The advice: An Individual Voluntary Arrangement (IVA) is the easy way out of debt

The reality An IVA allows you to avoid bankruptcy by coming to an agreement with your creditors. Generally, you make a series of monthly payments and the IVA will usually run for five years. Your wages will be monitored during this time and if you earn more, you will have to pay more. You may also be forced to remortgage your home to release equity as a way of paying off the debt. IVAs are legally binding agreements, so if you lie or try to avoid paying off some creditors, it is a criminal offence. An IVA will still stay on your credit report for six years, which could affect your ability to get credit for this period.

What to do You may be able to come to an agreement with your creditors without the need for an IVA. If you are having trouble paying back mortgage, loan or credit card debt, talk to your lenders, who may agree a new schedule of payments or negotiate an interest freeze. You can also get free advice on dealing with your creditors from Citizens Advice at www.adviceguide.org.uk, National Debtline at www.nationaldebtline.co.uk or the Consumer Credit Counselling Service at www.cccs.co.uk. Your local council may also run debt counselling services.

The advice: A debt management company will help you to clear your debts quickly – usually within five years

The reality Many of these companies will focus on persuading you to take out an IVA. They usually get paid commission for doing this and you will also have to pay them a fee.

What to do Many of these companies play on your natural fear of negotiating directly with your creditors and offer to take the job off your hands – but charitable and government-funded organisations such as Citizens Advice, National Debtline and the Consumer Credit Counselling Service will do the same thing for free and help you to explore other routes as well.

The advice: A credit-builder card will boost your credit rating

The reality This could be true if you´ve never had a credit account or have paid off and closed every account down. Before they decide whether you´re credit-worthy, lenders look at your credit report to see whether you have previously been a responsible and reliable borrower who makes repayments on time and in full. If you have no credit history, they can´t see how you might behave in future and could even turn you down. If, however, you have a record of unpaid debts and money problems, you can only improve it by improving your financial behaviour.
What to do Research what´s on offer to find the deal that suits you best -visit the Lower My Bills tab to learn how we may be able to help you find the best deals on credit cards for your situation. Watch out for application, set-up or annual fees or penalties and choose a card designed for people like you, so you´re likely to be accepted. Then use the card to buy everyday items you´d need in any case and pay off your bill in full each month. That way, you´ll avoid interest charges while you build up a track record that could allow you to borrow more easily and on more favourable terms.

The advice: A credit repair agency will improve your credit status

The reality Some of these organisations will try to sell you a loan. Others charge for services such as removing records of court judgments for non-payment of debts from your credit report. They may assure you that claiming a court summons was not received or that correct procedure was not followed will persuade a court to remove a judgment from its records – but it won´t. A CCJ can only be marked as Satisfied if you have paid off the debt. Even then, it will stay on your credit report for six years.
What to do You are the only person who can improve your credit history and credit rating. Start by checking your credit report. Look out for clerical errors, accounts marked as open that you know you´ve closed and any suspicious or unfamiliar transactions. Then focus on other improvements. For example, close unused accounts and register to vote at your current address. You can also ask to add a note of explanation if special circumstances, such as a major illness, explain past problems.

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You will not be thrown into jail if you do not pay your credit card bills, even if you’re a chronic non-payer. We are not dealing with a criminal issue here, it’s purely a civil thing. No sirens, no police battering rams at your front door. But…the creditors have the right to get their money. They want to recover that money quickly. So they will just start off by mail you notices, then sometimes calling you on the phone. When that option is exhausted, then comes the lawsuit.

They will be kind at first, and that is the only stage you need to be concerned with. The key factor is that they’ll be patient at first, even though you are late on your payments. It’s best to pay those CC bills immediately or ASAP. A low credit rating, as has been repeated ad nauseum on many sites, commercials and news reports, can keep you from purchasing cars, homes, getting loans, and even sometimes its used to judge your suitability as an employee for a job (not really fair, but that’s a different topic).

Do not let these things get over 30 days late, because that is when the trouble begins to really mount. So just be careful, and make sure you are also acting in your best interest. These creditors will always act in their best interest, because this is how they have managed a successful company. So do the same for yourself, and make sure you do not let things get out of hand. In the end, you do not want to find yourself in a court room having to pay extra fees on top of the ones you already owe, or being stuck with high interest rates on larger purchases because of poor credit.

The voluntary code, announced this week, aims to prevent companies from reneging on agreed payment terms. This practice is (unfortunately) quite common among large corporations in the UK, with Alliance Boots and Tesco amongst the worst offenders.

The announcement follows the recent publication of research conducted by the Forum of Private Business sadly revealing the ugly truth: that 61 per cent of small firms in the UK are encountering troubles managing cashflow compared with the first week of November.

However Graydon UK is not convinced that the proposals will turn the tide of the late payment of suppliers in the UK, particularly in instances where small firms are the victims. If it’s voluntary, they’re likely to simply ignore the new code.

There’s no doubting good intention lies behind the Government’s introduction of a voluntary code but it is highly unlikely that this latest move will make a tangible difference when it comes to helping small companies manage their cashflow. Laws across the world are rarely an impetus or an incentive as a business tool, and this one won’t be either.

The economic situation has grown worse, and even large corporations no longer have the readily available cash required to pay bills and are failing to pay trade invoices simply because they can’t do so, and no voluntary code will change that simple fact.

The evidence from previous recessions is that business schools and universities tend to benefit greatly, and here’s why. In a difficult recruitment situation, people take time out to embark on masters degrees to improve their CV and knowledge while they ride it out, says Jonathan Slack, chief executive of the Association of Business Schools (ABS). Which in turn gives much needed income to schools and colleges.

Business and management is the most popular subject at degree level and is taken in some form by one in seven students in the UK. The findings of a survey by ABS show undergraduate demand from home and EU students for business school courses is up, particularly MBA courses and particularly full-time MBAs. Needless to say, a universities bottom line improves nicely under this scenario.