It’s that time of year again when we all spend a little bit too much in the knowledge that we can chip into our equity again after Christmas and get another little debt consolidation loan. Except this year it’s different. This year sees a change to things as we’ve known them for the last decade or so. In the U.S. the sub-prime lending fiasco has caused quakes around the world in various financial markets as greedy brokers try to cut their losses by selling on other people’s debts in massive bundles. And in the U.K. the build-up of personal debt has only made this worse, as we deal with the sub-prime virus and also the prospect – real, this time – of property values falling.Our own household budgets are microcosms of national budgets, and we must not be as greedy as those men in red braces or as misguided as the politicians who have allowed this to happen thus far. Clear sight is necessary now, as we can no longer look on the Christmas debt consolidation loan as the Saviour of our woes. We have never known personal debt like this, and the statistics tell us that it just can’t go on like this.There are alternatives to another Christmas debt consolidation loan that people will be turning to now, and they are healthy alternatives. These are properly constituted debt consolidation programs, and they take two broad forms. One is a simple debt management program and the other is called an Individual Voluntary Arrangement (IVA) or Protected Trust Deed in Scotland.The best thing about an IVA is that the main action occurs right at the very start of the arrangement. An insolvency practitioner (or IP) will have a look at your income and expenditure and work out just how much you can afford to pay your creditors each month after your essential bills have been paid. Then your IP will negotiate with all your creditors collectively; this is the clever bit.Your debt will be cut massively, typically by 60 percent but by as much as 70 percent, according to the terms of IVA legislation. As long as your creditors collectively agree to this – and there are certain stipulations to be met, such as being in employment and having at least three different creditors – you will have the bulk of your debt simply wiped out.You will then have five years (three in Scotland) to pay off your remaining debt every month at a rate that you can afford. During this time your creditors are not allowed to contact you by any means; if they do you can sue them. Stopping those phone calls and letters, and the threat of a knock at the door by the bailiff, will suddenly be gone forever. This is surely a more sensible alternative to a debt consolidation loan, pushed by the target-driven salesmen who don’t actually care what happens to you after they’ve received their commission. By comparison, a loan is as short-term as a sticking plaster compared to an IVA.There are occasions when a debt consolidation loan is genuinely useful. This is if the loan repayments are smaller than the total of the repayments of the loans and credit card debts, etc., that it is replacing (which is usually the case) and if you can genuinely afford the repayments over the long term. Remember that this will usually be a secured loan and that you may lose your home if you do not keep up the repayments.But for most people on a fixed income the IVA is the proper solution. Now, what about a Christmas IVA instead!