|
 |
 |
|
 |
|
 |
Personal Debt Solutions
|
|||||
|
|||||
Clear all debts straight away
and start afresh |
|||||
|
|||||
| The problem with Informal Debt
Repayment Programmes (see below) is that although the offer to
massively reduce your monthly debt repayments may be genuine, you
will still have to repay all of your debt. This means that your debt
repayment period will be significantly extended. For example, if you owe £20,000 and would normally repay this at the rate of £350/mth, you will be repay this debt in 57 months. However, if you reduce your monthly repayments to £150/mth to fit your budget, you will be repaying your debt for 133 months (11 years +). If you have more serious debts (generally £18,000 or above), then a solution which could solve your debt problem within 5 years is the Individual Voluntary Arrangement or IVA. WHAT IS AN IVA? An IVA or Individual Voluntary Arrangement is a formal legally binding agreement with Creditors. It allows someone who is in financial difficulty to make a formal proposal to settle his/her debts within a reasonable and fixed period of time - normally 5 years maximum. The repayment proposal is based on what you can afford to pay and after you have paid for the agreed time, any outstanding debt will be legally written off by your creditors and your debt will be settled in full. THE ADVANTAGES OF AN IVA • Single monthly affordable payment • Fixed repayment period (normally no more than 60 mths) with a specific end date giving Light at the End of the Tunnel • Creditors must freeze all further interest or charges • Once the final payment is made, any outstanding debt is legally written off by the Creditors. • Creditors can not go back on the agreement and demand increased payments • Protection from court action by creditors • The IVA is discreet and can be used by professionals, forces personnel and the police without damaging career prospects. AN IVA IS A SERIOUS MATTER Although the above advantages sound good, undertaking an IVA is a serious matter. As such, there are some things that you must bear in mind. • The IVA will be recorded on your credit file. This means that you will not be able to take further unsecured borrowing for the period of the IVA. • Once the IVA is completed (normally after 5 years), you can borrow again. However, it may take some time for your credit rating to repair. • During the course of the IVA, you may have to release available equity from any property that you own to increase the overall settlement offer to your creditors. WHAT WILL AN IVA COST? The IVA agreement is not undertaken for free. You will need to use a specially licensed person called an insolvency Practitioner to undertaken an IVA. Brookvale can arrange this for you. The insolvency Practitioner will normally charge two fees: A Nominee Fee and a Supervisor’s Fee. These fees vary but as a guide, most Insolvency Practitioners charge a Nominee Fee of £2,500 and annual Supervisors fees of £1000. NOTE: You will not normally be expected to pay these fees directly yourself. IVA fees are usually taken from your standard monthly payments. As such, you will not be asked to pay additional fees over and above your agreed monthly IVA payment. WHAT SHOULD I DO NEXT? The suitability of the IVA solution will depend on your personal circumstances. If you feel an IVA might be the right solution for you, you should get further professional advice. Brookvale can help and you should contact us for a free consultation. |
|||||
|
|||||
| I AM NOT SURE THE IVA SOUNDS
RIGHT FOR ME You may be right. The IVA is not suitable for everyone. If the level of your debt is less than £18,000, you may not be able to use the IVA solution. However, a less formal programme may be right for you. An Informal Debt Payment Programme (or Pro Rata programme) is a process by which all your debts are consolidated into one affordable monthly payment. This payment is then shared between your creditors. This solution is ideal for debts of c£18,000 and below. WHAT IS AN INFORMAL DEBT REPAYMENT PROGRAMME? An informal debt management programme allows you consolidate all your monthly payments to creditors into one affordable amount. You can therefore start to repay your creditors without having to borrow more and constantly “Rob Peter to pay Paul”. The plan is “Informal” because it is not a legally binding agreement. You make a “Gentleman’s Agreement” with your creditors which allows you to reduce the monthly amount you repay to them. Your monthly payments to each creditor can be managed for you so you only have to worry about one payment per month based on the amount you can afford. THE ADVANTAGES OF AN INFORMAL DEBT REPAYMENT PROGRAMME • Reduce monthly payments to a single affordable amount • Repay Creditors within a budget you can afford without having to borrow more • Stop Robbing Peter to Pay Paul THE DISADVANTAGES OF AN INFORMAL DEBT REPAYMENT PROGRAMME • You must still repay 100% of all your debt • Your debt repayment period may be significantly increased as you are paying less off your debt each month. • Default notices will be registered against your credit rating. This will mean that you will find it difficult to get further credit until your debts are repaid or settled in full. • Creditors are not under any legal obligation to suspend interest or late payment charges. However, Brookvale will request that your creditors at least reduce further interest charged. • Secured debts (ie mortgages and car HP) and Crown Debts such as Council Tax can not be included in an Informal Debt Repayment programme. WHAT WILL IT COST? Instruction Fee If you want Brookvale to help you negotiate an Informal Debt Repayment Plan on your behalf, then Brookvale will charge an Instruction Fee. This fee is normally your first two monthly payments. Brookvale charges this fee in respect of completing your Statement of Affairs (normally after a face to face visit has been carried out) and the necessary negotiations with your creditors. Management Fee If you want to make a single monthly payment which Brookvale distributes to your creditors on your behalf, then Brookvale will change an on-going management fee. This will normally be 15% of your monthly payment + VAT. This charge will be deducted automatically from your monthly payment. WHAT SHOULD I DO NEXT? The suitability of the Informal Debt Repayment Plan will depend on your personal circumstances. If you feel this might be the right solution for you, you should get further professional advice. Brookvale can help and you should contact us for a free consultation. |
|||||
|
|||||
| WHAT ABOUT BANKRUPTCY? If you have debts which you just can not afford to repay, either through an IVA or an Informal Debt Repayment Plan, then it might be sensible for you to consider Bankruptcy. Normally when someone hears the word Bankruptcy, they start to shake with worry because of all the negative images that this word provokes. However, Bankruptcy may not be as bad as you think. If you can only afford to make minimum payments to your creditors or you can not afford to pay anything at all, then through Bankruptcy, your debts can be taken away from you once and for all. ADVANTAGES OF BANKRUPTCY • The responsibility for paying your debts is taken away from you • You will normally be Bankrupt for just 12 months • You might have to make monthly payment contributions to the Court for 3 years. After 3 years, any outstanding debt is written off • You will be allowed to keep reasonable household goods • You will be allowed to keep your car as you have a reasonable requirement for it and it is not unreasonably valuable DISADVANTAGES OF BANKRUPTCY • The record of your bankruptcy remains on your credit file for 6 years making it more difficult for you to take further credit during this time. • You will have to give up your share of any equity in property you own • If you are a professional person or member of the Police or Armed forces, then Bankruptcy might be damaging to your career. WHAT WILL IT COST? In order to declare your self bankrupt, you will need to pay Court Fees. These normally total a one off charge of £490. If you require additional advice and help to complete your application forms, you must also expect an additional charge for this service. WHAT SHOULD I DO NEXT? Bankruptcy is a serious matter. Before deciding to proceed with bankruptcy you should take further professional advice. Brookvale can give this advice and you should contact us for a free consultation. |
| © Brookvale Group PLC |  |