Below we look at various debt solutions and we compare these in an easy to understand table by looking at the key features of each solution.
Individual Voluntary Arrangement (IVA) | Typically unsecured debts over £5,000 and a montly surplus of £85 |
Bankruptcy | Unsecured debts that you cannot pay as and when they fall due (For creditor petitions, unsecured debts exceeding £5,000) |
Debt Management Plan | No debt limit with something to offer by way of monthly repayment or lump sum |
Debt Relief Order | Debts of less than £20,000 with assets of less that £1,000, a car value of less that £1,000 and a monthly surplus of less that £50 |
Debt Consolidation Loan | No debt limit with something to offer by way of monthly repayment or lump sum |
Informal Agreement with Creditors | No debt limit with something to offer by way of monthly repayment or lump sum |
Individual Voluntary Arrangement (IVA) | Yes, if your proposal is approved by 75% or more of voting creditors |
Bankruptcy | Yes |
Debt Management Plan | No, creditors could still take action against you |
Debt Relief Order | Yes |
Debt Consolidation Loan | Only binding on creditors paid in full |
Informal Agreement with Creditors | No, creditors could still take action against you |
Individual Voluntary Arrangement (IVA) | Once completed, any remaining unsecured debts which were included in the IVA are written off |
Bankruptcy | Included debts are written off once bankruptcy is discharged after 12 months |
Debt Management Plan | Will last until all debts are paid in full. There is no debt forgiveness |
Debt Relief Order | Included debts are written off if no change in circumstances after 12 months moratorium |
Debt Consolidation Loan | No debt forgiveness |
Informal Agreement with Creditors | No debt forgiveness, it will be at your creditors discretion to agree to write off any part of the debt but it is not guaranteed |
Individual Voluntary Arrangement (IVA) | Forzen (You may need to pay interest if the debts are repaid in full) |
Bankruptcy | Frozen (You may need to pay interest if the debts are repaid in full) |
Debt Management Plan | Creditors may freeze at their own discretion but this is not guaranteed |
Debt Relief Order | Frozen |
Debt Consolidation Loan | Interest & Charges will apply as per the contract of the consolidation loan |
Informal Agreement with Creditors | Creditors may freeze at their own discretion but this is not guaranteed |
Individual Voluntary Arrangement (IVA) | Usually no contact and no payment requests can be made, but creditors may continue to send statement |
Bankruptcy | None |
Debt Management Plan | Possibly |
Debt Relief Order | None |
Debt Consolidation Loan | The consolidating creditor will still be able to contact you, but as all other creditors will be paid off through the consolidation, their contact will cease |
Informal Agreement with Creditors | Possibly |
Individual Voluntary Arrangement (IVA) | Aperture provide initial advice free of charge. The fees & expenses of the IVA are approved by creditors. The specific costs are detailed in the proposal. If the IVA is not approved, there will be no fee charged |
Bankruptcy | It will cost £680 to declare yourself bankrupt in England & Wales, and £647 to declare yourself bankrupt in Northern Ireland. Additional fees & costs will be paid out of asset realisations |
Debt Management Plan | Some charities will provide this free of charge and some companies will charge a set-up fee in addition to a handling fee for each payment |
Debt Relief Order | £90 application fee |
Debt Consolidation Loan | You may have to pay fees for arranging the loan |
Informal Agreement with Creditors | Possibly, but has the advantage of minimising costs, as there is usually no court involvement |
Individual Voluntary Arrangement (IVA) | Typically 5 or 6 years for an income based IVA. It is, however, possible to propose a lump sum arrangement thereby reducing the duration |
Bankruptcy | Typically discharged after 12 months, but a Payments Agreement/Order can continue for up to 3 years |
Debt Management Plan | No fixed term |
Debt Relief Order | Usually 12 months |
Debt Consolidation Loan | No fixed term |
Informal Agreement with Creditors | No fixed term |
Individual Voluntary Arrangement (IVA) | A lump sum or monthly payments based on affordability for a fixed term. The monthly payment may fluctuate with changing circumstances |
Bankruptcy | May have to make payments from surplus income for 3 years if available |
Debt Management Plan | Monthly payments usually made through a DMP provider, reviewed as creditors require |
Debt Relief Order |
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Debt Consolidation Loan | As per the contract of the consolidation loan |
Informal Agreement with Creditors | As per the agreement with creditors |
Individual Voluntary Arrangement (IVA) | Unless otherwise agreed, assets are protected through the IVA. Typically you will not be required to sell your home, however, you will be expected to attempt to remortgage 6 months prior to the end of the IVA should you have sufficient equity |
Bankruptcy | Assets may be at risk |
Debt Management Plan | Asset protection is not guaranteed and your home may be at risk |
Debt Relief Order | You cannot apply for a DRO if you have any assets more than £1,000, or a car worth more than £1,000 |
Debt Consolidation Loan | Yes, if you fail to manage the payments in respect of any unsecured consolidation loan, asset protection is not guaranteed and your home may be at risk |
Informal Agreement with Creditors | Yes, as this is an informal arrangement with your creditors, asset protection is not guaranteed and your home may be at risk |
Individual Voluntary Arrangement (IVA) | Generally unaffected but you should check your contract of employment |
Bankruptcy | Can affect current and future employment |
Debt Management Plan | Generally unaffected |
Debt Relief Order | May adversely affect current and future employment |
Debt Consolidation Loan | Unaffected |
Informal Agreement with Creditors | Unaffected |
Individual Voluntary Arrangement (IVA) | Yes, will be added to the Insolvency Register |
Bankruptcy | Yes, will be added to the Insolvency Register |
Debt Management Plan | No |
Debt Relief Order | Yes, will be added to the Insolvency Register |
Debt Consolidation Loan | No |
Informal Agreement with Creditors | No |
Individual Voluntary Arrangement (IVA) | Yes, will show on your credit file for 6 years after approval of the IVA |
Bankruptcy | Yes, will stay on your credit file for 6 years after the date of the bankruptcy order |
Debt Management Plan | Any default notices/CCJS etc issued by creditors remain on your credit file for 6 years after debts are fully satisfied |
Debt Relief Order | Yes, will show on your credit file for 6 years after the date of the debt relief order |
Debt Consolidation Loan | Possibly |
Informal Agreement with Creditos | Possibly |