How to avoid bankruptcy

There are a number of ways to avoid bankruptcy. Brief information about common solutions is provided below.

Individual Voluntary Arrangement (IVA) – This is where you agree to prepay a percentage of your debt over a period of about five years. You will be able to keep your house but you will be expected to release any equity. The IVA is probably the most heavily advertised debt solution due to the amount of money that organisations make from it. It is often cited as an easy solution, which is far from the truth. You will be expected to contribute all that you can for those five years.

Debt Management Plan (DMP) – This is an informal arrangement between your creditors and yourself to restructure payments of the debt. The creditors are under no obligation to freeze interest and charges and there will be no element of debt forgiveness. Usually, a debt management company will be used to make the arrangements for you and they will charge a fee of around 15% to 20% of your monthly payments.