Information On IVA UK debt plans - What Is An Individual Voluntary Arrangement?

When it comes to very serious debt problems, it is understandable that many people think that filing bankruptcy is the only way to end the situation.  Sometimes it is, but in many cases there are other, much better options available, with far less drastic consequences.  In the US, the most obvious road to go down is debt settlement, which is when negotiation is used to reach agreements to write off substantial amounts of debt.  In the UK, however, debt settlement does not really exist, because of a better scheme which was set up by the government as an alternative to bankruptcy.  This alternative is the IVA, or individual voluntary arrangement.

I want to give you some information on IVA provision in the UK in order to help you understand how these arrangements work, and offer some pointers to help you if you should wish to approach an IVA specialist.  IVAs are formal agreements set up by specialist companies, where you agree to make monthly payments out of your surplus income for a fixed period, after which your remaining debts are written off and you are debt free.

One advantage of the fact that IVAs are formal and legally binding agreements is that if you can get 75% of your creditors to agree to an IVA, the rest are bound by it even if they do not want to be.  The 75% is a proportion of the value of the debt, not the number of creditors, so if 75% or more of your debt was owed to one creditor, you would only need the agreement of that one person to set up an IVA for all your debts.

When you sign up to an IVA the amount of interest you owe is normally frozen from the start date, so your debt does not grow any larger.  Compared to bankruptcy, you have far more control over what happens, and are far less likely to lose your home.  You can also continue to trade if you are in business, and you are still allowed to have a bank account.

Setting up an IVA does cost some money, but it costs less than filing for bankruptcy.  The IVA provider will build their fees into the monthly payments you make, which should be more than made up for by the amount of debt that gets written off under the scheme.

There are many UK debt companies that will happily provide information on IVA plans for you, but you need to be sure that an IVA really is the best option.  They are not appropriate or necessary for all debt situations, and there are unfortunately some companies who will try to get you to set up an arrangement so that they can get the fees for it, rather than because it is actually the best solution for your circumstances.  A good company will look at your finances and tell you what is best for you, whether or not it is an IVA.

You should take care to get information on IVA specialists who are well established and reputable, and only approach these companies.  Then apply to two or three of these leading providers and see who comes up with the best deal for you.  The safest way to find the most trustworthy IVA providers is to follow recommendations for tried and trusted companies who have already successfully helped many other people to become free from debt.