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Credit cards offer convenience for consumers and even allow cash advance, but a substantial amount of debt may result. Credit card principal and interest can accumulate to a point that is beyond repayment capacity, forcing some borrowers to file for bankruptcy, but it is undoubtedly the last option because bankruptcy records will have great impact on everyday life. Debtors should always consider other available repayment schemes for settling credit card debts, such as IVA, DRP or balance transfer plans offered by banks and financial institutions. This article will discuss the pros and cons of these options.
IVA, an abbreviation for Individual Voluntary Arrangement, is a debt restructuring scheme. An applicant who fails to pay off debt according to the original repayment terms can appoint an accountant or a lawyer as a nominee to apply to the Court for IVA and negotiate with the creditors for a new repayment plan that is affordable. In most cases, it will come with a smaller interest amount and a longer repayment period. IVA is good for people with debts add up to more than ten times of their monthly salary and at the edge of bankruptcy.
Debt Relief Planning (DRP) is a simple version of IVA. The main difference is that DRP does not involve application to the Court. Banks or financial institutions can directly negotiate with creditors and form new repayment plans that are acceptable to both parties. The new plans will help applicants to pay off their debts. DRP is suitable for those with smaller debt burdens.
The following table summarizes the pros and cons of IVA and DRP:
| IVA | DRP | |
|---|---|---|
| Pros |
Compared to bankruptcy:
|
|
| Cons |
|
|
However, both IVA and DRP require creditor's agreement to process. The IVA process can only start when creditors holding 75% in value of debts agree. If debtors cannot reach consensus with creditors because of excessive debts, their applications may fail and they have to resolve the debt issues through other means. Also, the application process of IVA or DRP is complicated and time-consuming, debtors have to suffer from extra physiological stress while interest and eventually debt burden continue to increase. In fact, debtors may consider personal loans from financial institutions to settle their debts.
Various banks and financial institutions offer balance transfer loans to clients to pay off accumulated debts. The application process and approval time of a balance transfer scheme are relatively simple and easy when compared to IVA or DRP, making it ideal for those who are dealing with urgent debts. Debtors with repayment capacity and debt burdens that are below dangerous level are highly eligible to apply balance transfer loans in order to reduce the overall debt pressure.
Before debt burdens and overdue issues getting serious, applicants can deal with high-interest credit card debts and other debts by merging them into a low-interest loan and repaying this new loan in monthly instalments. This is not a bad choice for those who have multiple debts and get stuck paying interest for long time.
Promise Low-Interest Debt Consolidation Loan can help you find out the most effective repayment scheme. Our loan interest is calculated on a daily basis, and there are no handling fees and interest penalties for early repayment. It can help you reduce interest expenses and pay off debts in advance at a lower monthly repayment amount.
In additional, the application process of Promise's loan is simpler and easier than that of IVA and DRP, saving you time and handling fee. Applicants only need to provide ID card and mobile number# and finish the application online without showing up* or going through a complicated document submission process. Promise also offers a flexible repayment period up to 84 months for applicants to choose based on their financial status and repayment capacity. This effectively reduces the financial and repayment pressure of debtors and save them from the impact and consequences of bankruptcy or IVA.
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