Government Debt Solution

The Best Government Debt Solution For UK Residents

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UK Government Debt Solution

The UK government introduced a scheme called an Individual Voluntary Arrangement (IVA) in 1986, to provide an alternative to bankruptcy. It was originally meant as a debt solution for small businesses, but has been modified over the years and is now widely used as the main remedy for serious consumer debt in the UK. The IVA debt solution is ideal for sole traders and business partners because you can be in an IVA and continue to trade and earn an income, which could prove difficult if you declared bankruptcy.

The government do not want people to go bankrupt, so have developed the IVA debt solution as a way of writing off up to 75% of your debts under a scheme that is simple and straightforward. In the US the nearest equivalent is debt settlement, which can achieve similar results, but is not a government backed legally binding agreement.

One of the key advantages of this type of government debt solution is that you are far more likely to retain your home if you are a homeowner. With bankruptcy you hand over total control of all your assets, which can all be sold off to pay creditors. With an IVA it is possible to exclude your home, with the agreement of creditors.

IVAs are only available in England, Wales and Northern Ireland. The equivalent debt solution in Scotland is a Protected Trust Deed. These work very much in the same way and achieve essentially the same result.

How The IVA Debt Solution Works

Unlike a Debt Management Plan, an IVA is a formal and legally binding agreement between your creditors and yourself. For this reason it must be set up by a professional Insolvency Practitioner. It is designed for people in very serious debt situations who cannot afford to repay everything they owe. The IVA debt solution involves coming to an agreement to make regular payments towards you debts over a fixed period of time, so that you repay a proportion of the full debt. At the end of the IVA period (usually five years) any remaining debts are usually written off and you are debt free again.

To find out if your situation is suitable for the setting up of an IVA debt solution, you need to apply to a professional debt company to have your situation assessed. Once you are approved, you can apply to set up an Interim Order through the courts, which immediately prevents any of your creditors from suing you for your debts.

A creditor meeting will then be set up so that your creditors can vote on whether they agree to the IVA or not. In practice they will probably vote by post or other ways rather than actually attend a meeting. One of the advantages of this being a formal government debt solution is that you only need the agreement of 75% of the creditors for it to be legally binding on the others too. The 75% is by value of the debt, not the number of creditors, so if you have one creditor who is owed more than 25% of the total debt and they vote against the IVA, it cannot go ahead.

Government Debt Solution:
Criteria For An IVA Debt Solution

The exact criteria for being accepted for an IVA will vary slightly depending on the debt solution professional that you are dealing with. In general, you can expect the following to be fairly standard requirements for an IVA to be viable:

Your total debts must be for at least £15,000 in unsecured debt

Your debts need to be to three or more different creditors

You must have a regular income that leaves you enough to make a reasonable contribution towards your debts each month after paying your living expenses

Government Debt Solution - How To Apply For An IVA

You can make an initial application for an IVA very easily and quickly online with a reputable IVA provider. It is always best to apply to a few different companies and compare the responses and proposals that you get back.

The initial application is very basic and does not commit you to anything. Following your approach, the debt solution company will contact you and go through your finances in more detail. They will then respond to you and tell you whether an IVA debt solution is the best option for you or not. Depending on the debt company you approach, if you are not eligible for an IVA, they may well be able to offer you an alternative solution that is more appropriate for your circumstances.

As well as taking the precaution of applying to a few different companies, it is worth taking some care about the companies you approach. Not all companies that can offer you an IVA debt solution are as reputable as we would like, and it is possible to stumble across an organisation that will advise you simply on the basis of what is going to make the most money for them, rather than what is going to help you the most. You can avoid this sort of company by starting with the list of Reputable IVA Providers on the main IVA page of this site.