How to Survive Debt with an IVA

Sometimes it can feel as if there is now way out of debt. This can lead to a lot of stress and despair. The reality is though that there is almost always a way for people to extract themselves from this position. One possible solution is the individual voluntary arrangement (IVA). This type of solution is not necessary the best choice for everyone, but it can work for a lot of people. Always be sure to weigh up the pros and cons of an IVA before you go with this option.

How an Individual Voluntary Arrangement Works

The best way to describe an IVA would be to say that is an arrangement between you and your creditors that will allow you to escape debt. This is not something that you arrange yourself but instead you use a licensed professional to act as your representative in the matters. This individual will liaise between you and the creditor to determine a suitable arrangement. The goal of the professional arranging the IVA will be to discover the best deal you can realistic offer the creditor. There will be no point in them trying to arrange anything that is beyond your ability to pay. Therefore there needs to be a close examination of your finances to discover how much you can afford to offer. The creditor does not have to accept the IVA but they often will if they think it is the best possible option.

Good Reasons to Choose an Individual Voluntary Arrangement

There are some very good reasons for why you might decide to choose such a solution including:

• It should mean that you pay back a lot less than what you actually owe the creditor. Some debtors only end up paying as little as a quarter of what they actually owe. This can turn your debt from an insurmountable obstacle to something a lot more manageable.
• Once the creditor agrees to the IVA they will not be able to take further action against you unless you break your end of the deal. This will take a lot of pressure off you and there should be no more threatening letters.
• In most instances the IVA will just be an agreement between you and the creditor without any real public disclosure.

Good Reasons Not to Choose an Individual Voluntary Arrangement

There are some potential drawbacks to an IVA including:

• Although it won’t harm your credit rating as much as going bankrupt it will probably make it harder to borrow money in the future.
• If you break the terms of the IVA the creditor will be more likely to take further action against you.
• Not everyone will be eligible for an IVA – you have to owe at least £15,000 in order to be able to do this.
• There may be costs associated with arranging the IVA

As you can see there are pros and cons to this type of arrangement but it is certainly something worth considering.