If your debts feel unmanageable, there are still options and support to help you choose the right one.
When debt becomes too much to handle, it’s easy to feel stuck or ashamed. But you’re not alone and there are formal solutions that could help you get a fresh start.
Two of the main options people explore when their situation becomes serious are an Individual Voluntary Arrangement (IVA) and bankruptcy.
They aren’t the right choice for everyone, and they can come with consequences but for some people, they offer a clean slate. Here’s what you need to know.
What Is an IVA?
An Individual Voluntary Arrangement is a formal agreement between you and your creditors. It allows you to repay a portion of your debts over time, usually five or six years with the rest written off at the end.
It’s legally binding, which means once it’s in place, the people you owe money to can’t chase you or add more interest or charges.
You’ll need to go through a qualified Insolvency Practitioner, who will help set it up and manage the plan.
Pros:
- You make one affordable monthly payment
- Interest and charges are usually frozen
- No more chasing letters or calls
- You’ll be debt-free at the end
Things to consider:
- It affects your credit rating for six years
- There may be fees involved
- You’ll need a regular income to qualify
- Not all debts are covered (like student loans or court fines)
What About Bankruptcy?
Bankruptcy is a legal process that writes off most of your debts if you can’t afford to pay them back at all.
It can feel like a scary word, but for some people, especially those with little income or no assets, it can offer a much-needed reset.
You can apply for bankruptcy yourself, and the process is handled through the Insolvency Service. There is a one-off application fee.
Pros:
- Most debts are written off
- Creditors stop contacting you
- It can give you a clear way forward when nothing else works
Things to consider:
- It stays on your credit file for six years
- You may have to sell valuable assets (like a second car or property)
- Your bank accounts could be affected
- It may impact certain jobs or roles
Should I Choose an IVA or Bankruptcy?
That depends on your situation. Every option comes with pros and cons, and there’s no one-size-fits-all answer.
Before deciding on either, it’s really important to get free, impartial debt advice.
Get Trusted Support
If you’re thinking about an IVA or bankruptcy, speak to one of these organisations first:
- StepChange – www.stepchange.org | 0800 138 1111
- National Debtline – www.nationaldebtline.org | 0808 808 4000
- Citizens Advice – www.citizensadvice.org.uk
They’ll help you understand all your options from debt management plans to breathing space, and everything in between.
Worried About Your Loan with Us?
If you’re an account holder at Northern Community Bank and you’re struggling with repayments, talk to us before things get too tough. We’ll do everything we can to help without judgement.
- Flexible support tailored to your circumstances
- A listening ear, not a lecture
- Trusted referrals if you need specialist help
You’re Not Alone
Money problems can feel isolating, but help is always within reach. Whether you’re exploring an IVA, thinking about bankruptcy, or just unsure what to do next, we’re here to guide you in the right direction.
You can always talk money with us.
