For many, an IVA is the best alternative to bankruptcy and clearing their debt. But IVAs can be complex. You need to know exactly what you are getting yourself into before taking the step towards applying for an IVA. Here we provide you with the ten most important facts you need to know about IVAs. It is, however, important that you speak to a financial expert before making this decision.

Top 10 IVA facts:

1. You can repay your debt with fixed, affordable payments in a maximum of five years.

2. An IVA is ideal for those wanting to settle unsecured debts in the form of credit cards, store cards, unsecured loans, overdrafts etc. It will also assist in your secured debts in that you only pay what you can afford.

3. Once your IVA is approved and your term has begun, your creditors will no longer be able to contact you making payment demands. You pay a fixed monthly payment instead of multiple payments to various creditors. What’s more, it will cost less and save you money. This is because your payments are based on your disposable income – i.e. the money you are left with after all your essential expenses (mortgage/rent, secured loans, utility bills, food, petrol etc) are taken care of.

4. The chance of you losing your home is slim through an IVA. Although, you will be expected to release some of the equity from your property to pay into your IVA.

5. Once the IVA term has been successfully completed, any outstanding unsecured debt will be written off. After a duration of five years paying a fixed monthly fee, any remaining debt will fall away.

6. Unlike bankruptcy, an IVA is a private process and will not appear in the local papers. It will, however, appear in the Insolvency Register, which is publicly available.

7. An IVA will be approved if the IVA proposal is accepted by enough of your creditors. Once accepted, all creditors, including those who have rejected your proposal, will be bound by the terms of the contract.

8. Unlike bankruptcy, an IVA does not place any restrictions on your future or current career.

9. You do not need to own a home to qualify for an IVA.

10. An IVA is an option to seriously consider if you:

• Are struggling to repay your debts
• Have two or more creditors
• Have debt of at least £15 000
• Have a full-time job
• Are able to commit to making regular, monthly payments throughout the term of the IVA without defaulting.

It’s a simple case of the higher you climb, the harder you fall. Sarah Ferguson, the Duchess of York, may be the first member of the Royal Family to file for voluntary bankruptcy. According to sources, the Duchess is believed to be as much as £5 million in debt. And despite this steep amount Fergie, as she is commonly known, is determined to ward off bankruptcy by clearing her debt.

Fergie’s financial woes began soon after her divorce from Prince Andrew in 1996. Since the divorce she has a number of failed businesses, including a US promotions company Hartmoor which went under in 2009 due to a £650,000 debt.

However, despite the rumours, a spokesman recently told the Guardian newspaper that the actual amount owing is exaggerated. The spokesman claims the amount is closer to £2 million. Upon speaking to the Guardian, the spokesman added, ‘There is a number of options open to the Duchess, of which bankruptcy is one. But it would be premature to say she is going into bankruptcy as the situation is being managed’.

Ferguson came clean about her financial problems is May after being caught in the middle of a cash-for-access scandal. The scandal began when Sarah was filmed accepting money from a News of the World reporter, posing as a businessman, in exchange for meeting Prince Andrew.

In an interview after the scandal, Sarah revealed to US chat show host Oprah Winfrey that she was in major debt and was considering filing for voluntary bankruptcy. In the interview, Sarah declined to state exactly how much she owed. The Sunday Telegraph stated that of all Ferguson’s debts, more than half was for lawyer’s fees.

Fergie has delved into many projects since divorcing Prince Andrew in 1996. These include writing children’s books, making television documentaries, and acting as a spokeswoman for Weight Watchers in America.

According to one debt expert, despite the reputation and financial issues associated with filing for bankruptcy, Ferguson would benefit from it. Filing for bankruptcy would mean walking away from your debt completely and being able to start afresh. It would be one of the smartest ways to solve debt issues. However, in the case of Sarah Ferguson, not only a public figure but member of the Royal Family, it would be humiliating to have her dirty laundry aired in public.

That being said, in a time of economic turmoil, even the Royal Family cannot escape the wrath of bad financial decisions.

It may start out all moonshine and roses, purchasing clothing, cots, prams and all the other stuff that goes along with welcoming a new baby into the world, but what many parents do not realise is the actual cost of raising a child. And by the time your child walks out of the gates of university, you as a parent would have spent more than £200,000 on raising him/her. But for some parents the cost does not stop there, as more and more young adults are still depending on their parents thanks to a competitive job market.

Chances are, if parents actually knew the cost of raising a child, they probably would have thought longer and harder before making this commitment. We all want to give our children the best of everything, but money, or lack thereof, often prevents us from doing this.

The latest debt news reveals a recent study which provides us with the average, estimate cost of raising a child these days.

On average, the cost of raising a child to the age of 21 is £201,809, according to the latest report. Divided by 21, parents have to cough up £9.61 a year to feed, clothe and educate their kids.

And this cost does not even include private school fees, which is only paid for by 7% of UK families. Despite this, even the additional charges on state education can set families back thousands a year. This includes paying for uniforms, sports equipment, and other essential school supplies. On average, education costs the most for UK families, adding up to an average of £52,881.

In the latest debt news it is revealed that the cost of raising a child has increased dramatically in the past few years thanks to inflation-busting 4% since the beginning of the year. That means the cost has risen by 43% since 2003.

Another pricey factor for families is childcare. Childcare contributes to a hefty dent in families finances, with costs rising by 66.5% since 2003 – this is the single biggest rise in any of the categories.

Of course some cynics will beg to differ, and insist on there being a significant grey area to consider. For example, they argue that will private schooling is expensive; there is significant help from the government which the survey does not account for.

Also, it is argued that higher education fees, while pricey, should not be paid for by the parents, as sufficient student loans are available. This means that students, once they have attained their respective degrees and started their careers, should pay off their student loans themselves.

While there may be a grey area, this is just a general idea of the cost of raising a child in the UK these days.

The version we know of bankruptcy differs quite substantially from its medieval origins. This is a good thing: medieval debtors often landed up in jail for the debts they could not afford to repay.
One other difference is the purpose of modern bankruptcy: modern bankruptcy exists chiefly to help the debtor. This is in stark contrast to bankruptcy in the 14th and 15th centuries. The word bankruptcy originates from the Italian for ‘broken bench’ – banca rotta. This is in reference to the tradition of breaking a bankrupt tradesman’s bench.

But this doesn’t answer the original question, which is why we allow bankruptcy in the first place?
One easy answer to the question is that we want to help people who are in genuine financial turmoil and from which they cannot escape without a lot of assistance. The other side to this coin is that we believe that people deserve a second chance – in life, in finances, in everything.

We believe that the conditions bankruptcy imposes on people to adjust their expectations of their lifestyle. And we expect them to do things differently after their bankruptcy, so that the bankruptcy acts as both a school and a hospital. A school because it teaches the new bankrupt how to better manage their finances and a hospital because it treats not the symptoms of being in too much debt, but because it treats the root of the problem.

These questions and problems have received much thought from some of the most famous philosophers – since antiquity: the question of bankruptcy deals with ethics and moral duties. We want to ensure that creditors be paid but we do not want to extract a pound of flesh from debtors in order to pay the creditor. This is one of the reasons why we no longer throw debtors who are unable to repay their debts in prisons reminiscent of the middle ages.

The decision to apply for a bankruptcy is not an easy one to make but it can often change the financial circumstances of the person applying for it. And surely that is a good enough reason to allow bankruptcy

It may be good to know that it is not just us mere mortals who struggle with debt. There are more than a few celebrities in the UK who are not capable of making the right financial choices. Many have learnt the hard way that being rich and famous does not come cheap. So next time you complain about paying your ‘average Joe’ bills, think of these celebrities who face similar challenges, only on a broader scale – with the public watching.

Kerry Katona:

This former Atomic Kitten star has been through quite a bit in her 30 years. Not only did she have to deal with personal and health problems, financial issues have been a prominent factor in her life. The debt problems stem from a decline in her professional life. After quitting her stint with Atomic Kitten, Katona moved from reality show to reality show trying to find her niche in the entertainment industry. But, after many failed attempts to break into the industry, Katona was declared bankrupt at the High Court in London after failing to pay the final £82 000 of a £417 000 tax bill. In December of 2009, her £1.5 million home was repossessed after failing to make mortgage payments.

Shane Ritchie

Shane Ritchie may be best known for his role in popular Brit soap opera EastEnders, but for many he will be known as the actor who could not control his finances. His reputation for financial problems indeed precedes his acting talents. His money troubles included the sale of his dream home after failing to keep up with the £8,000 monthly payments. He has, however, managed to dodge the bankruptcy bullet thanks to friends covering his debts and saving his financial reputation.

Mike Read

Mike Read is a disc jockey who allowed his finances to run away with him. Read declared bankruptcy not once but twice, the latter occurring just last year. The second bankruptcy forced Read to sell his beloved collection of records and music memorabilia. Even this didn’t help much, as the record collection sold for only one tenth of its £1 million estimate. The remainder of the collection is being sold by the liquidators on ebay.

Joe Swash

The cast of EastEnders should take note. Joe Swash, an EastEnders cast member seems to have the same lack of money management skills as fellow cast mate Shane Ritchie. Not only was he a popular soap star, he also hit it big on reality TV winning the British show ‘I’m a Celebrity…Get Me Out Of Here!’ Unfortunately, money doesn’t equal responsibility, leading Swash to file for bankruptcy after failing to pay a £20 000 tax bill and debt consolidation loans.

Matt Goss

Known as one of the Goss brothers in the British pop sensation Bros, Matt Goss achieved fame and fortune while still a teenager. But thanks to years of squandering, Goss came close to bankruptcy by the end of the Bros reign as pop stars. Matt has since left the UK for the bright lights of Las Vegas and is apparently more careful about how he handles his money.