It used to be that when you applied for a credit card, you were asked to buy credit insurance as well. You don’t hear about credit insurance as much today, but there is something else you can buy: a credit card protection plan. If you look at it closely, however, you’ll see that it’s pretty much the same thing as credit insurance. These plans offer coverage to help consumers in the event that they are unable to make their credit card payments, while providing another method that credit card companies can use to profit from their cardholders.
Credit Card Protection Plans: Are They Worthwhile?
Before you buy a credit card protection plan, make sure you know what it covers. The terms for these policies vary from one card to another. Most policies cover your payments if you are disabled as the result of an injury or lose your job. The premium for the plan is usually a percentage of your balance each month. If you have no balance, you usually do not pay a fee for that month.
When you attempt to make a claim, you may discover that the plan doesn’t cover you as well as you thought it would. For example, you might be disqualified because you were unemployed when you signed up for the plan or because you left your job voluntarily. You might even discover that there is waiting period after you become unemployed, during which time you are ineligible to receive any benefits. You might also be required to apply for unemployment benefits before you will be eligible for coverage under the credit card protection plan.
Credit Card Protection
The fees for these plans are usually around 50 cents for every £100 that you owe, but they can sometimes be as high as £1.00 per £100. These charges are added on to your credit card balance as if they were ordinary purchases, so you also have to pay interest on them. It is also possible for them to push you over your limit and incur over-the-limit fees.
Most states do not regulate credit card protection plans, so you will not receive much help if you have trouble when it comes time to make a claim. Many people who have paid for these plans report having issues with not being able to use the benefits that they have paid for, so be cautious about purchasing credit card protection plans for your credit cards. You may discover that you are better off buying regular disability insurance or some other type of insurance instead of a credit card plan.
A Person Voluntary Agreement (IVA) is a rather new procedure offering a far more personal option to bankruptcy. You will find several advantages of the IVA compared to the traditional insolvency, and that’s why it has become a very popular option for many households. Simultaneously, for those in debt, the precise implications of the IVA continues to be unclear and shrouded in complicated legal terminology. Don’t allow the first hurdle to scare you off. An IVA procedure is actually a very structured process, created to make success the likeliest outcome.
The first step: Getting approved for an IVA
Even before you start considering an IVA, you have to check whether you entitled to the IVA criteria as dictated through the Insolvency Act. To qualify for an IVA amongst others criteria, you have to owe more than £12,000. You should also maintain a reliable job to be able to prove to creditors, that you’ll really have the ability to meet the agreements from the IVA.
Second step: Drafting a proposal
The primary advantage of an IVA consists in the increased versatility in comparison to some traditional personal bankruptcy procedures: You’ll have the ability to safeguard a number of your assets including, for instance, your home, from being obtained from you. When setting up a personalised repayment plan you can include assets not normally obtainable in personal bankruptcy. These for example could be 3rd party funds or earnings out of your ongoing trading or employment. Once you have made the decision on a realistic goal, you will have to present it to your creditors for his or her approval. Drafting this formal proposal could theoretically be carried out by you, but with regards to the many technical details involved in the process, in some instances, it is certainly better to get in touch with an expert debt management company having a specialised IVA department.
Third step: Assigning the licensed insolvency specialist and decision-taking on the IVA
Included in the proposal, you will have to assign an authorised insolvency specialist. The role from the insolvency specialist would be to behave as a specialist, mediator and middleman. In the end, an IVA is can only be effective if you’re really able to meet the conditions and when creditors can therefore be prepared to be paid out a minimum of the original sum owed to them. Finally, the insolvency specialist will make a report supplying a completely independent judgement about your proposal and make these details available to the creditors. Once the creditors have been supplied the required information, they’ll make a vote on the IVA. For a Individual Voluntary Agreement to become recognized, 75 % (in value) of the creditors have to accept it.
Fourth Step: IVA implementation
When the IVA terms have been agreed on the agreement will be valid for 5 years. Following the end of the IVA period, all remaining debts are wiped off.