A reader emailed me over the weekend concerned that his debt was getting pretty unmanageable, ‘reader’ had been scouring the internet for advice and was confused as to whether there was such thing as a self employed IVA.
Research suggests self employed people are just as likely to be struggling with debt problems as the unemployed people.
Without a consistent, regular income the debt is likely to be more unmanageable compared to those who are employed or unemployed, it can be a stressful and scary situation.
When you’re self employed you not only have the worry of keeping on top of the bills to ensure your business can run smoothly, but also all the bills at home that need tackling too.
What is a self employed IVA?
The truth is, an IVA is an IVA, whether you are employed, self employed or unemployed.
If you’ve got into financial difficulty, the best advice anyone can give you is DO NOT bury your head and seek advice ASAP, your problems won’t just disappear, you must tackle the problem quickly to protect your business and livelihood.
By choosing a debt solution you are able to show your creditors that you mean business when it comes to tackling your debt with them.
A debt solution could stop any pending legal action against you – which could affect your assets – as well as freezing any future interest and charges to the original debt.
How does an IVA benefit the self employed?
If you are struggling with mounting debt you could consider an Individual Voluntary Arrangement (IVA), which are designed to help self employed people too.
An IVA is an alternative to bankruptcy, they make it easier to continue to trade, retain your assets and protect the jobs of your employees.
If you enter into an IVA you pay one affordable, monthly sum to an Insolvency Practitioner, who dishes it out to your creditors.
An IVA usually lasts for five to six years.
If you stick to the terms of the IVA and complete the process making all 60 – 72 payments, anything left over is written off and you walk away debt free.
How much will I pay back in a self employed IVA?
With the help of an Insolvency Practitioner, you will be able to create a business cash-flow for the following twelve months – this will enable you to project the future income and expenditure of your business.
By doing this you show your creditors that you’re profitable and you can keep up with reduced monthly payments towards your outstanding debts.
It also shows if you are able to keep up with your essential business costs during an IVA.
Any monthly income you earn, after tax has been deducted, will go towards your personal living costs, anything left over from that will go into your IVA to go towards paying back your debt.
The main worry for any business owner committing to a monthly sum is fluctuating income.
An IVA can be flexible to allow you to make payments as income is received, however you must commit to an agreed amount annually.
How do I know if a self employed IVA is right for me?
You need to speak to a trained debt adviser who will work with you to evaluate both your business and personal finances to see if an IVA is the appropriate solution for you.
You can also seek advice from Money Advice Service.
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