Would your job be at risk if you declared yourself bankrupt?

These are the first questions to ask yourself and if you have answered yes to both of them an Individual Voluntary Agreement may be your best option.

Individual Voluntary Agreements have been marketed as an alternative to declaring yourself Bankrupt. Each of your creditors need to agree on the proposed payment. Creditors used to accept 25 pence to the pound but many are now demanding far higher percentages, some as high as 55 pence to the pound.

Once an Individual Voluntary Agreement is made it becomes a legally binding contract and your creditors can not break the terms set out in the agreement.

People wishing to start an Individual Voluntary Agreement will have to enlist specialist help in the form of an Insolvency Practitioner (IP) to help them through the process. Once a Individual Voluntary Agreement has been made you must keep to the payment schedule. Should you not meet the agreed terms the Individual Voluntary Agreement may fail and your Creditors can pursue the full debt outstanding.

If an Individual Voluntary Agreement is the solution for you, consider the following very carefully.

Be realistic. An Individual Voluntary Agreement is not a quick fix - they generally last five years and once the term is up the remaining debt will be written off by your creditors. Prepare yourself. Have up to date bank statements, credit card & store card statements, car loan details, endowment details if you have one & any other debts you may have. Carefully work out your income and expenditure so you have a clear understanding of your financial situation.