How to Make an Individual Voluntary Arrangement Work for You

One of the possible solutions for people who are dealing with chronic debt is an Individual Voluntary Arrangement (IVA). This option is only really appropriate for those people who can no longer afford to make the minimum repayments on their debts and so are at risk of defaulting. There are penalties associated with this type of debt solution, but these will be less severe than just going bankrupt.

How the Individual Voluntary Arrangement Works in Practice

In order to decide if the IVA is a good option for you it will be necessary for you to consider how it works. Here are just some of the key facts about this type of arrangement:

• You will only be allowed to apply for an IVA if your debts amount to more than twelve thousand pounds. If you owe less money than this you will need to consider other options for your debt problems.
• You will usually be expected to hire a solicitor to sort out the Individual Voluntary Arrangement on your behalf. This will not be a free service and will usually cost around £4000. On the other hand the amount of money you will cut off your debt should cover any expenses you incur.
• The main difference between going bankrupt and choosing an IVA is that with the latter you will have a bit more control over your assets. With an IVA you will be in a position to negotiate your assets via the solicitor. When you go bankrupt you lose control over your assets and there is not much you can do about it.
• In most cases the terms of an IVA will require you to pay more than £300 per month. With this arrangement you will be free of debt within five years.
• Once your creditors decide to accept the IVA they will not be allowed to take any further action against you unless you fail to hold up your side of the bargain.
• When it comes to deciding on the amount you will need to pay back each month on the IVA it will always depend on the amount of money you can afford. There is absolutely no point in offering your creditors any amount if you will be unable to stick to this. You will work with your legal representative to find an amount of money that you will be able to offer realistically. It is the job of the insolvency solicitor to work through your finances with you to help you find a manageable amount of money.
• In order to be considered for an Individual Voluntary Arrangement your debts will need to be unsecured. You will also need to owe money to more than just one creditor.
• The creditor is under no obligation to accept the terms of the IVA. They will only accept it if they feel sure that it is the best deal that they can get in order to recuperate at least some of their money.