What Exactly is an Iva and Would I be Eligible for One?

'What exactly is an IVA and would I be eligible for one?'

I get asked this question all the time – Just what is an IVA and do you think I would be able to get one?

In this article I will attempt to explain further just what an IVA is and help you to understand if and how it could possibly help you.

IVA stands for Individual Voluntary Arrangement, an arrangement set up by an insolvency practitioner on behalf of yourself to your creditors. It is a formal agreement which your creditors are obliged to cooperate with in order to enable you to clear your unsecured debts completely. An IVA usually runs for a period of 5 years (60 months) at which point any remaining debt will be written off.

The arrangement is set up in such a way that you will have all of your interest frozen, thus the debt will stop increasing instantly. The monthly payments you are currently paying will also be consolidated into just one, which should be manageable whilst still being effective in clearing your debts at a reasonable rate. The creditors will no longer be allowed to contact you directly once an IVA has been set up as one of the conditions of the IVA is that the creditors must communicate via the insolvency practitioner only. This is of course ideal if you are fretting constantly about threatening letters landing on your doorstep. It is amazing how much of a weight can be lifted from your shoulders once an IVA is set up and not only do the creditors stop chasing you but you also have a date set for your own debt freedom.

An IVA is a real alternative to bankruptcy and it is clear to see why – not only can you be given a genuine way to become debt free within 5 years or less, you can also stop the phone calls and threatening letters, save your property from being sold for a knockdown price, remain in it and really get your life back on track. Opting for an IVA rather than bankruptcy also shows you have made a real effort to repay your debts, which will obviously look much better on you when applying for credit or bank accounts in the future than bankruptcy would.

An IVA can also save your career – many occupations can be put at risk if a debtor is declared bankrupt including accountants, legal professionals, banking staff, those in the public services such as police officers. An IVA can protect those in these professions who are at risk of bankruptcy loosing them their careers.

You may be able to set up an IVA providing you have £15,000 or more debt owing to at least 3 separate creditors, have a steady regular income of which you can set aside a set amount each month for your IVA payments. The most important thing to remember is that if you currently have the debts you have, you are probably already paying a lot of money out each and every month to your creditors which is simply going towards paying off the huge interest charges. With an IVA those interest charges will stop, you won’t be throwing money here there and everywhere anymore – you will be giving a set amount each month to one source who will then distribute the payment out for you. Not only this, every penny which goes to your creditors will be another penny of your debt paid off, not just keeping the interest down (there will be no mounting interest anymore).

It is easy to see why an IVA is so appealing to so many people. It just makes sense in so many ways.