Would an IVA be right for me?

If you are struggling with a high level of unsecured debt that you can’t afford to repay within a realistic amount of time, then an IVA (Individual Voluntary Arrangement) may be right for you.

To be eligible for an IVA, you must, in most cases, be able to commit to making regular, reduced monthly payments for 5 years (the length of a typical IVA). However, this may vary depending upon 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 how much you can realistically afford after your essential costs (mortgage/rent, secured debt repayments, utility bills, etc.) have been covered. This means that you
will be left with very little disposable income for the duration of the IVA.

Because an IVA is a legally binding agreement, creditors cannot change the terms – or back out of it altogether (unless you fail to keep up with your side of the agreement) – once the IVA has been approved by enough lenders.

An IVA is seen by many as a preferable alternative to bankruptcy, as it avoids several of the downsides. For example, an IVA is very unlikely to force the sale of your home.

It is important to note, however, that homeowners who enter an IVA may be required to release some of the equity in their home during the 54th month of the agreement. This will be used to pay more to their lenders.

Once the IVA comes to a successful conclusion, any remaining unsecured debt will be written off.

Should I look into other debt solutions?

Before you commit to any debt solution, you should always speak to a professional debt adviser. They will be able to discuss your circumstances with you and help you decide on the best way for you to
tackle your debts. They’ll be able to explain the drawbacks of each solution – for example, the fact that an IVA will affect your creditnrating for six years from the time it starts.

Even if you meet the criteria mentioned above, it doesn’t necessarily mean that an IVA is right for you – it depends on your current circumstances, both financial and personal.

If you know you can repay your debts within a reasonable amount of time, then an alternative debt solution, such as a debt management plan or a debt consolidation loan, may be more appropriate.