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If you are one of the many self employed individuals working in the UK then you will have the difficult task of trying to run both your business and your personal finances at the same time. When personal and business finances merge it is easy to find yourself getting into difficulties with debt.
If you are self employed and you are struggling with debt or cash flow problems then there are options open to you. For any small business owner the first option will most likely be to find a way to cut costs and to seek out new sources of revenue. Where this is not possible then you may want to look at some kind of plan to restructure your debts.
One self employed debt restructure option open to people in the UK is an Individual Voluntary Arrangement (IVA).
Introduced in 1986 as part of the Insolvency Act, IVAs are designed specifically to help individuals to restructure overwhelming debts and so avoid being forced into bankruptcy. Entering into an IVA will consolidate all your debts into a single regular monthly payment. This payment is set at an affordable rate and is made for a fixed period of time, usually 60 months. At the end of this period any remaining unpaid debt is written off.
Individual Voluntary Arrangements have the advantage of protecting you from legal action from your creditors. A self employed IVA can enable you to regain control of your finances and keep your business going.
However to qualify for an IVA you will usually need to have debts in excess of £12,000. Self employed individuals with debts lower than this should consider other options such as a Debt Management Plan (DMP).
Based in Lancashire, Royal Exchange provides financial advice to the self employed and sole traders throughout the UK. If you are struggling with debts then we can help you to find the best solution for you.