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How To Access Government Debt Advice

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Government Debt Advice

The UK Government does not directly provide debt advice, but they have taken steps to help people in debt through legislation intended to make it easier to deal with serious debt. One of the changes the government made was through the Insolvency act of 1986, which introduced the individual voluntary arrangement, known as an IVA.

Despite the fact that there is not really such a thing as government debt advice, they did create the IVA specifically to provide a way of eliminating serious debt without having to declare bankruptcy. The IVA does not exist in other countries and by introducing this scheme the UK government have allowed thousands of people to write off large parts of the debts and escape the lasting stigma that bankruptcy brings with it.

Government Debt Advice - What Is An IVA?

An IVA is a formal and legally binding agreement originally introduced by the government to give businesses an alternative to bankruptcy. It has since become much more broadly applied and is now widely recommended by specialist debt advice companies where a significant amount of unsecured debt in is involved.

An IVA Debt Solution is only suitable for certain circumstances as it was designed by the government to address particularly severe debt situations. It cannot simply be used because you would like to. The formal and legally binding nature of the agreement means it should not be entered into without very serious consideration. Informal agreements, such as debt management plans, are easy to get out of if you change your mind or if your circumstances alter. With an IVA you sign up for a set period and it is not so easy to change your mind about.

What Can An IVA Do For You?

The main thing that an IVA can do that other debt solutions cannot is to write off a large part of your debt. There are some situations where the expert debt advice you are most likely to get is that the only way to ever be debt free is to find a way to wipe out a substantial portion of the debt. This is because the relationship between the amount of debt and your available income is too far out of step. There comes a point when the amount you can use to pay towards your debts still means that you effectively take forever to repay the full amount.

This is clearly not tenable so something has to give. The government brought in IVAs to address this situation by allowing you to make a regular payment that you can afford each month for a fixed period, after which you are debt free. The money you pay goes towards your creditors, but any debt remaining at the end of the IVA has to be written off and the creditors are not allowed to pursue you for that part of your debt. An IVA will normally last for five years, so you know exactly when you are going to be debt free again.

One attraction of the IVA is that unwilling creditors can be made to join in with the IVA even if they do not want to. Provided that you have the agreement of 75% of your creditors, by value of your debts, then any others have no option but to join it too. Another big plus is that you will not be bothered by your creditors again. Your creditors have to go through your trustee, and cannot contact you direct to chase you for money. This in itself can be a huge benefit if you have been used to constant phone calls by creditors and debt collection agencies demanding payment.

Government Debt Solution For Scotland

IVAs only exist in England, Wales and Northern Ireland, but Scotland has its own very similar equivalent called a Trust Deed. These work in very much the same way, though some of the details vary. The main principle is the same, in terms of paying what you can for a fixed period, though with Trust Deeds that period is normally only three years, rather than the five year span of a typical IVA. Also, you only need the agreement of two thirds of your creditors for the agreement to be binding on the others.

Other Forms Of Governmental Debt Advice

It is important to also remember local government and the part that local councils sometimes play in providing debt advice. Again local government does not tend to provide direct debt advice, but they often include useful information on their websites, which sometimes include guides to dealing with debt and saving money.

The other indirect way local government helps provide debt advice is through grants to organisations such as the Citizens Advice Bureau. Such organisations could not exist without the support of local government at district council and county council level.





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