S Rush, Gateside

“I was getting nowhere with minimum payments and falling further behind. With 65% of my debt written off I can finally see a light at the end of tunnel.”

Individual Voluntary Arrangement

(the list below is designed to highlight some of the main features.)

An IVA is an Arrangement made between you and your creditors when you are unable to meet your monthly commitments. It must be supervised by a licensed Insolvency Practitioner and normally lasts for 60 months.

Pros

• You only pay back what you can afford. In the vast majority of cases over half of your debt is written off at the end of the term. (Do not be misled by other companies that claim 75% or even 90% of your debt will be written off, most creditors now require at least 40% of their money back).
• It is a private agreement between you and your creditors and as such you avoid the stigma of bankruptcy.
• It is legally binding and as such offers protection from creditors. Once approved even those creditors that voted against it are not allowed to contact you.
• Once you have supplied your documents, the Insolvency Practitioner dealing with your case will do all of the hard work by drafting your legal proposal and negotiating on your behalf.

Cons

• You are not allowed to take out credit whilst in the Arrangement and this will be reflected on your credit file. Once the Arrangement is over you are free to take out credit again but will need to rebuild your credit rating to obtain the best rates.
• Most Insolvency Practitioners appreciate that things change over five years and can accommodate things like a short term loss of income, however if you fail to co-operate and do not stick to the arrangement you will be made bankrupt.
• If you own assets of significant value (other than your property) they may have to be sold and the proceeds entered into the Arrangement.

Facts

• An IVA will typically write off 58% of your debt.
• IVA’s are increasingly popular. The number of IVA’s increased by 21.8% in 2009 to 47,641.
• Over £1.1bn was written off in 2008 as a result of IVA’s.

To find out if you qualify for an IVA, try our