IVA Debts

IVA – Debts Written Off

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IVA Debts – What Is An IVA?

IVA stands for individual voluntary arrangement. This is a mechanism that was set up by the UK government in the 1980s as a way to help small businesses by providing an alternative to bankruptcy. It has since proven so successful that it has become very widely used as a solution to serious consumer debt problems.

With an IVA, debts are written off at the end of the agreement, which leaves you free to start again with a clean slate. This can sound very attractive, but there are certain conditions you need to meet to be able to set up an individual voluntary agreement, and there are other consequences of an IVA that you must be aware of before deciding whether it may be for you or not.

Debt - IVA Solution - How Does It Work?

The main principle of an individual voluntary agreement is that you make a set contribution towards your debts each month, based on what you can afford, and at the end of the agreement term any debts left unpaid are written off. This can typically mean between half and 75% of your debts are written off. This is why a debt IVA is one of the only ways to deal with debt that you really cannot otherwise afford to repay.

The period that you keep up payments for is usually five years and at the end of that period you are debt free again. An important principle to understand is that individual voluntary agreements are formal and legally binding, which is in marked contrast to other debt solutions such as debt management plans. When you sign up you are committing to making an agreed contribution for the period of the arrangement, so you cannot stop paying just because you change your mind.

To set up an IVA, you must be a UK resident with debts of at least £15,000 to at least two creditors, but conditions will vary slightly depending on the company providing the service for you. The IVA debts that you can include in the agreement must all be what are called unsecured. This just means that there is no property or other asset tied into the agreement. A mortgage for example is a secured form of credit as your house can be repossessed if you fail to keep up with payments. Mortgages and other secured loans cannot be counted as IVA debts as they are not unsecured.

IVA Debts – What Are The Advantages?

You can get up to 75% of your debts written off, making it possible to deal with debts that you could never hope to repay.

Because it is a legal agreement, if 75% of your creditors agree to the IVA, debts for any remaining creditors who do not agree are also included. Being able to force reluctant creditors to join the agreement is a big advantage over a debt management plan, which has no legal power to make any creditor join the scheme.

Your creditors are legally prevented from bothering you. You will not be chased for payment as under the terms of the deal they are not allowed to do this.

You only have a single monthly payment to make towards your debts, which is very easy to administer.

Most people considering an IVA are also thinking of bankruptcy as an option. An IVA is a way of avoiding the stigma and lasting consequences that bankruptcy brings with it.

You are far more likely to retain your home with an IVA than with bankruptcy, where you lose control of your assets automatically. With an IVA you have more input into how the agreement is set up and what is included.

If you run a business you can continue to trade during the term of the Agreement.

You can still have a normal current account with a bank as long as you do not expect any credit facility.

Debt IVA- Are There Any Disadvantages?

As mentioned previously, there are many advantages to the legally binding aspect of the Debt IVA, but one possible disadvantage is that you cannot just get out of it when you want to. If your circumstances were to change, for example, and you came into some money, you would not be able to cancel the IVA. You would probably have to pay a proportion of any money you receive into the IVA to go towards your debts.

You cannot be accepted for an IVA unless your debts come to at least £15,000.

The IVA can only be set up if at least 75% of your creditors (by value of the debt, rather than by the number of creditors) agree to it.

You could still be made bankrupt if do not keep up with the payments that you agree to make each month.

An individual voluntary agreement will affect your credit record.

IVA Debts – What If I Am Not Eligible?

If you do not have debts of at least £15,000 or your circumstances are not deemed suitable for some other reason, you may still be eligible for another form of debt help. The most common form of debt solution is a debt management plan, and these are usually also provided by the same organisations that offer IVAs. So if you apply to a good company, they will examine your circumstances and advise you on the most appropriate solution for your particular needs.

The main differences between an individual voluntary agreement and a debt management plan(DMP) are that the DMP is an informal agreement and involves repaying your debts in full. An IVA on the other hand is legally binding and involves writing off part of your debt.

IVA Debts – Finding Reputable IVA Providers

The most important decision you can make if you are seriously thinking of applying for an IVA is which organisation to use to help you through this process. The reason this matters so much is that all debt companies are not the same, and you need to know you are dealing with a reputable and trustworthy organisation. With serious debt problems to deal with, the last thing you need is an unscrupulous company who are simply interested in steering you into a debt plan designed to make them money, whether it helps you or not.

I have therefore recommended some reliable companies on the main page of this site. You can also apply direct from this site through my simple Application Form on this page. An expert advisor from 123DebtSolutions will then contact you to go through your situation in more detail.

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How A Debt IVA Can Set You Free