In this recession, managing debts become a headache for most of us. Most of the people have 7 to 10 credit cards and it is really difficult to make payment to those huge credit card debts each month. So in this condition you may think of debt consolidation. It may be a worthy concern that debt consolidation may affect your credit score. But if you make late payments months after months or miss your monthly payments then it will hurt your credit score more than a debt consolidation.

Some people even lost their sleep at night and want to file bankruptcy to avoid the harassment of the creditors. Now if you file bankruptcy then it will hurt your credit much more than debt consolidation. So if you are in a situation that seems to you impossible to make the monthly payments, then you can think about debt consolidation.

If you have already made some late payments or missed payments then your credit score will not be in a good condition and after the debt consolidation, your credit score may get hurt to a certain extent. But through debt consolidation you can save thousands of Dollars and at the end it is a nice feeling to be debt free. As you start making payments, your credit score will start improving and within one or two years after debt consolidation, you can improve your credit score to a great extent if you make all your payments on time.

Getting approved by credit cards can be frustrating if you had a bad credit score but debt consolidation can actually help.

Individual Voluntary Arrangements or IVA is a legal agreement between you and your creditors, sometimes mediated by Insolvency Practitioners (IP). This is a proposal for your creditors where it contains your plan to pay off your debts within a given time frame. Most of the time is within 3 – 5 years. IVA is applied to by those that see no other way to pay off their debts; it is usually one step away from bankruptcy. Although, not all can be approved for IVA there are certain requirements before one will be permitted to apply.

IVA needs certain net income, and a sound plan before creditors agree on your proposal. In UK, your disposable salary should be at least 200 ?. The amount will be agreed upon by all parties concerned, you, your creditors and your IPs. Then, all your creditors would need to be present at the time your proposal will be presented, if at least 75 per cent of them agree, then you are on your way to being debt- free. The remaining 25 per cent will adhere to the IVA.

IVA is a lifeline extended to you by your creditors, they are willing to enter into a legal contract that will provide you with all the benefits. Once your creditors agree on your IVA, collection agents from creditors and the IPs will work side by side so as to stop getting in touch with you regarding your payments, be it on the phone or by demand letters. You would also be protected against legal action from your creditors as long as you are paying the amount agreed upon on your IVA. Throughout the course of your agreement, the interest rates and charges will be fixed.

However, IVA will also have some effects in your life. For one, throughout the course of your IVA, you will not be allowed to obtain unsecured debts. You will be prevented from getting credit cards, or even store cards. Such measures are taken to assure that you will not get into other debts. After your IVA rest assure that your credit rating will be returned favorably. All your remaining debts will be written off by the end of a successful IVA.

Entering an IVA is a dignified way of paying off your debt. Do not be concerned as to it being publicized; your case will be confidential to protect you and your profession.