Monthly Archives: May 2010

Facts about IVAs

An IVA (Individual Voluntary Arrangement) can be a big help for people struggling with unmanageable unsecured debts. It’s a formal agreement with your unsecured lenders in which you’ll repay an agreed percentage of your debt, and your lenders will write off the rest once you’ve done that.

As with any debt solution, there are a number of things you’ll need to consider before you go ahead. Here are a few facts about IVAs to help get you started.

It’ll write off the debt you can’t afford

The idea of an IVA is that it enables you to repay as much of your unsecured debt as you can afford, and writes off the rest.

Your IVA will be set out over a fixed number of years – usually five – in which time you’ll be expected to pay as much as you can towards your debts each month. What’s left of your take-home pay after your other essential costs have been covered will go towards your debts.

On successful completion of the IVA, your remaining debt will be written off and you’ll be legally debt-free (in terms of unsecured debt – your IVA won’t be able to write off any mortgage debt you have, for example).

It protects you against action from your lenders

Once your IVA is agreed, it’s a legally binding agreement. Your lenders will no longer be able to pursue you for the debts, unless you fail to keep up with your IVA payments.

However, this works both ways – you are required to make your payments each month, and if you don’t the consequences could be serious. You could end up being made bankrupt.

Your home won’t be at risk

An IVA is extremely unlikely to end up forcing the sale of your home. This can make it a good option for homeowners who are really struggling with their debts and don’t want to enter bankruptcy.

However, if you are a homeowner, you may still be required to release some of the equity in your home in the final year of your IVA.

It’s only available to people who need it

Because an IVA writes off the debt you can’t afford and should leave you debt free after five years, some people might see it as an ‘easy way out’ at first glance – but this isn’t the case.

You’ll only be eligible for an IVA if you can demonstrate that you really can’t afford to repay your debts in full. You must also be able to commit to regular monthly payments, and you’ll be expected to pay as much as you can afford.

It’ll affect your credit rating

Like any form of insolvency, an IVA will harm your credit rating. This will make borrowing money more difficult while it’s on your credit report.

So you should only enter an IVA if you are completely sure it’s the right option for your circumstances. A debt adviser can talk you through all your options and help you find a debt solution that’s right for you.

How to manage your family finances

family-finance

family-finance

Managing your family finances is becoming more and more important – especially at a time like now.

I know that every month I have to make sure my money lasts me – and make sure I have enough to cover the cost of food, travel, clothes and any emergencies.

So, in these tough economic times, what can we do to make sure we are in full control of our family finances?

  • Well, this is what I do:

Budget:
Creating a budget is essential if you want full control of your family finances. By creating a budget, you can keep track of exactly where your money is going on a monthly basis. When you can successfully keep track of your money, you will be able to highlight areas in which you could save yourself money – for example, do you need to buy your lunch at work every day? Or could you just make it at home?

In addition, by budgeting, you will be able to plan out how much money you will be able to spend each week. (for more information on finances, click here)

Shopping list:
It has never been more important to plan out what you need to buy. If you don’t plan what you’re going to buy – how can you save money at the store? You will just end up buying things you don’t actually need!

So, before you go, search your cupboards and find out what you actually need. If you are feeling particularly organised, buy in for next week too – and buy a few tins of food that will last a while, but make sure you buy cheap!

When you head into the store, keep your shopping list in your hand. I do this, and it really works. With my list in my hand, I am always reminded of the things I need, and don’t end up buying things I don’t need!

Kids’ pocket money/allowance:
All parents want to give their kids a good upbringing. However, in difficult financial times, this can often be hard – so planning their weekly pocket money/allowance is very important.

You can take steps to keep their weekly allowance fairly small, by finding things for them to do for free – basically, if they don’t need to spend the money, don’t give it them!

Kids will be kids and will probably ask for more, but it’s important that you teach them the value of money while they’re young – that way, they (hopefully) won’t grow up to end up in loads of debt.

Carry cash, not cards:
If you carry your cards around with you, the chances are, you will lose track of how much you have spent and may also lose track of how much you have left to spend too.

However, if you simply withdraw a set amount of money from the bank at the start of the month and divide that by four to give you your weekly spending allowances, you will be able to see how much you can spend when you go out.

Plus, by carrying cash around with you, you will be able to see exactly how much you have spent, and how much you have left to spend.

Debt Management Plan (DMP) Qualification Criteria

A Debt Management Plan, or DMP as abbreviated, can be a useful solution to a person with debt difficulties.

DMP’s enable the debtor to afford a single monthly repayment for unsecured debts while at the same time prevent the build up of fees, interest and late payment charges to their balance.

Not everybody is eligible for a Debt Management Plan, however. DMP’s are available to residents living in the UK (England, Scotland, Wales and Northern Ireland) and they are for unsecured credit only. Therefore secured debt such as mortgages, car finance, hire purchase and leases for example are excluded and will need to be paid as usual.

The money that is paid to creditors from the single repayment will usually equal a person’s surplus disposable income. In other words the money left from your income after paying secured debts, rent, mortgage and bills.

To be able to receive a DMP agreement with creditors you must:

– Not be able to meet your existing credit repayments;

– Be able to afford at least £100 per month for unsecured credit repayments;

– Have unsecured consumer debts of at least £8,000 in total. Please note that secured debts cannot be included in this total nor can Student Loan Company payments or Council Tax arrears.

– Have unsecured debts from a minimum of three separate creditors.

If the above conditions are met then a debt professional will be able to act on your behalf to try and approve a Debt Management Plan from your creditors.

The plan can be exited at your will if your financial position improves; however if this does not happen the debt professional will monitor your circumstances to ensure that the monthly repayments represent a fair amount for creditors depending on changes in income.

Euro goes down to 4 year low against US dollar although stock rise early

euro-vs-dollar

euro-vs-dollar

Euro bounced off the four year low in the early day although stock indexes have moved slightly up. Euro goes down to $1.2234 from $1.23 because of the growing fears about Europe’s debt crisis.

Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Morgan Stanley Securities, told CNBC.com that “People have no idea what it will take to get out of this situation, as they have seen the euro plunge despite a massive rescue package,”. He also told, “There are very big concerns about the eurozone.”

Trichet said in German newspaper Der Spiegel that, “In the market, there is always a danger of contagion — like the contagion we saw among the private institutions in 2008,”

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement or (IVA) is a debt solution made available in the United Kingdom – it is a alternative for people not wanting to go bankrupt. IVAs are governed by the Insolvency Act of 1986 and are made possible through the help of an Insolvency Practitioner.

Originally introduced in Part VIII of the Insolvency Act, IVAs have become a popular form of repayment for residents of the UK with a serious debt problem.

Most of the time, an IVA will only be used for paying off the unsecured debts but this is not always the case. Sometimes they can be used to cover secured debts as well. It depends on the agreement.

An IVA is a formal contractual agreement but it is quite flexible in that sense too. The amount that you pay each month into the IVA will greatly depend on how much money you can afford each month.