The Individual Voluntary Arrangements is a legal contract between you and your lenders and is supervised by a Licensed Insolvency Practitioner. The purpose of this agreement is to enable you to reach a compromise with your lenders and avoid the consequences of bankruptcy and other financial adversities.
The agreement enables you to reduce your existing debts to an affordable level and clear them over a fixed period of five years. The compromise should offer a larger repayment towards your total debt burden than could otherwise be expected were you to be made bankrupt. You can even take out a fresh loan of secured category while in an IVA. What’s more, it is a totally private arrangement as nobody needs to know about it apart from you, your IP and your creditors. An IVA ensures that your home is protected from the threat of repossession and your job is not at risk.
You make one single manageable monthly payment, based on your affordability, for 3-5 years. After that time frame, the remaining debt is wiped clean, leaving you completely debt-free. This means that an IVA can write off up to 75% of your existing debts in a convenient manner. However, under the terms of the Individual Voluntary agreement you undertake to contribute towards your debt burden as much as possible within your budget. So in actual practice, an IVA presents an opportunity for you to pay whatever as you can in a manageable way that you can afford.
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