The untruths some advisers will tell you!

Incredibly, there are debt advisers out there who will deliberately mislead you!  Other, ill-trained, advisers harbour misconceptions that have no basis in fact.  The following statements often made by debt advisers are simply not true!

• Your whole family’s credit rating in perpetuity is effected by the decisions you make
  The reality is that everyone has their own personal credit rating, there’s no such thing as a black-rated address;
• You will lose all your assets, including your home, if you go bankrupt
  The reality is in 99% of bankruptcies, all the person loses is his unsecured debts, no assets are lost.  As regards the home, you have a choice as to whether you retain it or not, it’s far from certain you will lose it;
• Paying something back to your creditors through a debt management plan or IVA will better protect your credit rating than going bankrupt
  The reality is they won’t.  Your credit rating will be damaged by every formal or informal solution.  And the banks aren’t likely to start lending anyway soon;
• You and your spouse have to take the same route for solving your problems because you’re a couple
  No you don’t!  You and your spouse have your own assets, debts and options for solving your problems.  It’s far too simplistic treating you as a couple with one solution.  Even if the same solution is appropriate for both, you don’t always need to take it at the same time, sometims there are advantages to delaying one spouse’s solution;
• Going bankrupt will prevent you buying a home at any time in the future
  This is not necessarily so, the availability of credit even to people who have been bankrupt generally moves in a cycle, it may cost a little more to buy a home but no one can really see the future with absolute certainty. And future inheritances from parents could then make buying easier;
• If you go bankrupt, the Official Receiver will take all your surplus income for three years
  In 80% of bankruptcies, the bankrupt pays nothing to the trustee.  Of the 20%, only one third pay everything they agree in full.  And even then the bankrupt can fight the income payments order/agreement;
• An IVA will give you peace of mind;
  In reality, a 5 year income based IVA is a huge commitment which will rule every aspect of your and your family’s lives for the next 5 years.  The sleepless nights will continue, your worries now being how can you maintain the payments into the IVA;
• Debt management plans and IVAs are somehow a more palatable solution to people, and their creditors, than bankruptcy
  While creditors would prefer you to take any solution other than bankruptcy (because they have to write off less), it’s only the stigma of bankruptcy that prevents more individuals taking their best option – and that in 95% of cases is bankruptcy;
• IVAs offer the perfect solution for people with credit card debts;
  Voluntary arrangements were originally brought in to help people with small businesses deal with their debt problems while at the same time retaining and protecting the business.  The IVA factories have hijacked them as a solution for employed people to write off some of their credit card and loan debts.  While designed to protect something, a business, they don’t in most IVAs because most indebted employees have no assets or income to lose in a bankruptcy;
• You don’t pay the costs of the solution, your creditors do
  This is simply advertising speak to encourage you to sign up.  You pay the costs, full stop.