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| Have you already asked for help?
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If you have already approached your bank or finance company you may have met with some resistance or a reluctance to help.Such help that is offered is usually only temporary, for 2-3 months at the most, and you will be expected to resume full payments after this. Also, banks often threaten to take away your banking facility which makes it even more difficult for you to pay your bills, especially when you want to! Then, to compound the problem, they return your cheques which incurs further charges.
If this sounds familiar then you could do with some professional advice. This is where debt3options can help. In order to identify the correct debt solution we firstly need to understand your financial situation and the level of your indebtedness. |
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| Free Consultation & Assessment?
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| We initially assess your situation by phone or e-mail. We then prefer to have a face-to-face meeting with you in order to get the best understanding of your circumstances. There is no charge for this initial consultation and you are under no obligation to take the matter further. However, if you do decide to ask us to help with the management of your debts then we do charge a fee. |
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| What happens next?
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Once we have established your financial situation and assessed how much is left to pay your debts we can then select the option best suited to your situation.
What you should do is to cancel all direct debits and standing orders to unsecured creditors as and when you can without incurring any fees. This only applies to unsecured debts and not to priority or secured debts and loans such as mortgages, utilities, CCJ's, court fines etc... which you should continue to pay. If your bank is a creditor you may wish to move your account to another bank. The reason for this is that if your bank learns of your difficulties it is likely to call in any overdraft immediately and will continue to take money from your account, often creating an unauthorised overdraft or, worse, a "bounced" payment, both of which then attract other charges. |
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| Who tells my creditors?
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| debt3options, or an appointed agent of, will write to your creditors, with a copy of your letter of authority, advising them that we have been retained to carry out a review of your finances and asking for details of your account and what action they are taking, or thinking of taking. This will alert your lenders to the fact that you are trying to deal responsibly with your debt problem. However, if your bank is a creditor we will not write to your bank until you have told us that you have opened an account elsewhere (see previous paragraph). |
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| How much can I afford per month?
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| debt3options will produce a Financial Statement which will show how much you can afford to pay to your creditors from your disposable income. It will also contain an indication on how long it will take to clear your debts assuming that no further costs or interest are added to the account. You will never be asked to pay more that you can afford. |
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| Is my credit rating affected?
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Almost certainly, yes. Some lenders have a policy of automatically issuing a Default Notice as soon as you miss a payment or they are notified of your difficulties or of the appointment of a third party. This will affect your chances of obtaining further credit and may incur further costs added to your debts.
However, if you are currently in arrears creditors may have already informed the credit reference agencies.Records are retained by the credit reference agencies for 6 years. |
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| Will I still receive calls and letters?
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Yes, in the short term. But once your debts are brought under control then your creditors are more likely to correspond with the people paying the debt on your behalf rather then directly with yourself. |
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| How do I pay?
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You simply make one payment per month to debt3options, or an appointed agent of (Standing Orders are preferred) which will be distributed amongst your creditors on your behalf. |
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| How do I keep track?
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You will receive a monthly statement showing monies received from you and the disbursement of funds made on your behalf. As an added safeguard you will also continue to receive statements from your lenders which you should retain for reference. |
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| What happens if I fail to make payments?
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| If you do not make payments at the agreed level and on the agreed dates your creditors are likely to withdraw their support for the plan and may commence legal action. |
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| How much will this cost?
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| There is no fee for the initial consultation and advice. The fee after that is dependent on the debt solution required to solve the debt problem. |
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| What is an IVA?
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| An IVA is a formal agreement between a debtor and their creditors, which allows the debtor to pay all or part their debts over a set period of time and to carry on trading should they be in business. An IVA is an effective way of protecting both the creditors and the individuals when a situation involving financial insolvency occurs. |
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| How does an IVA work?
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| To set up an IVA, the debtor must submit a proposal to his creditors that list all his assets and their values, all his liabilities and a schedule of payments to each of their creditors and a number of other details which debt3options will help to prepare.
If the proposal is viable a Meeting of Creditors will be called where the creditors have an opportunity to seek clarification and to suggest modifications before putting it to the vote. In order for the IVA to be accepted and binding, over 75% of the value of creditors will have to agree and vote in favour. Unless circumstances warrant it, there is no need for the debtor to attend this meeting. |
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| IVA v Bankruptcy : what are the advantages?
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It's cheaper – The costs involved with an IVA are normally less than those of the bankruptcy process.
There's no discredit – Unlike bankruptcy orders, IVA's are not advertised in the press. Also, there are few restrictions on the individual.
It's a positive solution – The individual is given a realistic opportunity to put their affairs in order and to protect their livelihood if they are in business.
The creditors receive more – lower costs coupled with the fact that the debtor has an opportunity to continue to earn or trade profitably, make it much more likely that the creditors receive all or part of their money. |
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| Why should creditors agree to it?
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Because they are likely to receive more money than through a Bankruptcy Order, to receive it more quickly, and in the case of a business, continue to trade with the debtor on a pre-payment basis thereby ensuring continuity of business and their own profit. |
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| What makes it work?
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The IVA must be in both the debtor's and the creditors' interest. To a large extent this will depend upon the honesty and integrity of the debtor and their willingness to want to succeed. Should the IVA not work through default on the part of the debtor, it is the duty of the Insolvency Practitioner to initiate bankruptcy proceedings against the debtor. |
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| Who is eligible for an IVA?
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Practically anyone who is liable for debts in excess of £16,000. Generally an IVA is an arrangement made with an individual. An IVA is very versatile and can incorporate partnership debts as well as personal debts and is particularly suitable for a sole trader in business. Other formal arrangements for partnerships and companies are also available, logically called PVA for Partnership Voluntary Arrangement and CVA for Company Voluntary Arrangement.
It is important also to consider, in the case of an IVA, the impact on other members of the family or partners, as it may be necessary to enjoin a wife, husband or partner in their own arrangement in order to avoid action against them for recovery of debts where debts and assets are in joint names. |
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| How can debt3options help?
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debt3options can help by putting together the details of the rescue plan which will be eventually be passed over to the insolvency practitioner who will become the nominee of the arrangement. Once you have decided to proceed with an IVA you may refer any creditor enquiries to us. As your acting agent we will deal with creditor enquiries. It is also essential that no payment promises are made to creditors who are to be entered into the IVA as this would be deemed to be preferential treatment. |
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| What is the process?
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Once we have obtained all the relevant information we shall prepare an application to the insolvency practitioner. Based upon this information the insolvency practitioner will accept your case as suitable for an IVA and will prepare a draft proposal to creditors. A bit later in the process he will assist you in applying for an Interim Order of the Court. This order prevents any creditor or their acting agents from taking any further action for a period of up to nine weeks during which time the Meeting of Creditors should convene.
The proposals for the detailed terms of the IVA are observed by a District Judge and then sent out to the creditors. These proposals show the amount the creditors could expect to receive from both an IVA and from bankruptcy.
Each creditor has a vote in direct proportion to the debt, allocated on a pari passu (£1 = 1 vote) basis. Should the creditor wish to voice an opinion or vote, they must return the proposals indicating their view – either for or against. Once a 75% vote in favour of the IVA has been received, a creditors meeting is then arranged to formally conclude the voting procedure.
The individual must then make the payments to the nominee (who then becomes the Supervisor) who will distribute these monies amongst the creditors on a percentage basis. |
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| What if I am unable to maintain payments?
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If an individual fails to make these payments it is then the Supervisor's statutory obligation to the creditors to make that individual bankrupt. |
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| I own a house. Is it safe?
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More and more creditors are aware of the increase in house prices and, if you are a homeowner, even though you may not be able to raise any money against the house to pay off your debts now, you may be asked to pledge a percentage of the future equity to pay into the IVA. This normally means getting a valuation of your house at the end of the 4th year of the IVA and re-mortgaging in the final year to raise this equity.
If you are a tenant then this modification does not apply. Equally, if there is likely to be insufficient equity, the creditors may opt to extend the term of the IVA for an extra year to compensate. |
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