Should I Enter into an IVA?

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by: Hollie Wilcox
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Word Count: 363
Date: Fri, 17 Jul 2009 Time: 6:39 AM
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One solution that UK residents may consider when trying to shovel out from under mountainous debt is that of an individual voluntary arrangement or an IVA. This is a formal proposal presented to one's creditors that outlines a repayment plan for their debt. The proposal can be accepted or denied depending upon the results of a vote that occurs amongst your creditors. There are many benefits for choosing an IVA over some other debt solutions. However, there are also some drawbacks that need to be considered prior to arranging an IVA.
Individual Voluntary Arrangements are a good choice and should be first considered before resorting to bankruptcy. IVAs are a private matter and are not made public record. Therefore, your friends and family will have no idea that you are experiencing financial issues unless you choose to tell them. If you are a homeowner, an IVA is a wise option as it keeps you from losing your house. The intent of an IVA is to help the consumer pay off their debt. Once the IVA concludes, the consumer will be debt free. The duration of the IVA varies from person to person but typically the IVA will last no longer than five years.

Despite all these benefits, there are a few drawbacks to IVAs. The duration of an IVA lasts for a longer time period than a bankruptcy. Bankruptcies only last for a year. In some situations, albeit rare, the IVA may last six years. Not everyone is able to qualify for an IVA. There are certain criteria that a consumer must meet. In order to enter into an IVA, the consumer must hold at least 15,000 pounds of debt. The number of creditors that this debt is owed to must be at least three. Also, with an IVA the minimum monthly payment required is 200 pounds. If your budget is so constrained that this minimum amount is not even a possibility, then an IVA is not for you. An IVA is legally binding. If the terms of it are not followed by the consumer then they are forced to declare bankruptcy.

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For more information on IVA or for some debt advice from the experts, visit www.debt-free.org.uk today.