In recent years there has been an explosion in cheap credit and low interest rates which has contributed to greater numbers of people getting hopelessly into debt. Collectively British consumers owe more than £1 trillion on unsecured lending such as mortgages, credit cards, loans and overdrafts. The governor of the Bank of England remarked in May 2006, that Britons’ spiralling levels of debt could create difficulties for the economy in the future.

What to do when debt spirals out of control?

IVA (Individual Voluntary Arrangement) procedures were first introduced by the government under the Insolvency Act 1986 and were put in place as an alternative to bankruptcy. 

The legally binding procedures are designed to help people when debt spirals out of control and enables an individual to put forward a deal (the proposal) to the people it owes money to (creditors).

The purpose of an IVA proposal is to demonstrate to creditors that they would be better off if they accepted an individuals IVA proposal, in comparison to the individual being made bankrupt.

A typical IVA agreement will see a creditor / lender agree to write off a proportion of the debt owed to them which can be as much as 75%. In return the debtor agrees to pay a fixed proportion of their monthly income towards the debt for a period of five years.

Although the IVA procedure is much simpler and easier than bankruptcy, they should not be considered an easy option and for some bankruptcy might be a more suitable option.

An Individual Voluntary Arrangement is legally binding; it must be legally approved and supervised by a licensed Insolvency Practitioner. 

Simply complete our no obligation enquiry form to get FREE professional and impartial advice from a licensed Insolvency Practitioner, so you can be sure that you have all the facts and are choosing the best debt management solution.