Solutions like debt consolidation & remortgages simply replace the existing debt with a new one. Often, the interest rate is lower, so you do end up saving money, but the actual debt is the same – it is just easier to manage.

On the other hand, solutions like IVAs and debt management can allow you to write off part of your debt. This can also be done with bankruptcy, but the consequences are so severe, that it should only be considered as a last resort.

Write off debt with an IVA

An IVA is a debt solution, backed by the Government, that can allow you to write off a large percentage of your debt. The amount that is written off depends on your circumstances, how much you owe and your ability to pay this debt back.

Your creditors must agree to an IVA for it to go forward, but once they do, it becomes legally binding. This means that the agreed amount of debt to be written off cannot change. Two years later, your creditors cannot change their minds—you are legally protected from this. The only way the agreement can change is if you fail to keep up with your payments. However, before recommending an IVA, your Insolvency Practitioner will have ensured that the payment plan is affordable for you.

Find out more about IVAs here.

Write off debt with debt management

Debt Management differs from an IVA in that it is not legally binding. It is an informal agreement with your creditors, where you agree to pay a certain amount of your debt back & they agree to write off the remaining amount & freeze any interest associated with you accounts.

The amount that is written off is likely to be less than if you were to opt for an IVA, but with debt management, you can take care of everything yourself – meaning that you are fully in control of your finances. There are debt management companies that can help you in this regard & for some people, this is the best option, but if you feel comfortable contacting your creditors & negotiating reduced payments with them, then there is no reason why you cannot do this yourself.

Find out more about debt management here.

Get tips on negotiating with creditors here.

---

Helpful debt management links

Debt management plan
Paylan overview
Debt management DIY

---

Remember, Advance With Finace is a completely free, impartial service. Although the information on this website is provided by industry experts, it should never replace the advice of a debt adviser who understands your individual circumstances.

What is debt consolidation?

Debt consolidation simply means replacing multiple loans with one new loan. If you have debts with different creditors, you can combine them into one loan using a debt consolidation loan.

Find out more about debt consolidation here >>