Further information
If you have a large amount of unsecured debt (usually around £20,000 or more) an Individual Voluntary Arrangement, or IVA, could be the best option for you. An Individual Voluntary Arrangement is a formal agreement between a person owing money ("debtor") and his or her creditors, under which the debtor undertakes to make certain payments or realise certain assets, or both, in full and final settlement of their debts. This acts as a legally binding agreement between you and your creditors, effectively freezing interest charges and setting an affordable monthly payment amount over an agreed fixed period (usually 5 years). In addition, because the contract setting out what the debtor intends to do during the Individual Voluntary Arrangement ("the proposal") requires the approval of more than 75% by value of their creditors, over the period of the IVA the greater the return to creditors the greater the likelihood of them accepting the proposal however there is no requirement to repay your creditors in full. Provided you carry out what you promised to do in the proposal you will, in a typical IVA, be free of your debts in approximately 60 months
The benefits of an IVA are- Frozen interest payments and an agreed monthly payment amount
- A fixed repayment term (usually five years)
- Protection from action by creditors or debt collectors
- When the IVA is completed any unpaid debt is written off
- An IVA avoids bankruptcy and any adverse publicity