IVA - INDIVIDUAL VOLUNTARY ARRANGEMENT

An Individual Voluntary Agreement is a debt solution that can help you avoid bankruptcy and pay off your debts.

Are you in debt?

There are thousands of people across the UK that are experiencing a debt problem of some kind. If you are in debt then you will know how stressful it can be and often you can’t see a way out. Whatever the extent of you debt don’t ignore the problem because it will only make the situation worse. The sooner you take action the closer you will be to being debt free.

What is an IVA?

Individual Voluntary Arrangements are also known as IVAs. Essentially an IVA is a legally binding contract between you and your creditors to help you manage your debts. They agree not to pursue you for the outstanding debt once you have successfully completed your IVA. You agree to pay as much as you can over a fixed period, usually 5 years.

IVA’s can be flexible. For example, if your financial situation improves you may be able to end the IVA before the 5 year period is over. Alternatively, if you find that you can’t keep up with your payments for the full 5 years, your creditors can come to an alternative agreement.

What are the benefits?

An IVA could be your way out of unmanageable debt without declaring yourself bankrupt and unlike bankruptcy it will protect your home. As it is a legally binding agreement you’ll be protected from any action by your creditors as long as you keep to the agreement.

Your payments to your IVA will be based on what you can afford as it will be based on your disposable income or the money you have left after your essential expenses. It is therefore designed to be affordable; you can keep up with your IVA and keep up with all your other living costs.

With an IVA you could repay your debts without the need for a loan. Potentially the interest and charges on your debt could be frozen and you should have no further payment demands from creditors. You will make a single, fixed monthly payment as opposed to the multiple payments you are currently making so an IVA will reduce your monthly payments.

What are the risks?

An IVA is a serious commitment and if you do not keep up with your repayments you could be declared bankrupt. Failing to complete an IVA once you have agreed to it could put you in a worse financial situation because if you don’t keep your side of the agreement, your IVA could fail leaving you fully responsible for the outstanding debts and costs.

You should remember that if your situation does not improve you may have to pay more and an IVA will appear on your credit report which will affect your chances of future. There may be fees involved which are why IVAs are not for everyone.

Finding the right IVA for you?

It is important that you make sure an IVA is the right debt solution for you before you sign.

Please note that every IVA is different and they can be very complex. In terms of who an IVA is best suited for if you can’t afford to repay your debts and you have two or more creditors, you are unable to keep up with your monthly payments but are able to commit to making regular payments then an IVA could suit you.

As an IVA is a serious commitment you should take the time to research the market. You can compare different products in the table above.