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Posted: Mon Jul 31, 2006 1:28 am
by daisy
Hello,
Could you please explain the disadvantages of Informal Debt Plan?
Many thanks,
Daisy
Posted: Mon Jul 31, 2006 2:34 pm
by iva_squirrel
Hello Daisy,
Debt management programmes and debt consolidation loans may be your first thoughts if you have debt problems. However, they might not be the best way to get debt free.
Creditors have no legal obligation to stop adding interest and late payment charges. Therefore, your debt may increase over time. You may have to continue paying until ALL the debt is paid in full, even if that takes you 10 years or more.
Creditors can change their minds at anytime and ask for circumstances to be reviewed or take further action against you.
Best regards,
For more information about IVAs, please visit my website:
www.supersonicsquirrel.net
Posted: Tue Aug 01, 2006 8:29 am
by accgroup
Hi Daisy
The comments above are correct, one of the major disadvantages of an informal debt plan is that it is not legally binding on your creditors, therefore they can still pursue you for the debt (including interest and charges which can continue to be added) whereas in an IVA the creditors are all bound and the interest is frozen at the date of approval (unless you find yourself in a position to repay in full during the term of the IVA in which case creditors may be entitled to interest as well). As all creditors are bound this means that no creditor can take any further action against you to recover their debt.
The other disadvantage of an informal debt plan is that you will not be able to say when it will end, as the IVA Squirrel says above, you may be required to continue to make payments until you have paid your debts off in full. An IVA will be for a specific duration, depending on your circumstances, but usually for 5 years. Once the IVA is completed your creditors will receive a payment, a final dividend, and the Supervisor of the IVA will issue a certificate of completion and you will be released from those liabilities which were included in the IVA.
Hope this helps
AccumaGroup
http://www.accumagroup.com - One of the UKs leading debt and insolvency advice firms with over 200 employees.