IVA Advice – The Pros And Cons of Individual Voluntary Arrangements

This article is intended to explain the basics of what an IVA is and to offer some guidance on when it may be appropriate to consider one. Most references to IVAs on the web are from companies with a vested interest in offering you one, so there is a danger that the advice may be a little one-sided. The information in this article is unbiased and intended to provide the information you need to make an objective judgement about whether an IVA is right for you or not.

What Is An IVA?

An IVA is an Individual Voluntary Arrangement and is a legal agreement between you and the people you owe money to. It is a way of consolidating your debts into one payment, and will usually result in some of your debt being written off at the end of the process.

The usual requirement for being able to set up an IVA are that you have at least £15,000 in unsecured debts (ie debts which are not secured against your home, such as your mortgage) which you are unable to pay. Your debts must be to three or more creditors and you must have a regular income.

To set up an IVA you will need to have the agreement of at least 75% of your creditors (by value of the debts). If 75% or more agree to the IVA, then the remaining creditors have to go along with it. The majority of IVAs will last for a period up to five years, though the period varies depending on the circumstances.

Advantages of IVAs

• Your monthly repayments may well be less than they were before

• A proportion of your debts may be written off

• You should be debt free at the end of the process

• As the IVA is a private agreement, there are no public notices about it as there would be for bankruptcy

• You will not normally be required to sell your home (as you may be with bankruptcy)

• You will have only one monthly payment to think about

• Creditors will no longer be allowed to hassle you for money owed

IVA Advice - Conclusions

So one of the key things to remember is that IVAs are not free. There is a cost in setting them up, but this is a lot less than bankruptcy and could be considered well worth it when the result is becoming debt free again.

You can find a list of some of the most reputable and reliable UK IVA providers here.