An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay your debts over a period of time.
It’s a formal alternative to bankruptcy and can be a good option if you are struggling to repay your debts.
It is arranged by an insolvency practitioner, who will negotiate with your creditors on your behalf.
The terms of the IVA will be set out in a document called a proposal, which will include how much you will pay each month and how long it will last.
If your creditors agree to the proposal, the IVA will be approved by the court and will become legally binding.
Living with the IVA
During the period the IVA is active, creditors will not be able to take any further action against you, such as taking legal action or charging interest on your debts.
You will also be protected from bankruptcy.
Once it’s completed, any remaining debt will be written off.
However, it will stay on your credit file for six years, which could make it more difficult to get credit in the future.
It isn’t impossible to get credit, but it may be more difficult.
Here are some of the benefits of an IVA:
- Reduce the amount of debt you owe
- Freeze interest and charges on your debts
- Protect your assets
- Get a financial fresh start
Here are some of the drawbacks:
- It will stay on your credit file for six years
- You will still have to make regular payments into your IVA, even if you are struggling financially
- You may have to give up some of your assets
If you are considering an IVA, I strongly recommend seeking professional advice from a debt adviser. This is a big decision that can have far-reaching implications.
They will be able to help you to assess whether an IVA is right for you and they can help negotiate the terms.
Is an IVA worth it?
Whether an IVA is worth it depends on your individual circumstances.
It can be a good option if you are struggling to repay your debts and you are unable to get a debt relief order or bankruptcy.
An IVA can help you to:
- Reduce the amount of debt you owe
- Freeze interest and charges on your debts
- Protect your assets
- Get a fresh start financially
Here are some factors to consider when deciding whether an IVA is worth it for you:
- The amount of debt you owe
- Your income and expenses
- Your assets
- Your credit score
- Your willingness to make regular payments
If you think an IVA might be right for you, here are some steps you can take:
- Get professional advice from a debt adviser
- Gather information about your debts
- Calculate your income and expenses
- Decide what you can afford to pay each month
- Negotiate the terms with your creditors
If you are successful, it can be a good way to get your finances back on track.
However, remember that it’s not a magic solution. You will still have to make regular payments and you will have to live within your means.
If you are not willing to do this, an IVA may not be the right option for your situation. Hopefully, your time with a professional debt adviser may be able to suggest alternatives.
