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        Struggling with household debt, what can I do?

        I’m struggling with high levels of household debt, I’ve tried to cut costs as much as I can but the amount I owe is still significant. What can I do to get myself back on track financially?

        When debts start to become unmanageable, despite cutting spending and making use of other money saving techniques, it may be time to look into debt repayment and some of the formal insolvency options available. There are a range of options for those struggling with growing levels of personal debt including debt management plans, bankruptcy and individual voluntary arrangements (IVAs).

        An IVA, in particular, can be very beneficial as an alternative to bankruptcy for those struggling with debt repayments and/or bills. In an IVA, you will be able to pay off your unsecured debts in a single monthly payment that is affordable for you.

        iva debt column content household debt

        If you think an IVA may be useful to manage your money problems, here are some important points for you to bear in mind:

        • You will need to get in touch with an insolvency practitioner (IP) to put together your IVA proposal with you.
        • Debtors must be able to afford an IVA after the cost of bills and they must also owe money to at least two creditors.
        • Only unsecured debts, such as credit cards and loans, can be included in an IVA. Mortgages and student loans are excluded.
        • IVAs usually last for five years and they will stay on your credit file for at least six years.
        • 75% of your creditors by value have to vote in favour of your proposal so it to be approved.
        • In most circumstances, any outstanding debt will be written off at the end of the five year term.
        • An IVA offers you flexibility and safety by putting a halt to legal pressure from your creditors.
        • You must inform your IP of any significant changes, such as redundancy or receiving a windfall, in order to submit a revised IVA proposal to your creditors.
        • If you don’t keep up your repayments or follow the terms of your IVA, then your IP will make you bankrupt.

        References and further reading

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