IVA stands for Individual Voluntary Arrangement and they are designed to help you to find your way out of debt. They are a little more involved than a debt management program and they are usually run over a 60 month period. The main idea is to write everything that you have coming in and everything that you have going out. An affordable monthly plan is then agreed on and the company managing your IVA will then negotiate with your creditors.
Many people see IVAs as an easy way out of their debt. However, this is not strictly true. Often, companies only allow you to take on an IVA if you are really struggling. With so many people in debt, they need to know that you are truly in need of help. So, if you are just about getting by but you would like extra help, an IVA may not be for you. It is only if you really, honestly cannot afford your current repayments that certain companies will help you.
Are IVA's Legal?
Once the repayment plan has been agreed by all parties, the IVA becomes legal. Therefore the rules cannot be broken and you have to stick to the monthly repayments. Sometimes you will get a rest period when you do not have to start repaying the loan for certain amounts of time in order to give you a little break financially. However, you will have to look around to see if any IVA plans do offer this option.
One of the main advantages of IVA's is that they do often write off a lot of your debt. You simply make repayments for 60 months and then, once finished, you are debt free, even if you have not fully paid off all of the balance. However, not all creditors write off your debt, so make sure that you understand the agreements of the IVA. In most circumstances, creditors are happy to receive a bulk of the money owed rather than nothing and that is why they often write off some of the debt owed. It is a lot better than you declaring bankruptcy and then they don't get a penny.
Overall, IVA's can help and thousands of people have found them helpful. However, you have to really be struggling and you have to stick to the agreement once made, as it is legally binding.
