When you find yourself knee-deep in debt, perhaps the first solution that you would come up with is filing for bankruptcy. Although this is a perfectly viable way out of your financial woes, you need to exhaust all the options that you have first before even considering filing for bankruptcy. This will stay on your credit record for up to ten years and will greatly affect your purchasing power as a consumer.
The good news is that there are other options that you can look at prior to filing for bankruptcy. One of these is applying for the Individual Voluntary Agreement which is a form of government debt help provided for residents of the United Kingdom.
Government Debt Help: What Is An IVA?
No matter which country it is that you live in, its economic status does not just depend on the prosperity of the business owners, but on the wealth of the private industry as well. If you have a bunch of citizens who are average earners and are struggling to pay off their debts, this can negatively impact the economy. Although there is no specific assistance that the government provides for individuals who have debts, the IVA is the closest thing to government debt help as you can get in the UK.
It was introduced in the UK in 1986 as a program which was only supposed to help those who are considering filing for bankruptcy. It was also meant to assist small business owners who incurred a certain amount of debt so that they can look at another alternative before even considering filing for bankruptcy. With the IVA, up to 75% of a borrower’s debt can be written off. The condition is that you need to have at least three creditors and fulfil other stated conditions as well. Depending on how much you owe, your debts can be paid off within a period of five years.
The nearest thing to an IVA in the US is debt settlement, where it is also possible to write off a portion of your debts.
How the IVA can Help You Out
If you are still wondering whether you should take advantage of IVA as a form of government debt help, take a look at the following list of its benefits:
IVAs can greatly reduce the amount of monthly payments that you need to make. Since the IVA is designed to help those who are considering filing for bankruptcy in the first place, you are given the privilege or option of paying back only what you can afford.
Once your IVA government debt help application is approved, you can become debt free within a period of 60 months. The agreement will also stop creditors from harassing you with collections calls, so you can get back on track with your finances.
IVAs can also prevent you from losing your home if it is about to be foreclosed. In the same vein, the agreement can freeze up any additional charges or interest rates applied to your existing loans.
More importantly, the IVA will clear or write off any debts that you cannot afford to pay, based on your overall financial picture.
Is This Type of Government Help Better Than Bankruptcy?
If you are wondering whether the IVA is a viable form of government debt help, it definitely is. As compared to filing for bankruptcy, there are plenty of benefits that you will get to enjoy from applying for IVA. Basically, the first thing that you need to do is determine whether you are qualified for this agreement or not. If you are qualified, another thing that you need to keep in mind is that although it is a better alternative to filing for bankruptcy, the IVA will still have a negative effect on your credit, although not as dire.
IVAs will not prevent you from obtaining credit but it will stay on your credit history for about six years. All in all, IVAs are a form of government debt help which gives creditors an excellent alternative to filing for bankruptcy. If you think that you will benefit from such an agreement, there is absolutely nothing wrong in checking whether you qualify for it or not. What is important is for you to realize what the pros and cons of this decision are, so do your homework so that you can make an informed decision.