subject: Can I use an IVA to solve my debt problem? [print this page] An Individual Voluntary Arrangement (IVA) could be the answer to solve your debt problem enabling you to write off up to 50% of your debt and become totally free of debt within 5 years.
An IVA is an agreement with your unsecured creditors which enables you to settle your debts over a fixed period of time (normally five years). The agreement allows you to make a single affordable payment which covers all of your creditors.
During the arrangement, your creditors are not allowed to charge you interest or continue to harass you with demands for payment. At the end of the 5 year period, if any of your debt is still remaining, this is written off leaving you debt free
An IVA is also designed to be used by business people and company directors. There is no legal reason why you cannot remain as a company director running a limited company if you are in an individual voluntary arrangement.
Not everyone will qualify
The clear advantage of an individual voluntary arrangement is that your debt repayments are brought down to a single manageable amount, interest is frozen by law and the fact that a significant portion of your debt is actually written off.
However, in order to propose an IVA to your creditors, strict criteria have to be followed. Generally speaking your total unsecured debt will need to be at least 18,000.
You will need to be able to prove a sustainable income and that you can afford to pay a minimum of 200-250 per month towards your debts.
If you are unable to do this, it may still be possible for you to take advantage of the IVA process. However you will need to offer a lump sum to settle the arrangement in full up front. Such a sum could be made available from friends, family or the sale of a property.
Not suitable for everyone
Even if you meet the required criteria for an IVA, the arrangement may still not be right for you.
If you are a homeowner and equity is available, one of the requirements will be to release money from your home to put towards your debt. This is normally achieved through re-mortgaging your property in the final year of the IVA.
Secured debt such as a mortgage and car HP cannot be included in an IVA. The payments to these kinds of debts must be maintained or you risk losing your property or home.
In addition, much like other debt solutions, a student company loan cannot be included in the arrangement. As such, even where other unsecured debts are written off, student loan company debts will remain even after the IVA has finished.
An IVA is an excellent solution used by over 4000 individuals each month to resolve their debt problems. The fact that debt is written off and you are debt free in five years means that the IVA can put an end to debt once and for all.
However an IVA is not a magic wand and must not be entered into lightly. An IVA may not be the most suitable debt solution for a particular situation and alternatives such as a debt management plan or even bankruptcy should first be considered. For this reason it is vital to first speak to a debt management expert and get the right advice before proceeding down the IVA route.
Can I use an IVA to solve my debt problem?
By: Steve Jackson
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