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.