Category: IVA
IVA stands for Individual Voluntary Arrangement, which is a formal debt solution available in the United Kingdom for individuals who are struggling to repay their debts. It is a legally binding agreement between an individual and their creditors, which sets out a payment plan that the individual can realistically afford. An IVA is typically used by individuals who have unsecured debts such as credit card debts, personal loans, and overdrafts, and who have a regular income but are unable to keep up with their debt repayments. It is an alternative to bankruptcy, which can have severe consequences on an individual's credit rating and financial future. To set up an IVA, an individual must work with an Insolvency Practitioner (IP) who will assess their financial situation and negotiate with their creditors on their behalf. The IP will then propose an affordable repayment plan, which is based on the individual's income and expenditure, and which usually lasts for five years. During the IVA, the individual makes a single affordable monthly payment to the IP, who then distributes the money to their creditors. Once the IVA has been successfully completed, any remaining debts are written off, and the individual is released from their obligations. An IVA can be a helpful solution for those struggling with unmanageable debt, as it allows them to repay what they can afford over a set period, while protecting them from further legal action by their creditors. However, it is important to consider all the pros and cons of an IVA and seek professional advice before making a decision.