IVA is the shortened named for an individual voluntary arrangement and it’s a debt solution which allows people to have a percentage of their debt written off.

The IVA is only available to people who’ve lived in England, Wales or Northern Ireland for at least 6 months prior to entering the solution. The equivalent debt solution in Scotland is called a protected trust deed.

What’s An IVA

An IVA allows people who are struggling with their debt to repay a percentage of it for 5 years and any remaining debt is simply wiped off.

In order to enter the IVA it’s important the person can’t repay the full debt but can prove they are able to repay a percentage of it.

Benefits of An IVA

Write off Debt

So long as the person entering the IVA doesn’t come into additional money during the period of the debt solution they will have some of their debt written off.

Additional money would include winning money, coming into inheritance, pay rise or something similar but this should be explained before enter an IVA.

Avoid Bankruptcy

A lot of people who have entered an IVA would have been forced to enter bankruptcy and still contribute a monthly payment to it but face harsher consequences.

A bankruptcy is often considered a lot more strict in regards to how much a person is allowed in their expenditure and what they can pay for.

Also in bankruptcy any assets someone has will be taken and sold with the proceeds of the sale being paid to the debts, while in an IVA they’re protected.

Protect Assets

If someone has equity in a property or other assets the insolvency practitioner will just add another year to the IVA, this is called the equity year.

It allows people entering an IVA to keep their property or other assets while still repaying a percentage of their debts over 6 years.

Negatives of an IVA

Credit Rating

A default is placed on the credit file of anyone who enters an IVA and lasts for 6 years, which cans stop people getting credit in the future.

The default is placed once the IVA begins and generally lasts for 6 years after the IVA has completed but people could still get some credit.

Additional Money

Probably the biggest down side to entering an IVA is any additional money some receives will be taken to pay for debts and IVA fees.

This means people could pay the full debt and fees if they win the lottery, come into inheritance or earn more money.

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