Individual Voluntary Arrangement: Is It Your Best Option?

If you are struggling to repay your debts, you are not alone. The many uncertainties affecting our personal finances are causing thousands of people to struggle with debt issues. Not taking the right action will only allow these debts to get further out of hand; it will make settling them even more difficult.

Royalty free photo

You actually have a lot of options when it comes to dealing with debts. Consolidating multiple unsecured debts to reduce costs and the monthly payments is one way to get started. Another viable option to consider is Individual Voluntary Arrangement or IVA. How can you tell if an IVA is your best option? Here are some of the things to consider.

The Requirements

An Individual Voluntary Arrangement or IVAcan help you clear different types of debt in an affordable way. You basically consolidate most (or all) of your debts into a manageable monthly payment. That said, the IVA is not without its limitations.

For starters, you need to be dealing with at least £5,000 in debt from two separate creditors to qualify for an IVA. In some cases, your debt principal amount needs to be higher than £15,000. You also need to have the ability to pay a reasonable amount every month.

Fortunately, figuring out if you qualify for an IVA is rather easy. You can visit IVA Online and use the provided calculator to determine if you can use IVA as an option to solve your debt issues.

The Outcome

As long as more than 75% of creditors agree to support your IVA, you can quickly convert several unaffordable monthly payments into a single amount that you can actually avoid. What you need to do is make sure that the new amount is within your budget.

After completing the IVA period, usually after a period of six years, remaining debts from creditors included in the IVA will be written off. You also have the option to repay your debts in a lump sum. This is a handy option to use if you still have a mortgage.

On the other hand, failing to keep up with your IVA payments could lead to further debt issues. Think of an IVA being your last line of defence; you want to stick to the plan and be debt-free at the end of the period.

The Creditors

As mentioned before, most of your creditors need to agree to the IVA before the process can start. You have to have 75% of your debts – calculated from the value of the debts rather than their amounts – included in the IVA program.

Again, you have the program itself on your side. Many IVA providers will assist you in negotiating with the lenders. They are also in charge of distributing your monthly payment proportionately. With the agreement of all creditors in your pocket, you can start the IVA process.

You will have an advisor reviewing your expenses and income. The IVA payment can be as little as £70 per month depending on what you can actually afford, so it is a fantastic option to use when you are struggling with multiple debts.