Remortgaging/Consolidation loans

Advantages

  • Confidential
  • Low costs to set up
  • Will be at a lower rate of interest than the debt which it is replacing
  • Normally fairly fast to arrange

Disadvantages

  • Will be secured on your home
  • Will probably last longer than the debt interest paid may be higher
  • No real incentive to change your ways
  • May be early redemption penalties/exit fees on existing loans.

Debt Management Programs

Advantages

  • Confidential between you and your creditors.
  • Fees may be relatively low.
  • Can usually be terminated earlier than planned if circumstances improve
  • Creditors normally agree to these.

Disadvantages

  • May go on for years more than the original agreements.
  • Not legally binding on all creditors, so some may remain outside of the arrangement and able to take whatever action they want
  • May not stop interest and charges being added to the debt

Individual Voluntary Arrangement (IVA)

Advantages

  • You only have to pay what you can afford
  • Available to non-homeowners
  • Fixed term as agreed, usually 60 months.
  • Legally binding on all creditors, as long as 75% by value of those voting agree
  • Avoids having to give up your job in some cases
  • You can usually remain in your home for the duration of the arrangement.
  • Publicly recorded like bankruptcy, but not publicly announced

Disadvantages

  • Needs 75% of voting creditors to agree.
  • Repayment term may be longer than in bankruptcy.
  • May involve giving up equity in home after 60 months.

Bankruptcy

Advantages

  • It draws a line under all non-excluded debts.
  • Relatively low costs to apply yourself.

Disadvantages

  • Any assets you own will be taken off you, except basic household goods and tools needed for work.
  • You may have to leave your job in trades and professions, and may not be able to obtain a job in some industries.