instead of having lots of different payments which you can't manage.
Creditors are usually pleased when you go into a debt management plan as it will help them to be ceratin ensures that they will obtain a regular payment from you. Keeping up with your payments will make sure that your creditors will not apply to force you into bankruptcy.
The Money Advice Service is an impartial service set up by the Government. They provide free debt counselling, debt adjustment and credit information services
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