An Individual Voluntary Arrangement (IVA) can be an excellent debt solution. It is used by over 4000 individuals each month to resolve their debt problems.

The Arrangement enables you to settle your debts over a fixed period of time (normally five years) by making a single affordable payment which covers all of your debts. During this time your creditors are not allowed to charge you interest or continue to harass you. At the end of the 5 year period if any of your debt is still remaining this is written off leaving you debt free.

However an IVA is not a magic wand and must not be entered into lightly. It is not always the most suitable debt solution for everyone.

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Not everyone will qualify for an IVA

The clear advantage of an IVA is that your debt repayments are brought down to a single manageable amount, interest is frozen by law and the fact that a significant portion of your debt is actually written off.

However in order to propose the Arrangement to your creditors a number of criteria have to be followed. Generally speaking your total unsecured debt will need to be at least £6,000.

In addition you will need to be able to prove a sustainable income and that you can afford to pay a minimum of £100 per month towards your debts.

If you are unable to do this, it may still be possible for you to take advantage of the IVA process. However you will need to offer a lump sum to settle the arrangement in full up front. Such a sum could be made available from friends, family or the sale of a property.

IVA is not suitable for everyone

Even if you meet the required criteria for an IVA, the arrangement may still not be right for you. Secured debt such as a mortgage and car HP cannot be included in the Arrangement. The payments to these kinds of debts must be maintained or you risk losing your property or home.

In addition, much like other debt solutions, a student loan company debt cannot be included. As such, even where other unsecured debts are written off student loan company debts will remain even after the agreement has finished.

If you are a homeowner and equity is available one of the requirements will be to release money from your property to put towards your debt. This is normally achieved through re-mortgaging in the final year of the IVA. If this is not possible then the IVA payments will be extended for 12 months.