Know about an IVA?

An Individual Voluntary Arrangement (IVA) which is a legally binding agreement between those persons who are having debt and with creditor. It allows each individual in financial difficulty to make a formal proposal to settle their debt within a reasonable and fixed period of time (generally 5 years). Any kind of interest and debt charges will have to be frozen and creditors will be strictly prohibited from demanding of additional payments. An Individual Voluntary Arrangement (IVA) involves creating monthly payments based on an affordable disposable income. As soon as the final payment is made, any outstanding debt is legally written off. As thus the arrangement can write off up to 95% of your total debts (subject to your circumstances).

Pros with an IVA

• There isn't the mark or publicity that comes with bankruptcy.
  
• The debtor, via the insolvency practitioner, is involved in the choice of assets made available to the creditors since the arrangement is designed to suit debtor's situation. All this is providing the creditors are no worse off than if bankruptcy had taken place.
• Creditors who vote against the IVA are by it as long as 75% of the creditors agree to it.
• A debtor can still be a company director, in the armed forces, hold public office, retain their professional status or trade under a business name.
• There isn't the stigma or publicity that comes with bankruptcy.
• The debtor is able to operate a normal current account, as long as it does not have an overdraft facility.

Cons

• Usually only suitable if the debtor has unsecured debts of at least £15,000
• Creditors representing at least 75% of the value of the debt, as well as a simple majority, must agree to the proposed arrangement for the IVA to be approved.
• IVAs usually last for five years
• The home and assets of the debtor can still be at risk if the creditors decide not to exclude them.
• If the IVA doesn't work out well, the debtor can still be made bankrupt.
• All IVAs are recorded in a public register & will almost automatically appear on your credit file.