There are thousands upon thousands of people held within the clutches of debt in the UK. Serious debt occurs in its simplest terms is when the amount of outgoings exceeds the amount of income. This situation can arise for a number of reasons. Some people’s earnings might not be high enough to cover the most basic of essential outgoings, such as rent, bills and basic food. However, some people fail to live within their means and overspend. However the situation occurs, some people have no option but to take credit, landing them firmly in debt.

Taking out credit, either through bank loans or credit cards can seem like the perfect option to cover costs in the short term. However, whilst people take out credit, many fail to increase income to cover the cost of the monthly repayments. Therefor the amount of monthly expenditure continues to rise, which simply worsens the debt situation. This happens all too often and the best plan of action for anyone who ends up in the situation would be simply to seek advice as quickly as possible.

A great place to start when tackling your debt issues is to contact the Citizen’s Advice Bureau. Here, you’ll be given free expert advice on all of your options available. The helpful staff will be able to talk you through and discuss which option would be best for you. Out of all the options available, the most popular tend to be IVAs and debt management agreements.

If your debts amount to less than 15,000, a debt management plan might be the best option for you. This is a voluntary agreement between debtor and creditors, which clearly states how the debtor intends to pay and over what period of time. You can arrange your own debt management plan, but for creditors to take the plan more seriously, it is advised that you approach a specialist debt management company.

Individual Voluntary Arrangements (IVAs) are a more formal option for repaying creditors. As the name would suggest, this is an involuntary arrangement whereby your creditors have taken legal action. This option is better suited to those with debts greater than 15,000 and the terms must be agreed by at least 75% of the creditors (determined by the amount owed). Generally, IVAs will state that 25% of the debt will be paid over a period of 5 years. A Licensed Insolvency Practitioner will put the terms together and once the agreement is signed, all creditors are bound by law. Interest rates are frozen to protect the debtor and all communication must be made through the Licensed Practitioner.

Have you considered an IVA to settle your debts?