With so many different methods of obtaining credit with store cards, credit cards and loans amongst others, it can be very easy for individuals to get themselves into financial difficulty. This section of the website will guide you through the different options available.
The first option that a person would have would be to enter into an individual voluntary arrangement or IVA. An IVA is where a person enters an agreement with all of the various parties that they owe money to (creditors). A proposal would be put forward that the person can only pay back a certain amount of their debts, the creditors then vote against or in favour of this proposal.
Another option available would be bankruptcy, bankruptcy is the most extreme form of personal insolvency a person can enter into, if a person were to go down this route, all unsecured debts would be written off. As with an IVA – bankruptcy would stand as a “black mark” on their credit rating for the foreseeable future. There are also certain court fees involved in making yourself officially bankrupt. Bankruptcy is definately a decision that should not be taken lightly.
A debt management plan would also be a possible way out. Debt Management is more of an informal agreement that is that is put to a person’s creditors. They are very similar to an IVA, however the amounts owed would not usually be reduced, the plan would more often simply restructure the time frame in that the money was owed. This reduces the individuals monthly payments in order to make the debts far more affordable.
A debt consolidation loan is another option, debt consolidation is when a company effectively pays off your debts on your behalf and switches debt from the creditors over to themselves. They would then take the repayments over a larger time span in order to make the debt more serviceable from the individual’s point of view.
All sole traders have unlimited liability, this is a term that makes any individual running a company as a sole trader liable for any and all debts accumulated by that company. This means that, despite being company debts, the individual is eligible to use any of the above methods in trying to clear those debts.