How do you know if you need IVA advice?

We’ve probably all experienced financially tight months and periods in which we’re feeling the strain on our bank balances. But how do you know if your current tough monetary situation is just a passing phase or whether you really need IVA advice or alternative formal debt help?

The first thing to consider is that an IVA is a very serious move. It is essentially an alternative to bankruptcy and, as a government initiative, is legally binding. It will also show up on your credit record and make it particularly difficult for you to obtain any sort of credit in the long term. So this type of plan really isn’t for someone who is just experiencing a difficult couple of months. If, for example, you had an unforeseen expense such as car repairs one month and this is the only reason you’re struggling, you really shouldn’t be looking at long term restructuring plans.

Key indicators that you may be someone who is in serious financial difficulty and that a formal debt solution is for you include:-

• You owe multiple creditors money (usually more than three).
• You frequently find yourself getting behind on payments to creditors.
• You total unsecured debts are disproportionately high in comparison to your income (and at least £15,000 total).
• You lose sleep worrying about paying debts.
• Your credit score is being annihilated by your inability to keep up with payments.
• You do not see any changes in your financial circumstances in the foreseeable future that will enable you to improve your situation.

These are indicators of a serious debt problem as opposed to simply a bad couple of months. In cases where individuals are suffering severe debt problems, the quicker that the problems are addressed the easier it is to solve.