• Aug

    IVA stands for Individual Voluntary Arrangement and this is a legal, formal arrangement by which you can pay back debts, and in the process sometimes shed some of the debt too. IVA’s stand somewhere between administration orders and bankruptcy. The reason they exist is to allow people with more than £15,000 in unsecured debt to address their debt issues without going bankrupt.

    There are a number of advantages but the main one is that you don’t suffer an actual bankruptcy, whereas you may well do under the same circumstances if there was no IVA in place. This will help with issues of self esteem going forward and is less of a serious personal and financial issue. IVA’s are also not publicly announced and this can be a major factor in deciding to go forward with an IVA as opposed to a straight bankruptcy. Other advantages include: the ability to keep many of your assets (an agreement regarding assets is usually in your favour in return for you making monthly payments going forward), the ability to shed some of the debt (often IVA’s will allow you to only part pay debts depending on your circumstances), the ability to keep your home and/or equity in it (again decisions about your assets are more lenient than bankruptcy), and .. there are less restrictions than a bankruptcy (eg you can continue to trade in business etc).

    On the downside, IVA’s usually mean you will pay more of your debts than you would in bankruptcy (even if not 100%), the IVA will be recorded on your credit file, you will be restricted from taking out new credit during the period of the IVA, administering an IVA is quite expensive (more than an administration order for example), and the IVA must be adhered to otherwise your creditors can still make you bankrupt. If you can come to an informal agreement with each of your creditors then it would be wise to do this prior to considering either an IVA, a bankruptcy or an Administration Order.

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