Make the effort to repay debt

If you are in a lot of debt, then there are two solutions to help you get back on your feet and these are bankruptcy or an IVA (Individual Voluntary Arrangement).

Bankruptcy is a decision that should not be taken lightly though as there are certain consequences when you declare yourself bankrupt. You will need to be prepared to lose certain valuable personal possessions in order to help pay off the debt. You will have to go to court and your money problems will become public knowledge and this can often be stressful time.

As well as losing material items, you also lose the right to be the director of a company, a member of parliament, a member of local authority or a lawyer.These factors need to be taken into consideration, especially if you dream of one day owning your own business.

If you become bankrupt then you will find it difficult to obtain credit in the future. Your credit history will stay with you for many years and simple things that you will have taken for granted in the past such as taking out a mobile phone contract agreement may prove impossible.

An IVA is a formal agreement with your creditors where you make reduced monthly payments and generally after five years, the rest of the debt is cancelled. This is a way of paying off up to 65% of your debt at a sensible rate and you will not have any privileges or possessions taken away from you. It is a private arrangement so no one but yourself and the people that you owe money to need to know about the IVA if you wish to keep it that way.

Bankruptcy is a quicker way out of debt, but you should only choose this option once you have thoroughly weighed up all the pros and cons as you cannot reverse it. An IVA will take longer to get yourself out of debt, but you have more control and it is kept private.