No matter how good your money management skills are, there might come a time when you'll find yourself with more debt than you can handle. This is especially true if you live in an economy wherein people rely mostly on their credit cards to make purchases.

What are you supposed to do if such a situation arises, and you have accumulated more debt than your finances can actually handle? The good news is that there are personal and government debt management solutions that you can consider using. The only thing that you need to do at your end is lay out all your options on the table and decide which one will work best for you, considering the financial bind that you're currently in.

The initial instinct of someone who is facing serious financial problems is to immediately consider bankruptcy as a solution. However, since it is your finances which are at stake here, it is a must to consider what alternative options you have.

To help you out, let's learn more about the government debt management options which are out there. In essence, there is really no one specific plan which equates to its being a government debt management in the United Kingdom. But the one thing which closely resembles government debt management help is called the IVA or the Individual Voluntary Arrangement.

Instead of immediately considering filing for bankruptcy, you can opt to use the IVA. The agreement is part of the Insolvency Act of 1986 implemented in the UK. It is a contractual agreement that an individual can have with creditors which can be based on any, or a combination, of the following; capital, personal income or third party repayments.

Simply put, the IVA is a legally binding agreement which allows you to reach a compromise with your creditors so that bankruptcy can be avoided. Individuals who have acquired personal debts and entrepreneurs who are getting a lot of pressure from creditors for their business can benefit from the IVA.

Aside from preventing bankruptcy, the benefits of having an IVA include freezing the application of additional interest and charges on your debt. If you are getting harassed by creditors, this will immediately stop the minute that you file for an IVA. More importantly, the agreement will allow you to pay a more affordable monthly fee for your debts, which is based on your disposable income.

How about the cons of filing for IVA? Perhaps a major disadvantage to this is that your credit score and history will be negatively affected. In the UK, the effect that an IVA has on your credit may last for up to six years. During this period, you cannot gain access to new credit sources, preventing you from applying for mortgage loans, personal loans and other types of financial products.

With such disadvantages, is the IVA still a recommended solution? It all depends on your financial circumstances. Keep in mind that the IVA is a step better than bankruptcy - but you still need to look at your other options because the agreement will negatively affect your credit.

Prior to considering the IVA, you might want to have a talk with your creditors about the possibility of reducing your monthly payments so that you can keep up with your bills - which they might agree to, especially if you have a good payment history with them.

No matter which move you end up making, what's important is for you to look at all the options that you have rather than rushing into a decision that will have a dire effect on your finances. Get proposals from several good IVA providers before making any decisions.