Recently, the government has announced private schemes where people in serious debt can get a chance to write off 75% of their debt and become debt free in 5 years. These schemes are private agreements entered into between yourself and your creditors.
This agreement is called an IVA, Individual Voluntary Agreement, this agreement stands for 5 years where your creditors enter into an agreement with you on a certain fixed monthly installed of between 150-250 pounds against your debt for five years. After which your credit history shall be cleared and your credit history restored.
Many people are able to write off 75% of their debts and become debt free in short span of time. However these agreements are legally binding and the consequences of not making these payments could drag you to court and cause considerable problems.
However, not everybody can apply for an IVA, as there are some basic requirements required. This sort of settlement needs to go through an Insolvency Practitioner and you need have a debt of over 15k with the creditors to be at least more than three. A majority of the creditors need to agree for this arrangement for it to be implemented. However, if you are a home owner, you may be required to re-mortgage your property at the end of the term to release any equity in your property to pay off your debts.
To apply for an IVA, it is best to speak to a financial advisor who will require a financial statement to process the application. The process normally takes between 4 – 6 weeks. You will need to declare all your assets and will need to have a disposable income of more than 200 pounds to qualify for the IVA. If you have a property, then applying for such an arrangement may not be the viable option for you. Cases vary from person to person, please refer to your financial advisor for further information.