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Tag: Debt Help

Gas stove utility bills

How To Deal With Rising Utility Bills

Written by Alex Swindells on . Posted in Debt help.

A lot of people are struggling with the cost of living due to many factors, such as the increase in wholesale gas prices which has caused a rise in household energy bills.

The price cap of energy bills is expected to rise again in October 2022. The price cap is the maximum limit a supplier can charge. This expected rise will put extreme pressure on households. 

With the price of goods and other services also being affected by inflation, a lot of people may find it difficult to make utility bill payments on time. If unpaid bills accumulate and a solution hasn’t been negotiated with the supplier, such as the energy supplier, in some circumstances, the service provided can be disconnected. 

If you’re in a situation where you’re struggling to pay your utility bills, or you can see that you’re potentially going to struggle, then there are a few things you can do to help ease your financial pressure. Additionally, there are several debt solutions available which we’ve detailed later in this blog. 

What Can I Do If I Cannot Pay My Bills?

money to pay bills

1. Arrange A Payment Plan

The first thing you should do is try to find a solution with your service provider. 

For example, you could agree to a payment plan, such as paying off your debt in small instalments. 

In the above instance, you would pay fixed and affordable amounts over a period of time. This payment plan should cover any outstanding debts plus any current usage. 

The service provider must take into account how much you can afford to pay as well as how much your consumption is likely to increase in the future based on past usage and metre readings. 

2. Negotiate A Better Deal

Another thing you could consider, if a payment plan isn’t right for you because you don’t have a regular income, is to try and negotiate a better deal with your service provider.

Contact them to explain that you are consistently having trouble making the payments; they may be able to offer you a cheaper deal. 

In the case of an energy supplier, they may offer you a prepayment metre. This is a good option for people in debt; however, it is possible to end up in further debt if you use emergency credit.

What Options Can A Debt Solution Company Offer?

post it note with pay debts written

As previously mentioned, there are various debt solutions available to help people who are struggling financially. Below you will find a brief overview of some of the most popular options. 

Finding the right one will depend on your particular circumstances and needs. A debt solutions company like Swift Debt Help can help you decide what’s right for you.

1. Debt Consolidation Loan

A Debt Consolidation Loan is a term used when you have several debts which you decide to combine into one loan. This can be done by taking out a new loan to pay off your original loans.

This option is suitable if you’re struggling with numerous credit commitments and debt repayments. If you decide a debt consolidation loan is right for you, then you’ll only have to manage one single payment per month, and your overall interest could be considerably reduced.

2. Debt Management Plan 

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them.

If you are eligible for a DMP, a payment plan will be set up based on what you can realistically afford.

A debt management plan can last between five and ten years.

3. Debt Relief Order 

A Debt Relief Order (DRO) allows your debt, and any interest owed, to be put on hold for twelve months. 

To be eligible, you will have to meet the specific debt relief order criteria. For example, your debts must not exceed £30,000 and your surplus income must not be over £90 per month.

After the twelve months of your debt and interest being on hold, and if you continue to meet the eligibility criteria, then any included debt will be written off.

4. Individual Voluntary Arrangement  

An Individual Voluntary Arrangement (IVA) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms. 

To be eligible for an IVA, you need a minimum debt of £5,000.

This is a solution offered by Swift Debt Help. As part of our assessment of your eligibility, we will discuss with you alternative options, and if an IVA isn’t right for you, we can point you in the right direction for the solution you need. 

If you’d like to find out more about the debt solution available at Swift Debt Help, then contact us, and we’d be happy to assist. 

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

mental health debt

How Can Spiralling Debt Affect Your Mental Health?

Written by Alex Swindells on . Posted in Debt help.

If you’re in debt, you’re not alone. As of March 2022, the average debt for a person in the UK was £33, 410, and that figure is still increasing. However, knowing that many people are in a similar financial situation does not lessen the burden, and you may feel that the stress of debt is now affecting your mental health.

You may also believe that there’s a stigma attached to being in debt due to the common assumption that people get into unmanageable debt because of poor budgeting or bad spending habits. However, it can be dramatic life changes, such as losing a job or splitting up with a partner, that force people to apply for credit. 

Additionally, with the increase in living costs, it has become more difficult for people to pay off their debt, which can then result in additional fees, interest & charges, making it seem even more impossible to get back on track and into a financially stable position. This, again, can put a strain on a person’s mental health.

How Does Debt Affect Mental Health?

woman looking at her debts on computer

Having uncontrolled debt can harm a person’s physical and mental health.

Half of all adults living with a debt problem suffer issues with their mental health. The stress of debt can cause a person to have a constant feeling of anxiety and/or depression, and it can also affect their sleep, which in turn can lead to low energy levels and irritability. Having a continued lack of sleep can weaken a person’s immune system and increase the risk of heart disease.

Symptoms of stress can be exacerbated if a person in debt has no support from family and friends. Without any support, they can feel isolated and unable to see a way out of their financial situation. In this case, many people may decide to ignore their debt, choosing denial as a way to deal with their emotional stress. 

Although denial seems like the easier option by not dealing with their finances, it will worsen the situation, and send them further into debt.

How Can Mental Health Affect Your Life?

The endless worrying about debt can affect sleeping patterns. If a person is having sleeping difficulties, such as insomnia, it will begin to impact their mood and energy levels. They’ll become more down and irritable, with little energy or enthusiasm to do anything. Additionally, severe sleep deprivation can cause heightened anxiety.

If insomnia persists, then it can eventually lead to a person being unable to work. The case could be the same for someone who is suffering from depression. So, once they’re out of work due to ill health, their debt will continue to spiral. 

Having poor mental health can affect how a person thinks and reacts. It can also put a strain on their relationships. 

Where Can I Find Help With My Debt?

Swift Debt Help can talk to you about various solutions to help get you out of debt. We have listed just some of the options that we will discuss below, and if an IVA is right for you, then we will be able to provide that solution for you:

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a legal agreement with your creditors for you to pay back some or all of your debt. The IVA is arranged on your behalf by a qualified person, called your IP (Insolvency Practitioner). Your IP will arrange a payment plan for you to repay your creditors over a period of time (typically 5 years) through monthly payments, and, once approved, your creditors will have to stick to this agreement.

Debt Relief Order (DRO)

A Debt Relief Order (DRO) allows your debt, and any interest owed, to be put on hold for twelve months. After this time, if you continue to meet the eligibility criteria, then any included debt will be written off. A DRO is an alternative to bankruptcy if you have limited assets and affordability. 

Debt Management Plan (DMP)

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them.

Advantages Of Finding Help

There are many advantages to finding a solution to help get you out of debt.

With less of a financial burden, you should find it easier to sleep, which will improve your cognitive behaviour, such as your memory and concentration.

If you’re struggling with debt, then we may be able to help. Please contact us, so we can advise you on the various debt solutions available, then we can help you find one that’s right for you.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Help with credit score

5 Common Causes of a Decreased Credit Score

Written by Alex Swindells on . Posted in Credit Score, Debt help.

Your credit score plays a big role in your life when it comes to making financial decisions. This is because there are fewer credit options available to you if your credit score is low. It can also be more difficult to acquire a mortgage, or to even rent a property, with a low credit score. 

So, if your credit score decreases, then it’s very important to understand why, and how you can go about increasing it. 

But what exactly is a credit score? And how is this figure calculated?

A credit score, also known as credit rating, is a number generally between 300 and 850, although there are some credit scoring models that go higher.  The number is calculated based on information provided by credit reference agencies. This information is called a credit report.

A credit report contains details on a person’s credit history, such as the number of accounts they have open, their total number of debts, and their repayment history.

Credit reference agencies collect this information from utility companies, mobile phone companies, and mortgage lenders, just to name a few. The higher the credit score is for a person, the better it looks to lenders, and the more likely that person will be accepted for credit.

For example, if a person would like to apply for a credit card, the lender will check their credit score to ascertain whether they are eligible. Generally, the lower the credit score, the higher the interest will be. 

To help you, we have put together a list of 5 possible causes as to why your credit score might have decreased. 

We advise monitoring your credit report regularly, so that you can keep track of your credit score and notice if/when it decreases. If it does, then it could be due to any of the 5 reasons below.

1. Making large purchases on your credit card

person making large purchase using a credit card

If you use too much of your available credit limit, then this could signal to lenders and/or credit reference agencies that you aren’t in a financially stable position. However, using too little or no credit could also affect your credit score. 

You should try to find the right balance between spending too much and not enough to help you limit the negative impact on your credit score. It is recommended that you use around 30% of your credit, and that you make regular repayments.

If you do decide to make a large purchase on your credit card, ensure that you are able to repay the full amount as soon as possible, so that you don’t incur too much interest.

2. Missing credit card payments

man looking at credit score

When checked by agencies, your payment history plays a major role for the credit scoring models they use in determining your credit score. 

A 30-day missed payment can have a negative impact on your credit score. If you have a high credit score, then the amount the figure drops will be greater than it would be if your credit score was low.

Additionally, if you have gone into arrears on one of your accounts because you have missed multiple payments, then this can drastically affect your credit score for a number of years.

However, the decrease in your credit score because of missing one payment can easily be fixed. If you are late with a payment but you manage to keep on top of your payments thereafter, it shouldn’t be long before you see an increase in your credit score.

3. Paying off loans

Although it is a good idea to pay off some debt in full, this can have a negative impact on your credit report by causing your credit score to decrease.

This is because credit scoring models prefer you to have a mix of credit types to prove that you can adhere to the agreements made. The more credit you have available, and as long as you’re managing it sensibly, the higher your credit score will be, which will help to show lenders that you are trustworthy. 

4. Applying for new credit

If you apply for new credit, such as for a new credit card, then lenders will carry out a hard check. A hard check is when a lender pulls your credit report because they want to ascertain whether you have a good credit history. This hard check can lower your credit score by a few points. 

If you’ve recently applied for new credit, then consider waiting at least three months before applying elsewhere.  

When applying for new credit, you can limit the impact it may have on your credit score by requesting lenders to carry out a soft check. 

A soft check does not affect your credit score and other lenders cannot see when one has been carried out. A soft check is not always possible, but it can be worth enquiring about it before applying for new credit. 

5. Closing an old bank account

It is not uncommon for people to find they have old, often unused accounts that still appear on their credit report. Whilst you may think that closing these may be helpful, it could actually harm your score as the presence of older accounts can be a positive thing as they can increase the average maturity of your credit profile.

However, it is important to check that any historic accounts do not have any forgotten outstanding balances, even if they are small amounts, as these could be negatively impacting your credit score without you realising.

If you’re struggling to improve your credit score, then you may want to consider alternative financial solutions, such as a Debt Management Plan (DMP) or an Individual Voluntary Arrangement (IVA). 

To find out more about these debt solutions, please contact us, and we’d be happy to help.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Pound notes iva debt solution

IVA or Debt Relief Order: Which Is Right For Me?

Written by Alex Swindells on . Posted in Debt help, IVA.

IVA or Debt Relief Order -If you’re in debt and are struggling to find a way to repay your creditors, then there are several formal, legally binding debt solutions that could help you to clear your debts in a more manageable way. You may have heard of an IVA or a DRO but are wondering exactly what each of these debt solutions are. So, we have put together a brief summary of each debt solution below.

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way. Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms. 

What is a DRO?

A DRO (Debt Relief Order) allows your debt, and any interest owed, to be put on hold for twelve months. After this time, if you continue to meet the eligibility criteria, then any included debt will be written off. A DRO is an alternative to bankruptcy if you have limited assets and affordability. 

Which is better? IVA or Debt Relief Order?

Now you understand what an IVA and a DRO is, you are probably wondering which would be the best debt solution for you. Below, we have put together a list of some of the pros and cons, which will hopefully help you decide on whether or not an IVA would suit your financial situation, or if a DRO would be the right solution to help you out of your debt.

IVA Pros and Cons

IVA Pros:

✓ Write off unaffordable debt. At the end of your IVA, any outstanding debt will be written off.

✓ You only pay what you can afford. The payment is tailored to your circumstances. As previously mentioned, your IP will assess your income and expenditure to ensure you’ll have enough money for necessities. 

✓ You will no longer be harassed by creditors and/or bailiffs for payment. As long as you stick to your IVA agreed terms, legal action, such as CCJs, cannot be taken against you.

✓ Business owners can continue to trade. 

✓ An IVA is an option for homeowners.

✓ Interest and charges will be frozen. As long as you stick to your agreed terms, your creditors will not be able to add on any extra charges.

IVA Cons:

X There’s still the risk of bankruptcy if the IVA fails. 

X An IVA could affect employment. This does depend on the sector you work in, or are considering working in. For example, working in the financial sector, there may be certain conditions in place regarding IVAs.

X It will negatively impact your credit rating. An IVA will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

X You have to follow a strict budget. 

X An IVA isn’t private. It will be registered on the Insolvency Register, which anyone can access

X If you are a homeowner, you may need to release equity from your home to pay off some debts.

DRO Pros and Cons

DRO Pros:

✓ Any future interest and charges will be frozen on any debt you owe. 

✓ Your creditors will no longer be able to take legal action against you.

✓ Your DRO will only last twelve months after which any debts will be written off.

✓ This debt solution is one of the fastest ways to clear your debts.

✓ No monthly payment

DRO Cons:

X To be considered for a DRO, you must meet certain criteria, such as your debts must not exceed £30,000 and you must reside in England, Wales or Northern Ireland. Also, your surplus income must not exceed £75 per month.

X Homeowners are not allowed to apply for a DRO.

X A DRO isn’t private. It will be registered on the Insolvency Register, which anyone can access.

X If your situation changes, and you no longer meet the DRO criteria during the 12 month period, the DRO will be revoked. 

X It will negatively impact your credit rating. A DRO will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

So, an IVA vs a Debt Relief Order: which is the right debt solution for you? Hopefully this list of some of the pros and cons for each will have helped you to decide. However, If you’d still like further information on IVAs or DROs, please contact us, and we’d be happy to answer any questions you may have.

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May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

IVA Protection

What Protection Does An IVA Offer?

Written by Alex Swindells on . Posted in IVA.

An IVA (Individual Voluntary Arrangement) is a legal agreement that can be arranged with your creditors in order to pay back some or all of your debt. If your application for an IVA is successful, then the agreed payment plan will be set up for you to pay off your debt over a period of time (typically five years) through monthly payments. Once the IVA is in place, your creditors will have to stick to the agreement. 

You might be ready to apply for an IVA, but if you’d still like to know how this debt solution can protect you, then consider the following five benefits of having an IVA below.

1. Debts cannot rise

approving an iva

Once an IVA has been approved, your creditors will not be able to add on any interest or extra charges. As long as you keep up with your repayments and follow the terms of your IVA, then your debt will not increase.

2. Your assets are protected

There are a few common questions asked by those who are considering different debt solutions, such as, will I lose my house with an IVA? The short answer is no, unless you have volunteered to sell it to clear some of your debt. Once the IVA has been approved, your unsecured creditors cannot take further legal action to enforce the debt, such as applying for a CCJ (County Court Judgement) or instructing bailiffs to seek possession of your assets.

3. Protection from changing circumstances

During the lifetime of your IVA, it is expected that your situation will more than likely change. For example, if the agreed IVA payments become unaffordable due to a reduction in income, this does not mean that the IVA automatically fails. Your IP (Insolvency Practitioner) will usually be able to grant you a payment reduction (up to a certain level) and you will also have the ability to request more significant changes to the arrangement through what’s known as a Variation Meeting. This provides an opportunity for you to put forward a revised proposal, detailing any changes in circumstance, for your creditors to consider.

4. Protection from bailiffs

court hammer

Your creditors will not be able to take legal action against you once an IVA has been approved, which means, if you stick to the terms of your IVA, you should not have to worry about being approached by bailiffs. However, it usually takes around four weeks for an IVA to be set up, so during this time, you could still be contacted by people trying to collect money to repay debt. If this happens, you should be honest, and explain that you’re in the process of setting up an IVA.  

5. Pay what you can afford 

When setting up an IVA proposal, your IP (Insolvency Practitioner) will arrange a payment plan by, first, taking into account your income and expenditure. This ensures that you’ll only repay your creditors an amount that you can realistically afford which will allow you to have enough to pay your rent/mortgage, bills, and necessities each month. This is followed up by a yearly review whilst the IVA is in place which will, again, take into account your particular circumstances, ensuring that you will not be paying an unaffordable amount.

These are just a few of the ways that an IVA can protect you and, ultimately, help you to find a manageable solution for your debt situation.

If you want to find out if an IVA is a suitable option for you, then please contact us, and we’d be happy to help.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Finish line

5 Helpful Things To Consider When Your IVA Ends

Written by Alex Swindells on . Posted in Debt help, IVA.

When you enter into an Individual Voluntary Arrangement (IVA), you must make monthly payments towards your debts for the agreed term. But what happens once you have made your last payment? Your Insolvency Practitioner will confirm that you have made all of your payments and you will be issued with an IVA completion certificate. You are now debt free and you can move forward with a clean slate. However, an IVA has an impact on your credit score and your financial future, so there are certain things you should consider doing after making your final payment. Here are 5 helpful things to consider when your IVA ends.

1. Keep budgeting

a person working out their monthly bills

It is likely that the reason you entered into an IVA in the first place is because you were unable to manage your debts. Now that you are debt-free, it is important that you avoid getting into the same situation again. You will have been used to managing your finances within a budget whilst on your IVA; maintaining this once your IVA ends will help you manage your money well and improve your finances.

The additional money that was being paid into your IVA can now be put aside for savings and emergencies. By building a savings pot, you protect yourself against financial emergencies and avoid situations where you are forced to borrow the money you cannot afford to repay.

2. Open a high-interest savings account or ISA

saving money after an IVA

Now that you are more financially stable, you should consider putting money away for the future. Opening a high-interest savings account or an ISA is the best way to do this.

The main benefit of an ISA is that you won’t pay tax on the interest that you earn. However, there are limits on how much you can save each year and you may not be able to access the money right away (depending upon the ISA you take). A savings account, on the other hand, can give you more flexibility. Make sure you choose the type of account that suits your needs.

3. Consider further credit

Once you have completed your IVA, the debts that were included will have been settled. You may be wary about taking any further credit as you don’t want to get into a bad debt situation again. However, if you want to improve your credit score, using credit responsibly is a great way to do it. 

Using a credit card regularly, and in the right way, is one of the most effective ways to build credit again. There are a lot of credit cards available. You may not be able to access credit cards with the lowest rates, however as long as you use the credit sparingly, for small purchases, and make the repayments when they are due then the interest you will pay will be minimal. Creditors will then be able to see that you can maintain payments regularly, and this will help to boost your credit score. 

4. Monitor your credit report

Keeping a close eye on your credit report is beneficial to ensure that it is accurate, to keep you aware of your total credit and monitor for improvements. The 3 main agencies that generate credit reports are:

You can access your credit report by contacting these companies directly. Sometimes you are required to sign up for a paid monthly subscription to access your full credit report, however, there are many companies out there that allow you to access a summary of your credit information for free – search online for ‘free credit reporting’ to find one that suits you. 

Once the IVA is completed, your details will be removed from the Individual Insolvency Register after three months. Details of the IVA will be held on your credit file for six years from the date that the IVA starts. If you receive your credit report and your IVA has not been removed yet, you need to contact the credit agency to rectify it. Sometimes, details are not updated properly and the IVA remains on your report when it shouldn’t. If you send them your IVA completion certificate, they will fix the problem for you.

Check the reports for other errors and discrepancies too. For example, debts can be left on your report even though they have been paid off during the IVA. If there is anything that doesn’t look right, query it with the credit reporting agency and get it corrected. Mistakes like this are more common than you think and they can negatively impact your credit report, so always check your credit reports carefully.

5. Register to vote

person placing vote in ballot box

If you are not already registered to vote, you should do it right away because it instantly boosts your credit score. When you register to vote, details like your name and address are recorded on your credit report. Having these updated details makes it easier for the credit reporting agency to identify you and your score will increase as a result.

While this won’t fix your credit score overnight, it is a quick and easy way to boost it a little before you start using long-term strategies to improve your credit. You can register to vote online here and it only takes five minutes.

Need more IVA advice? Contact us today

If you have more questions about what to do at the end of your IVA, or you are struggling with debt and wondering whether it could be the right solution for you, we can offer the IVA help you need. At Swift Debt Help, we have a wealth of experience helping people manage their debt problems and unlock their financial future. Get in touch today and a member of our knowledgeable team will answer any questions you have.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Piggy bank

How to Improve Your Credit Score After an IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An Individual Voluntary Arrangement (IVA) will be on your credit reports for six years after the date that it starts.

Once the IVA has been removed from your credit report you can start rebuilding your credit score. Here is how to improve your credit score after an IVA.

Before you can start rebuilding your finances, you must ensure that you have successfully completed your IVA. When you first enter the IVA, your Insolvency Practitioner will inform you of how many monthly payments you must make. Towards the end of your IVA you may also be asked to remortgage your home and use the money to pay off some of your debts.

When you come to the end of your IVA, your Insolvency Practitioner will check that all payments have been made on time. If there are any missed payments, the IVA may be extended. But if everything is up to date, you just need to make your final payment.

When your IVA is completed, it should be automatically removed from your credit reports and you will also be removed from the insolvency register. Bear in mind that it can take a few months for records to be updated. Check your credit score after a month or two to make sure that the IVA has been marked as completed. If it has not, get in touch with the credit agency and send them a copy of the IVA completion certificate and they will rectify the mistake.

The first step to rebuilding your credit profile is to make sure that all bill payments are made on time and your credit score should slowly start to improve. When possible, you may want to consider borrowing small amounts of unsecured debt, as long as you can repay it on time. This serves as an indicator that you are a reliable borrower. After being on an IVA you will have grown used to living within a budget. It is recommended that any future debt repayments are manageable and the payment sustainable for you to avoid struggling with your finances.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

IVA debt help

5 Scenarios Where An IVA Could Be The Best Solution

Written by Alex Swindells on . Posted in Debt help, IVA.

When deciding if an IVA is the right debt solution for you, it is important to consider your personal circumstances and priorities. Different debt solutions bring with them different qualifying criteria and obligations from you, should you enter into them. An IVA works by you making manageable payments towards your debts over a set period (typically 5 years), with any remaining included debt being written off upon completion of the arrangement. 

This guide will take you through some of the scenarios where an IVA could be the best solution.

1. You owe debts to multiple creditors

owing debt to multiple creditors

An IVA is typically suited for people that owe debts to multiple creditors. If you only owe money to a single creditor, you should contact them and ask about a more suitable repayment plan. A single debt is a lot easier to deal with and you can often come to some arrangement with your creditors without having to enter into a formal debt solution like an IVA. 

However, if you have multiple unsecured debts with different creditors, your situation is more complicated. Managing lots of different repayments is difficult and this is often how people lose control of their budget. An IVA will not only help you write off a portion of that debt, but it also allows you to make one single payment, which is then distributed amongst your creditors on your behalf. This makes it far easier to manage debts to multiple creditors.

2. You can afford monthly debt repayments

Before you enter into an IVA, your Insolvency Practitioner will assess your finances. Your income and essential expenditure will be reviewed to create a budget. This will then determine an affordable monthly repayment that you are able to make to all of your debts through the IVA. 

However, it’s important to consider your situation before you enter into an IVA. If you have a reliable source of income and you are confident that you can make the repayments on time each month, it is a good choice. An important factor when considering an IVA is that both you and the Insolvency Practitioner believe that the arrangement will be sustainable.

3. You owe more than £6,000 of unsecured debt

An IVA is designed for people that are unable to pay their unsecured debts within a reasonable timeframe (typically 6 years). If you owe a relatively small amount of money, you may be able to manage the situation with improved budgeting and informal agreements with your creditors. Fees are payable within an IVA, although these form part of your affordable monthly repayment. This means that creditors may not be inclined to agree to an IVA where your budget shows that you could potentially pay them back in full over a similar time period outside of an IVA where fees would not apply.

4. You work in the correct job

person dealing with finances for a job

In most cases, an IVA will not impact on your employment. However, there are some notable exceptions that you should be aware of. Certain jobs do not allow you to have an IVA. These are often jobs that involve handling money or being responsible for finances in some capacity. Examples can include jobs in:

  • Accountancy
  • Other financial services
  • Law

In some cases, jobs in other industries may not allow you to have an IVA. It is important to check your contract, or speak to your employer in whatever industry you are in before entering into an IVA if you are unsure. 

5. You don’t want to directly deal with your creditors

Many people find that one of the most stressful things about being in debt is the constant contact from creditors. If you owe money to a lot of people and you are getting a lot of phone calls and letters demanding payment, it can take a real toll on your life. Often people fail to deal with their debt properly because they don’t want to face all of their creditors and try to negotiate with them.

An IVA is ideal if you are in this situation because you do not have to deal directly with them. Your Insolvency Practitioner will help you draft an offer for your creditors and take it to them on your behalf. If there are any disputes about the offer, they will negotiate with creditors for you. All payments will be made to your Insolvency Practitioner too, and they will distribute them amongst your creditors. 

As soon as you enter into the IVA, you have legal protection and your creditors are no longer allowed to contact you for payment. Your Insolvency Practitioner becomes a liaison between you and your creditors. If dealing with creditors is becoming a major source of stress for you, an IVA could be the solution that you are looking for.

If you need some advice about whether an IVA is right for you, and what other debt solutions are available to you, get in touch with Swift Debt Help today and speak to a member of our expert team.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Man signing IVA paperwork

12 Debts That Can Be Included in an IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An IVA (Individual Voluntary Arrangement) is an effective debt solution for many people and it may allow you to write off a portion of your debts. Although there is no limit on the amount of debt that can be included, only certain types of debt can be included in an IVA – here are 12 that can.

1. Catalogues

ordering gifts from catalogue

Catalogues are used by many people as a convenient way of purchasing goods and spreading costs over a period of time. Catalogue debts tend to have high interest rates, so many people find themselves unable to pay. Your catalogue debts can be included in an IVA, however you should stop purchasing items in this way in order to manage your monthly budget going forward. 

2. Credit cards

If you’re struggling with credit card debt you may have previously managed this through transferring balances on to other cards and trying to keep your minimum repayment as low as possible. For many people there comes a point where credit card repayments, especially when coupled with other streams of lending, become unmanageable within their monthly budget. Credit card debts are another common unsecured debt that you can write off with an IVA.

3. Personal loans

For many people struggling with debt, an unsecured loan repayment can feel difficult to pay as it is one fixed monthly repayment, with little flexibility. It can often be larger than other debt repayments that you are faced with each month, particularly if you’ve used this to consolidate other debts from the past. Unsecured personal loans are included in an IVA. 

4. Overdrafts

Overdrafts are commonly used as a convenient way to access funds to meet monthly repayments on credit or bills. People struggling with their finances often find it difficult, or impossible, to get themselves out of their overdraft. In this situation people are often at risk of incurring additional penalty charges by accidentally going over their overdraft limit which only makes their problem worse. Overdrafts are included in an IVA. It is advisable to change banks to a provider to which you don’t owe money before entering into an IVA – any accounts to which you owe money will be frozen when you declare insolvency. 

5. Gas and electricity debt

hob with gas on

It’s quite common for people struggling with debts to build up arrears with their utility providers. These are unsecured debts, so they are also included in an IVA. This can include debts from a previous property as well as your current home. It is important to remember that you will be responsible for making payment to your ongoing usage after entering an IVA, the monthly repayments for your utility bills will be taken into account when carrying out your budget assessment.

6. Water arrears

tap with running water

The rules surrounding water arrears are the same as gas and electricity debt. You can include any existing debts in your IVA, and your ongoing monthly payments will be included in your monthly budget so you should find paying future payments manageable. 

7. Council tax arrears

Council tax arrears are considered a priority debt because penalties for not paying them can be severe. In rare cases, you could even be put in prison for refusing to pay. These debts can be included in an IVA and if you are unable to pay, it is important that you seek debt advice as soon as possible.

8. Payday loans

Payday loans should be utilised when you need emergency access to funds, and the balance will be repaid on your next payday. However, this is often not the case, and when this becomes a debt you need to pay on a monthly basis it can be very expensive as they have high interest rates. If you only make the minimum payments, the debt will continue to increase. As with other unsecured loans, payday loans can also be included in an IVA.

9. Store cards

A store card can seem like an attractive way of paying for your instore purchases, particularly where there are discounts being offered, or when you might not have the cash available at the time of purchase. Much like with catalogue debts, this type of borrowing can become difficult to manage if you have many balances spread across multiple creditors. The interest rates can often be high. 

10. Income tax and National Insurance arrears

Self-employed people struggling with debt often find it difficult to pay their end of year tax and National Insurance bills, alongside managing the repayment demands of their other creditors.

If you are self-employed (or have previously been self-employed) historic debts from HMRC, along with your expected debt for the current tax year will be included as a debt in your IVA along with other unsecured creditors. 

11. Tax credits

If you claim tax credits, there is a chance that you can be overpaid. This happens when there are mistakes with the information that the DWP holds about you or your financial circumstances change. Overpayments can be deducted from future tax credits or taken out of your paycheck.  These debts can usually be included in your IVA.

12. Guarantor Loans

If you have struggled to find mainstream credit, then a more accessible option is to take a guarantor loan; where you nominate a friend or family member to guarantee the loan repayments in the event that you are unable to meet them. As an unsecured debt, they are also included in an IVA however the Lender will be entitled to pursue the guarantor for any unpaid balance.

Need more IVA advice? Contact us today

At Swift Debt Help, we can give you guidance when applying for an IVA and answer any questions you may have about what debts can be included. We can also discuss alternative options with you. 

Fill out the contact form, send us an email, or give us a call and we can help you deal with your debt problem today.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

IVA Documentations

9 IVA Myths That You Should Know About

Written by Alex Swindells on . Posted in IVA.

Applying for an IVA can be the right solution to your debt problems, but it all depends on your specific circumstances. It is important that you fully understand the implications of an IVA when making your decision. There are a number of misconceptions about this debt management solution. Some of these are detailed below, along with some facts to help you to decide if an IVA is right for you.

1. You will not be able to open a bank account

bank account with credit card

Although you may need to make changes to your bank account, that doesn’t mean you cannot open one at all. If you owe money to your bank through loans or overdrafts, they have the right to take money directly from your current account to pay towards the debt. This is called the right to offset. If this is the case, you will need to open a new bank account so your budget is not interrupted by the bank taking money from your account.

When you open a new account, you may not be able to have an overdraft facility as that is a form of credit. This should be discussed with your Insolvency Practitioner.

2. You will be forced to remortgage your property

If you are a homeowner, depending on your circumstances and the level of equity in your home, towards the end of the IVA, you may be expected to attempt to release a portion of equity by way of a remortgage for the benefit of your creditors. 

Upon considering an IVA, any obligations in respect of your property will first be explained and agreed with you before you enter into it. In many cases properties can be excluded from the terms of the arrangement where your circumstances demonstrate that your equity is either of a low value, or unlikely to be released by a remortgage.

In some cases where you are shown to have a significant level of equity, but a remortgage can not be achieved, creditors may agree to a longer IVA in lieu of this equity.

3. All creditors need to agree to the IVA proposal

When you put your application in, your Insolvency Practitioner will help you to write a proposal for your creditors, offering to pay a certain percentage of the debt and asking that the rest be written off. Your creditors will then decide whether they agree or not. But it’s a myth that all of them have to agree to the proposal for the IVA to go forward. 

Your creditors are not obliged to vote on your IVA proposal. Of those that do vote, only 75%, by value, must agree to the IVA for it to be approved and legally binding on all of them.

4. You have to tell your employer about an IVA

You only need to tell your employer about your IVA if it is specified in your employment contract. Some jobs, especially those that involve money handling or management, require you to disclose an IVA. This includes things like accountants, bank tellers, and legal services. Otherwise, you are not required to tell them.

Details of your IVA will be on the public insolvency register, but your employer will only see this if they actively go and search for your name.

5. You can’t obtain credit during your IVA

It is a standard condition of an IVA that you cannot obtain credit above £500 without the permission of your Insolvency Practitioner (the Supervisor of your IVA). 

Whilst subject to an IVA you are expected to live within a reasonable budget to ensure that you are able to pay your agreed IVA contribution. Therefore, you should think carefully before obtaining credit of any value as any subsequent repayments of this credit need to be affordable and within your budget. Credit obtained after the approval of your IVA will not be bound by the IVA and you will be responsible for repaying it separately. 

If you feel you need to apply for credit of a value above £500, it is important that you seek the consent of the IVA Supervisor before doing so.

6. An IVA will always be on your credit report

woman looking at credit score on computer

One of the reasons that people are cautious about entering into an IVA is that they think it will be on their credit reports forever and they won’t be able to borrow money in the future. It is true that an IVA is reported on your credit file, but it only stays on your report for 6 years from the date of approval; after that, it will be removed. 

7. Your IVA will fail if you miss a payment

It is important to make regular payments into your IVA, in line with the agreement. But it is a myth that your IVA will automatically fail if you miss one payment. If you are struggling to make the payments, you can speak with your Insolvency Practitioner who can work with you, and if appropriate approve a payment break. This gives you some breathing space to help you fix your financial situation. Typically if you become in arrears with your payments to the equivalent of three months (not including agreed payment breaks), this will be classed as a breach of the terms of the agreement, and your IVA is at risk of failure. Always talk to your IVA provider if you are struggling to make payment.

8. Not all interest charges or fees are frozen

Interest charges and fees make it far more difficult to get out of debt. One of the benefits of a formal arrangement such as an IVA is that interest charges and fees on your debts are frozen. Your creditors reserve the right to re-apply any owed interest and charges back to the debts owed if for any reason, your IVA fails. Once the IVA completes all outstanding balances will be written off.

9. You cannot save money with an IVA

When you take out an IVA, you will work with an IVA provider to produce a budget based on your income and expenditure. Your creditors expect you to offer all of your monthly disposable income towards the IVA. It may be difficult to put any money into savings at that point in time.

If your situation changes for the better during the IVA, one of the key principles of the arrangement is that both you and the creditors feel the benefit of this improvement, so you would get to keep half of any increase in disposable income. You’re free to utilise these funds as you see fit.

Need more IVA advice? Contact us today

If you want more information about the specifics of an IVA, or some advice about whether it is the right option for you, Swift Debt Help can give you some guidance.

Fill out the contact form, email us, or give us a call and a member of our expert team will give you the advice that you need.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.