Individual voluntary Arrangements have helped many people to deal with financial troubles in recent years. If you’re in the position of considering an IVA, there are a few things you might want to bear in mind.
Debt
IVAs are used for personal unsecured debt (e.g. credit cards or unsecured loans) totalling at least £15,000 and to at least 3 different creditors. To use an IVA, you will normally need to be in a position to make payments of at least around £200 per month, but there is some flexibility.
Insolvency Practitioner
Before taking any decisions about unmanageable debts, you’ll need to speak to an Insolvency Practitioner. They will take a good look through your finances and give you sound, trustworthy advice about how best to proceed.
IVA Proposal
If you do go for an IVA, this will mean putting a proposal to your creditors through the courts. There is no guarantee that the creditors will accept your proposal, but they do tend to be open to them. This is because they know that if they do not accept your IVA, you may become bankrupt, and in this case they may see even less of the borrowing returned to them.
Typically an IVA involves paying just part of your debt back, and the rest effectively written off.
Protection from creditors
While the IVA is being arranged an Interim Order will stop your creditors taking any legal action against you for the time being. If they accept the IVA, they are also prevented from otherwise pursuing you for the debt either during or after the IVA term, as long as you keep to your side of the arrangement.
Credit facilities
During the IVA you will not be in a position to get more credit. However, after the IVA is complete, you will be free to do so, and your credit rating will have suffered much less damage than if you had become bankrupt.
Success
Remember, an IVA is only going to be successful if you manage to stick to it. For this reason, never sign up to an arrangement that you feel you cannot realistically manage the payments for.