Personal finance

Individual Voluntary Arrangement: Is an IVA right for me?

If you find yourself struggling with debt, then you might want to consider an Individual Voluntary Arrangement.  Since they were first introduced under the Insolvency Act 1986, IVA’s have helped thousands of people across the UK to get themselves out of debt and firmly on the path to a much more positive financial future. The whole concept of IVA brings hope to anyone in debt, but one can only truly reap its financial rewards, if you understand what it entails. Hence, the first question you need to find an answer to is this: how does an IVA work? It is the best debt repayment strategy out there for anyone struggling with the burden of debt.

When might an IVA be the best solution for me?

An IVA might be the best solution for you if:

  • You have at least two separate debts
  • The amount you owe exceeds £10,000.00
  • You have at least two different creditors
  • You don’t want to deal with your creditors directly (or have simply lost track of where you’re up to with everyone)
  • You have enough money available to make set, monthly repayments. This is extremely important.  If you fail to maintain the agreed monthly amount, then your IVA is likely to fail, and your creditors may apply to make you bankrupt.

Can I include all my debts into an IVA?

No.  Whilst the vast majority of debts can be included into an IVA there are certain exceptions such as:

  • Child maintenance arrears
  • Student loans
  • Court fines

However, if you are one of those people wondering: how do I get my debts written off, you might want to contact your insolvency practitioner, so that he/she can enlighten you on the best ways to go about your IVA payment.

The type of debts you CAN include in an IVA are:

    • Bank/building society loans and overdrafts
    • Credit cards
    • Personal loans
    • Store cards
    • Catalogue accounts
    • Charge cards
  • Council tax arrears
  • Tax debts
  • Utility bills
  • Mortgage or rent arrears

What are the key benefits of entering into an IVA?

Before we delve into the details of the benefits associated with entering into an IVA, it is important for you to first comprehend what an IVA is. Once you have an undiluted knowledge about the concept, it would be easy for you to come to terms with the benefits therein. There are many benefits associated with entering into an IVA for example:

  • An IVA is legally binding which means all creditors must adhere to the terms of it and won’t be able to pursue you for any outstanding debt either during, or after, the IVA period.
  • An IVA is also time limited (usually repayable over 4 or 5 years). This therefore gives you a definite end date and you can start to rebuild your financial future.
  • Creditors will usually accept that only part of the debt will be paid and, at the end of your IVA, any remaining balance will simply be written off.

Are there any other things I need to take into account?

Before you decide to enter into an IVA you need to speak with your insolvency practitioner about things such as any property (or other assets) you might own, any personal possessions of value, savings, pension and the impact it will have on your credit rating (especially if you might need to take credit out shortly after your IVA has ended).

Do I have to pay to enter into an IVA?

Yes. Whilst the actual cost will vary between each practitioner, you can expect to pay around £5,000.00 to enter into your IVA, although the cost of this should be taken from your monthly repayments.  Never be tempted to pay for an IVA application up front.  If your proposal is rejected, then you’ll be left out of pocket.

Author: Uday Tank
Uday Tank has been working with writing challenged clients for over five years. His educational background in family science and journalism has given him a broad base from which to approach many topics. He especially enjoys writing content after researching and analyzing different resources whether they are books, articles or online stuff. 

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