Reduce Your Debts Ethically & Authentically

IVA and Debt Management

The Do's & Dont's of Managing Your Debts
Serious debts can make you panic and lose focus on the bigger picture. If you are in this situation, take a look at these do's and don'ts. They might save you from making a costly mistake.
 

Do's

  • DO devote your efforts to improving your income from your job or business and getting back in control of your finances. Wasting time and energy worrying about your debt problems is counter-productive
  • DO check the background of anyone you turn to for help with your debt. You may be about to entrust them with your finances so you need to be sure they are honest and trustworthy
  • DO be cautious of any help that includes borrowing additional money or obtaining funds from a 3rd party
  • DO remember that you are not alone. Thousands of people face up to their debt problems every day. The sooner you identify a problem, the sooner it can be fixed. A good professional advisor will never judge you - they've seen all types of cases

Don'ts

  • DON'T try to borrow your way out of trouble. It rarely works and normally just makes a bad situation even worse
  • DON'T make offers to repay your debts that you cannot afford. Creditors have little patience when it comes to broken promises
  • DON'T pay off one creditor in preference to another. This could lead to trouble if you end up bankrupt
  • DON'T allow bailiffs or debt collectors to intimidate you, and don't sign anything under duress
  • DON'T ignore the problem. It won't go away by itself
  • DON'T panic or make yourself ill. All debt problems have a solution and a trained advisor will be able to recomment the best course of action
  • DON'T be too proud to seek help 


Paul's Story

If you need a life line from your debt, our IVA partner Phillip Allen, from Baker Tilly’s Debt Life Boat has specialist, sensible and ethical suggestions. He has many case studies and the following story may inspire you and give you comfort (names and identity’s have been changed for obvious reasons).

Paul wound up with a lot more debt than most people rack up on their credit cards. But the £300,000 he owed was primarily a result of debt he had taken on to finance his business, a music recording studio. Though the studio had once been extremely successful, the loss of a key client and disputes with his business partners led to its eventual receivership in 2001. Paul was left holding enormous debts to a range of creditors, many of them on personal credit cards.

“I’d lost my business and was up to my neck in debt – I didn’t know where to go for help,”. Paul’s accountant put him in touch with 20-year IVA expert Phillip Allen because he’d seen other clients complete successful IVAs with Phillip’s team. “At the start, I didn’t even know what an IVA was,” says Paul. “And once I found out, it sounded terrifying!” But Phillip Allen walked him through the process and managed to get all his creditors to agree on a manageable plan.

“Getting 75% agreement from my creditors was a close-run thing because of the complexity of my situation. Phillip used his long experience in dealing with creditors to figure out a way of reaching agreement – the result was fair to my creditors and manageable for me.”

Paul admits the next five years were hard. He even missed occasional payments which then had to be made up on subsequent months. But Paul says his IVA advisor “held my hand” throughout the process, securing payment holidays for those times when he just couldn’t get the money together. “It was never an impersonal thing – he continued to support me during the entire five years of the IVA arrangement,” says Paul.

Paul won’t go so far as to say the IVA was a positive experience for him (he says the episode is best expressed by the Bob Seger lyric “I wish I didn’t know now what I didn’t know then”), but admits it taught him a lot. And he was taken aback by the sense of euphoria he experienced when he finally paid off the debt.

“I paid it in on the Tuesday and the cheque cleared the following Monday. I just felt this huge relief – I may not have any assets, but for the first time in my adult life I don’t owe anything and that’s just great.”