An Individual Voluntary Arrangement or ‘IVA’ is a legal substitute to bankruptcy introduced as part of the Insolvency Act 1986, which is a government law. Originally, IVAs were introduced as a solution to business insolvency but increasing levels of consumer debt has led many non-professionals to consider this option as an alternative to bankruptcy.

An IVA is a legal contract between you (the Debtor) and the companies that you owe money to (the Creditor), which enables you to reach a compromise with your creditors rather than resorting to Bankruptcy. Because the agreement is formal, it must be set up by the licensed professional, which is the Insolvency practitioner.

Basically, an IVA means that your debts will be reduced to a more affordable level for you and eventually cleared over a fixed number of months. To help you work out what is affordable to you, an IVA advisor will work with you. The advisor will also tell you whether this is the right option for you and whether you are eligible to be put on this programme.

Once you have qualified for an IVA, you will make one single monthly payment based on what you can afford for a fixed period of 5 years. This is undoubtedly less stressful than trying to keep up with the repayments for several different creditors! After 5 years, all amounts outstanding to creditors are erased and you become completely debt free!

Choosing an IVA as opposed to any other option (e.g. Debt Management Programme or Bankruptcy) is becoming more popular for people who are struggling to pay debts to their creditors. This is increasingly becoming a problem in the UK and our related articles (link to articles) will tell you why.

Finance Inc. has IVA advisors who will explain how the process works, determine whether you are eligible for an IVA and if so, take you through your application.

Sounds too good to be true? Need to know more about how an IVA works? Then please read on using the various links around the site.

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