Solve Your Debt Situation With An Individual Voluntary Agreement

Debt is a huge problem all over the world, since the credit crunch the situation has spiralled out of control leaving many people in financial difficulty even close to bankruptcy. If bankruptcy feels like the only way out, there is another option available and that is with an individual voluntary agreement otherwise known as an IVA.

So what is an individual voluntary agreement? This is when a licensed insolvency practitioner supervises a legally binding agreement between the creditor and the borrower. The Insolvency practitioner will ask the debtor to provide them with monthly earnings and outgoings, then they will need to work out if the debtor can afford to pay the money back to the creditor.

An IVA can help the debtor solve his or her financial problems by reducing the total amount that is owed, however the creditor normally has to make a sacrifice on the total amount that is owed to them. It is not an ideal option for the creditor but at least the company will be getting some of the money back that is owed to them. An IVA is a better alternative then bankruptcy and can take a lot of pressure off the debtor.

The Insolvency Practitioner will go through the agreement with both creditor and debtor, when both parties agree with the terms, a contract will be drawn up, which both parties will need to sign. As soon as the contract has been signed it cannot be changed, it also means that the creditor can no longer call or harass the debtor for money. If the debt is paid back in full and on time, the debtor can get up to 70% of his or her debt removed.

An Individual voluntary agreement does come with its restrictions, so they are not a viable solution for everybody. To qualify for an IVA you would need to have an unsecured debt of £15,000 minimum they will need proof that the debtor could not afford to pay this debt back. An IVA will normally be paid back within a term of 3 - 5 years. The individual will also need to prove that they are in long term employment and that they are able to afford to live on the money they are earning.

Final Thoughts

IVA's are great for individuals that are on the brink of bankruptcy, however IVA's should be looked into with caution, as it can still have a long term adverse effect on future finances not to mention the credit rating.


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Steve Smith writes for Inter Financial where we offer all kinds of debt help, from individual voluntary arrangements IVA's to debt consolidation loans. Visit Today http://www.inter-financial.co.uk