Choosing an IVA, or Individual Voluntary Arrangement, as a way to get out of debt, could help individuals, which are struggling with their finances, to avoid bankruptcy and the trauma that goes along with it.
An IVA is only suitable for people with higher levels of unsecured debt; usually a minimum of £15,000, however there is no maximum level of debt. The arrangement must be nominated by a qualified Insolvency Practitioner, or IP, who will then supervise the arrangement for its full term.
An IVA is arranged over a fixed period of time, which is agreed between the creditors and the debtor at the beginning. The typical term is 5 years, but there can be exceptions to this. Amongst the many advantage of an IVA is that all interest and charges will be frozen, so your situation can’t get any worse, and the monthly repayments will be set at a manageable level.
Any outstanding debt that is left over once the IVA is completed will be written off. Only unsecured debts can be included on the arrangement, such as store cards, personal loans and credit card debt as well as bank loans and overdrafts. Secured loans, hire purchase agreements and mortgages cannot be included on an IVA.
The expert advice, for people that are straggling with debt problems, is that they should act now and not stick their heads in the sand. There is no point in delaying the inevitable, and the debts will certainly not go away by themselves. According to the debt help charity, Credit Action, more than 300 people a day are being declared bankrupt, or signing on to an Individual Voluntary Arrangement.
For debts of a lower level, debt management may be an option, but it is best to speak to a professional, and get some debt advice, before any decisions are made.
