We’ve all heard those adverts on the radio which claim to be “government backed debt solutions” which can “write off debt”, but these should be avoided.
While these adverts are often promoting the IVA debt solution, they are doing so in a misleading manner.
An IVA can help people repay only a percentage of their debt, but the aim should be to repay as much as possible, not as little as possible.
Write Off Debt: Misleading?
When most people hear they can simply, “write off debt”, it’s gives an impression they won’t have to repay anything.
When someone enters an IVA they are agreeing to repay a percentage of their debt over 5 (maybe 6) years.
It’s also possible if someone comes into additional money they will be forced to pay more into the IVA pot, along with fees for managing the solution. This could mean someone could repay more than they owed, far from the claim they will “write off debt”.
To make the claims in these adverts worse, some of these companies will charge setup and admin costs.
How An IVA Should be Advertised
An IVA can help people write off a percentage of their debt, however the main feature of this solution is it’s ability to freeze interest and charges.
Most people in debt are just happy to have a fix amount they can pay over 5 years, with interest and charges being frozen.
The ability to get out of debt and be able to put a date on when it will be finished can give a lot of people in debt a feeling of relieve.
The IVA should be about helping someone find a route out of debt by paying as much as possible, after essentials have been taken into account.
Whenever we help someone deal with their debts by entering them into an IVA it’s with the aim of protecting them from further action and repaying a percentage of debt.
Could an IVA Solve Your Debt Problems
It’s important to seek charitable debt advice before entering an IVA and have an advisor determine whether another solution could be better.
Find out if an IVA could help you by contacting Debt Support Trust on 0800 085 0226.