Individual Voluntary Arrangements (IVA) - Is an IVA the Answer to Debt

What is an IVA

IVAs (also known as Individual Voluntary Arrangements) were introduced by the Government to offer an alternative to people facing the prospect of bankruptcy.

An IVA facilitates the repayment of a debt over a period of time and is supposed to be in the interests of both the debtor and creditor.

But is an IVA really the answer to debt?

What Exactly is An IVA

IVAs were introduced by the Insolvency Act of 1986, as an alternative to bankruptcy.

An IVA enables debtors to attempt to reach a settlement with their creditors. This normally involves the repayment of the debt in monthly installments and a reduced repayment amount.

An IVA is a legally binding contract between debtor and creditor.

Why Were IVAs Introduced

The IVA was initially designed as a convenient way of processing insolvency cases without incurring the costs and court time involved in bankruptcy proceedings.

The IVA process is therefore much simpler than bankruptcy and the outcome is significantly less severe.

Furthermore, an IVA doesnt carry the same restrictions and stigmas as bankruptcy. Moreover, once an IVA has been paid of, the debtor is deemed to be debt free.

The Advantages Of An IVA\r

An IVA enables you to only pay back an agreed percentage of your debts.

While an IVA is in place, your creditors are not allowed to harass you.

Unlike bankruptcy, an IVA doesn\’t affect your professional status or your ability to hold public office.

With an IVA, interest on your loan is frozen which means that your debt won\’t keep growing. \r

Mike Curry runs a free and independent national IVA advice line called Clear Start. For further information, please visit IVA or telephone 0800 138 5445.