If you have entered 2010 with debt to your name, you may be wondering how you could clear it.

There are several ways you could clear your debt, whether it’s on your own, or with the help of a professional debt solution.

Here, we will take a look at just two of the debt solutions available to see if one may be right for you.

IVAs (Individual Voluntary Arrangements)

An IVA is a form of insolvency. It’s a formal, legally binding debt solution – an agreement between an individual and their creditors.

An IVA could be suitable for you if you’ve got a high level of unsecured debt, that you don’t think you’ll be able to repay within a reasonable period of time but that you can commit to making regular reduced payments towards for the duration of the agreement (which, in most cases, is five years).

If you can commit to making regular reduced payments, your creditors will agree (assuming enough of them agree to the terms of the IVA) to write off the portion of your debt that you can’t afford to repay, once the IVA has reached a successful close.

Entering an IVA will show up on your credit report for six years. This will affect your ability to obtain further credit for this time.

Debt management plans

A debt management plan may be suitable for you if you can’t afford your monthly debt repayments as you had originally arranged, but you can afford to repay your debts within a reasonable period of time.

The way a debt management plan works is simple: your lenders will be asked to accept changes to the repayment plan you originally agreed on. They may agree to accept reduced monthly payments, and freeze/reduce interest and other charges.

However, it is important to note that by arranging to repay your debt more slowly than you originally agreed, you will be in debt for longer. What’s more, defaulting on an original agreement will, like an IVA, show up on your credit report for six years – affecting the cost and/or availability of credit for this time.