Individual Voluntary Arrangements are for individuals who have unsecured debt that they can no longer manage. If you’re struggling with debts such as credit cards or unsecured loans, then an IVA may be used to help you avoid bankruptcy.
Typically, IVAs are used for people with multiple debts, owed to 3 or more different lenders. The debts covered by an IVA are normally expected to total at least around £15,000.
Whether an IVA may be used for your own personal debts is something you can really only establish with the help of an Insolvency Practitioner. Everyone’s situation is slightly different, but an IP can have a look at your overall finances and give you an indication of what choices are going to work for you. It may indeed be the case that an IVA is going to help you, in which case your IP will draw up a proposal and put it to your creditors.
If you do decide to go ahead with an IVA for your unsecured debts, your IP will guide you through the legal processes involved. Providing enough of your creditors accept the proposal, it will go ahead. Once the IVA period has elapsed and you have met your side of the contract by continuing to make your payments, your debts will be settled.
If you have a mixture of debts, both secured and unsecured, you may also be able to use an IVA for the unsecured portion of your borrowing. This can ease the pressure on your outgoings in general, helping you to get the situation under control.
Once an IVA is complete, you will be able to start working on improving your credit rating again. While the IVA is in process, you cannot get any borrowing, but once it is over you will be free to seek credit again.