Loan Media Inc

If you are experiencing financial difficulties then you may be considering an Individual Voluntary Arrangement (IVA) as a solution to these problems. Although they can be a good solution to debts, IVAs aren't suitable in all situations and so how do you know if an IVA is right for you?

A major factor in whether entering into an individual voluntary arrangement is the best option for you will be the amount of money you owe. IVAs are intended to assist people with significant debt problems. They were first introduced by the government in 1986 as a viable alternative for people who would otherwise likely declare bankruptcy. Generally IVAs are designed to help people with debts of at least £15000 therefore if you owe less than this amount then you should likely consider other options such as a debt management plan.

The way that an individual voluntary arrangement works is that your debts are consolidated into a single regular monthly repayment. This payment is then made for a fixed period of time (usually five years) after which any remaining unpaid debt is written off. For an IVA to be right for your circumstances you must have the means to make these monthly repayments. Therefore anybody entering into an IVA must be employed and have a regular income. The size of the payment will be based on what you can afford on your current income after essential expenditures. For the IVA to be agreed you must be able to afford to make payments of an amount sufficiently high enough to satisfy your creditors.

A third factor in whether an IVA is right for you will be the type of debts you have. Certain types of debts including mortgages, secured loans and student loans can not be included in an IVA. For an IVA to be an option your debts should be unsecured for example, credit cards and store cards.