IVAs are specifically intended to help people with unsecured debts that they can no longer manage. Debts that are not secured against some asset that you have, such as credit cards, store cards, unsecured loans etc, are exactly the types of debt that IVAs are for.
Personal circumstances
IVAs are fairly flexible, but are really recommended for individuals who have personal debts totalling £12,000 or more. Your debts should also generally be owed to 3 or more lenders, and you must have sufficient income to afford the IVA payments – this is something that speaking to an expert will help to decide.
IPs
There is no guaranteed answer as to whether you will actually be able to get an IVA, but speaking to an Insolvency Practitioner is the first step in exploring such things. An IP will look at your income, outgoings and level of debt, and advise you about whether an IVA is going to work for you, as well as the details of the arrangement itself.
The IVA Proposal
Once you and your IP have come up with a good IVA plan that you feel you can manage, it will be presented to your creditors. Again, there is no guarantee that your creditors will then accept it, but providing enough of them do, it will go ahead.
IVA Payments
It goes without saying that an IVA will only help your situation if it is successful. This depends on whether you do manage to keep to the plan and make your payments. If you do manage this, at the end of the IVA term your debts will be cleared, and any outstanding balance effectively written off.
Affordable repayments
It is hugely important that you only agree to make IVA payments that you can realistically afford. If you keep to an IVA that is accepted by your creditors, they cannot then pursue you for the debts. However if the IVA fails (i.e. if you don’t keep to the payments) they will be free to pursue you again.
Problems with IVA payments
If you find that you are not going to manage the payments, then you need to speak to your IP immediately. This gives them the chance to renegotiate with your creditors on your behalf, or to arrange a payment holiday in some circumstances.
Situations
Whether or not an IVA will help you is of course dependent on your own particular circumstances. Only a licensed professional can give you the advice you need if you are at the point where your debts are really out of your control. Getting the right advice straight away is the best first course of action, and there’s a good chance you’ll be able to get things sorted without having to worry about bankruptcy.