In this arrangement the mortgage repayments comes before the rest of all the other creditors as it is treated as a main priority debt. It is a very good option for people under huge debts; however, it is best to keep the following in mind while considering the arrangement:



•If the borrower fails to complete the obligations under IVA, he/she may risk bankruptcy and may also loose the property.

•If the borrower has equity in the house, which is the sale value that exceeds the outstanding mortgage and balances to other secured creditors, the creditors look forward to a portion of the equity, which is usually around 75%. This generally takes place when the debtor is in a position to re-mortgage the property to release the capital, which can be early as three years after the debtors signs the IVA.

•There could be clauses in the IVA agreement that can limit the debtor’s ability to reduce the size of the mortgage during the life of the IVA programme as it states that if the debtor receives any additional income during the tenure of IVA, it will be put forward for the benefit of his creditors.

Debtors with 3 or more creditors and debt of more than £15,000 can apply for IVA UK. The monthly repayments are chalked out keeping in mind the debtor’s financial capability, his state of affairs and his disposable income, which is usually the money earned excluding expenses for essential living and mortgage payment. This legal arrangement is preceded over by a licensed Insolvency Practitioner or IP. Following are the advantages of the IVA programmes for a debtor:

•One can easily avoid filing bankruptcy with this arrangement.

•As this program is legally binding on the creditors, they neither can pester the debtor for any further payments nor can make threatening phone calls to extract the payment.

•Although IVA UK is a private agreement, it benefits the debtor by not making the proceeding public.