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It isn’t good economics for an IVA for under £20,000 to be taken on due to the fees imposed by the insolvency practitioner. The amount charged by the practitioner is very steep and problems keeping up the payments can prove very difficult. You should however seek IVA advice.

It is said that a certain amount is paid every month and gives the impression that the same amount throughout the IVA is kept to, but this is not true – the amount can change as the wage changes and as the cost of living is getting ever steeper it can prove difficult to justify your expenditures. It can seem a good way to rid yourself of the debt burden but it is for 5 years and that is a large portion of your life to commit for. If you own your own home at the end of year 4 you can be asked to re-mortgage and quite a large amount taken away from you which may mean you have paid all your debts owed anyway – considerably more than the 25% you are told you will pay.

On the other hand with bankruptcy you will automatically lose your home and if in certain employment, the police force being one of them, you will lose your job

But it is something that has to be thought about very carefully as an IVA is not an easy get out.

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Boost you income
Why not take on a part time job in the evening after your regular work, or even on a weekend, sure you’ll have less time to watch television or spend time with the family but think of the extra money in your pocket that could pay for a nice holiday or just help pay off those debts. Renting out a room in your house if it’s going spare is another great way of boosting your income, and the money you gain will be tax-free under the government’s rent-a-room scheme.

Insure your income
Insuring your income is a great idea during a recession as if you lose your job the insurance can cover payments on your mortgage for up to a year. The Government will also help homeowners who lose their jobs by paying the interest on mortgages of up to £200,000 from the 13th week after being made redundant. Mortgage protection can cover your repayments but make sure you check the small print as they have very specific terms.

Get a good credit card
Card issuers are pushing up their prices and also reducing their interest free periods so it is vital that you pay off consumer and credit card debts. Switching to a cheaper card is normally the best option and if you’re not in debt then have a think about switching to a cash back card that will give you back a percentage of the money you spend. If you are getting squeezed by those credit card companies and in need of debt help then make sure you shop around wisely for the best options as the recession is limiting them and debt help can be harder to come by.

Overpay your mortgage
If you can afford it then try to overpay your mortgage, Not only will this cut the term of your mortgage considerable and save you lots of money in the long run but will also means that if you do run into difficulties then you can take a payment holiday.

Change your savings
Savings rates have dropped dramatically with them being at the lowest in the history of saving, but there are still accounts that give you more than the base rate. There are still accounts out there that give 4% which is not too far away from the 6-8% we were getting last summer.

Get better insurance
Insurance is a necessity and you can always get cheaper and better insurance for your home/car. All you have to do is not accept that renewal quote, use comparisons sites or call your insurer and tell them you’re leaving as you’ve found a better bargain. They will offer you a better deal, and you can always haggle with them a bit more to get that low price. The same works for Sky TV and mobile phones just call them up and say you don’t want it anymore and they will lower their price to keep you.

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Twitter has taken over and I spend more time on twitter than I should.My poor little blog wishes I’ll pay more attention to her. Let’s address a real problem – BANKRUPTCY. I have written a lot of articles on this topic and will always do.

Administration orders is one alternative to bankruptcy and is a court-based procedure whereby you make regular payments to the court to pay towards what you owe your creditors. You need to have enough monthly or weekly income to meet the payments. If you cannot make the payments this order can be cancelled.

An informal arrangement is another option where you write to all your creditors and try to come to some kind of payment arrangement and this would usually include a timetable detailing when you can pay them. The only disadvantage to this is that it is not legally binding so it could be ignored by your creditors and then they could ask for full repayment of your debt.

The third option could be debt consolidation where you take a loan with a low interest rate say from a bank and this helps to pay many creditors and then you only have one monthly payment to make to pay off your bank loan.

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The thought of going bankrupt can be scary, but there are alternatives. The first alternative is to contact your creditors and try to reach an informal agreement. Explain to them that you are experiencing difficulty with their current repayment terms and try to negotiate a more suitable agreement. Most creditors would rather take this option and have you continuing to make repayments than risk you going bankrupt and having your debt written off.

If you are unable to reach an informal agreement then your second option is to opt for an IVA or Individual Voluntary Agreement. An IVA is a legally binding agreement between you and your creditors where you reach a compromise on how much of the debt you can repay and when payment should be made. An IVA is carried out in a much more formal manner than and informal agreement and if you decide to head down this route you have to involve a licensed Insolvency Practitioner to carry out the process.

Finally, if you want to avoid going through the process of an IVA you could enlist the help of a Debt Management Company. The company will provide you with your own debt manager who will prepare a financial statement and budget of your accounts and determine exactly how much you can afford to pay towards your debt. They will then approach your creditors on your behalf and agree a new set of payment terms. If you decide to use a Debt Management Company then read through their terms and conditions very carefully as some companies take a percentage of your monthly payments to cover their costs. To find one that charges no fees try contacting your local Citizens Advice Bureau.

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