What is an IVA?

Individual voluntary arrangements are just one of the financial products available if you are looking for an extreme debt management solution.

Up to your neck in debt? Drowning in bills? Getting threatening letters from debt collectors? If all avenues of clawing back credit seem to be closing there is one option available that might suit you - IVAs or Individual Voluntary Arrangements.

Extreme debt management solution

Individual voluntary arrangements are a step away from bankruptcy and so are only suitable if you have exhausted other debt management strategies.

An IVA can be suitable if:

• You owe a significant amount of debt, usually no less than 16,000.
• You are unable to find another debt management solution that is suitable for your situation.

The advantages of an IVA are that it allows you to pay back as much as you can afford over five years. Interest and penalties are frozen, avoiding the stigma and credit blacklisting of bankruptcy and your home is not at risk.

Potential benefits include:

• After 5 years, the remainder of your debt - up to 75% - is written off.
• The monthly repayments will be based on what you can realistically afford, not what creditors ask for.
• If you came into a lump sum of money your IVA provider could negotiate for you to pay off an IVA early.
• Once your IVA has been approved, creditors cannot take any further action against you, which means you don't have to risk your home or assets.

Potential drawbacks include:

• IVAs do cost. Typically £2,000 to set up and a further £5,000 in administration fees.
• You will need to stick to a budget for the five-year term.
• If you have assets of excessive value, creditors can ask that they are released for the benefit of the creditors.
• If you wish to exclude your property from the arrangement, you will probably have to make extra payments for a further 12 months.
• If you win the lottery or come across a large sum of money you will need to declare it.

For debt management solutions visit MRA Business Solutions at www.mradebthelp.co.uk, or call 0800 612 92 23.

For independent financial advice, visit our sister company Mike Robertson Associates at www.mraltd.com. You can email an independent financial adviser for professional help, or call 0870 803 1995.

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