If you are unable to pay your debts and are facing bankruptcy, then an IVA or Individual Voluntary Arrangement might be the correct alternative for you. It is a formal repayment proposal arranged between you and your creditors through an Insolvency Practitioner. Under this program, you pay your creditors a percentage of what you actually owe them over a period of 5 years. The payment can be based on your capital, income, third party payments or a sum combined from these. Discussed below are the current features of an IVA.

Criteria:

• The amount of your total debt is above £15000.
• You have three or more creditors; these creditors cannot be from the same lending institution.
• You have a fixed disposable income above £200 per month, assets whose equity can be released or a third party that could make payments for you.
• You have enough allowance for your necessary expenses like food, utilities and travel costs
• A nominees report from your Insolvency Practitioner which shows that an IVA is a good faith offer from your side.
• Creditors that hold 75% or more of your debt must agree for the IVA to be approved

How an IVA functions

Once your application for the IVA is accepted, a repayment amount based on your current financial condition will be assessed. You have to make payments of this amount to your Insolvency Practitioner who will distribute it to your creditors.

Advantages of an IVA

• All interest and charges are frozen
• An Interim Order from a court of law can be placed which prohibits your creditors from making any sort of demands.
• It is legally binding.
• Upon successful completion of your repayment, you will be considered free from your debts regardless of the fact that you have not paid the original amount
• It is a private agreement between you and your creditors
• It won’t stop you from continuing your professional career.

If you undertake an IVA program, you will have to give up your current credit like credit cards and store cards. You will also be forbidden to take additional unsecured loans while you are under the program. But such prohibitions are slight when compared to the fact that an IVA can save you from the public humiliation of a bankruptcy. It is rather a highly regarded and practical way of managing your debts.

Summary

An IVA is a formal repayment proposal arranged between you and your creditor through an Insolvency Practitioner. Under this program, you pay your creditors a percentage of the total debt over a period of 5 years. An IVA is a practical alternative to bankruptcy.