If you want to know if an IVA will help you get out of debt, the short answer to this question is maybe. How useful an IVA is likely to be really depends on the details of your own personal circumstances.
IVAs are designed to be used by individuals rather than companies or organisations. They are also designed for unsecured debts (i.e. credit cards and unsecured loans rather than mortgages or loans secured against property). IVAs are intended to be used as a way to settle debts that you cannot manage the normal payments for.
Typically an IVA is used where a person is struggling to make their debt payments to the point where bankruptcy has become a real possibility. In this case it is vital to speak to a professional expert such as a licensed Insolvency Practitioner. An IP can reliably tell you what your options are, and advise you as to whether an IVA will help in your case.
IVAs are normally used for personal debt of over £15,000 to 3 or more lenders, and normally involve monthly payments of at least £200. If these requirements apply to you, you may indeed be able to use an IVA, but it’s best to get the guidance of a knowledgeable IP before taking any decisions.
Repayments
An IVA is primarily a way to clear debts that you can no longer manage according to your existing agreements. Through an IVA you will propose to pay a certain amount of the debt back over the IVA period. Although this amount is typically less than the overall amount that you actually owe, your creditors are likely to see even less of the borrowing returned to them if you go bankrupt, and are therefore amenable to IVA proposals.
Negotiation
Your IP will handle all of the negotiations with your creditors and so you do not need to worry about the stress of dealing with them personally. As soon as the IVA process begins, you will be protected from any legal action from your creditors. During the term, the IVA is a legal contract that protects you from legal action as long as you keep to the terms.
If your IVA is a success, it effectively clears the debts, even when you have only paid back a portion of the original debts. As long as you have continued to keep to the agreed payments, your debts will be regarded as settled and you can get on with living your life.