If you are struggling with a high level of unsecured debt that you cannot afford to repay within a realistic amount of time, then an IVA (Individual Voluntary Arrangement) may be suitable for you.
To be eligible for an IVA, you must - in most cases - be able to make regular reduced monthly payments for the duration of the agreement.
In general, an IVA will require you to make these payments to your IP (Insolvency Practitioner) for 5 years - however, this may vary depending on the terms of the agreement and whether you miss any payments during the course of the IVA. The payments you make will be based on what you can realistically afford and will be distributed amongst your creditors as agreed in the terms of the agreement.
Before an IVA can go ahead, voting creditors who collectively 'own' 75% or more of your debt have to agree to the terms laid down in the IVA Proposal which you and your IP have drawn up.
An IVA is a legally binding debt solution, which means that once it begins, creditors can't change the terms of the agreement, or back out of it altogether - as long as you keep up with your side of the agreement.
If you are a homeowner, it's very unlikely an IVA will force the sale of your home, but you may be required to release some of the equity in your home during the final year of the agreement, so you can pay more towards your debts.
When the IVA comes to a successful conclusion, any remaining unsecured debt will be written off.
Please note that an IVA will affect your credit rating for 6 years from the time it starts, potentially making it harder and/or more expensive to obtain further credit during that period.
Should I consider an alternative debt solution?
It is important that you contact a professional debt adviser before committing to any debt solution. They will be able to assess your financial situation and help you come to a decision on the approach that's suitable for you.
Even if you are struggling with unmanageable levels of unsecured debt, you may find that an IVA isn't the most appropriate debt solution - it depends on your individual circumstances.
If you are unsure if an IVA is for you, you should seek professional debt help. A professional debt adviser will offer guidance on a range of products including debt consolidation,
bank accounts, IVAs, mortgages and personal loans.
