What is an IVA and Are You Eligible?

Individual voluntary arrangements were introduced as an alternative to Bankruptcy for citizens of the United Kingdom in the 1986 Insolvency Act. In an IVA, debtors and creditors come to an arrangement that freezes interest, lowers monthly payments, and set pay off time at five years. At the completion of the five years, the debt is completely written off, up to seventy-five percent of the total debt. This allows people to get out from under massive debt amounts in five years. The voluntary arrangement stays on the person's record for six years and has less of a stigma than Bankruptcy.
One of the main benefits to an IVA is that people with an individual voluntary arrangement are allowed to keep their homes and many assets as opposed to having to liquidate them to pay off debt. Mortgages are excluded from the voluntary arrangement so the person must still keep up with mortgage payments. However, the mortgage amount is taken into consideration when the monthly payments are set for the arrangement. There is a list of criteria and individual must meet to be eligible for an individual voluntary arrangement, including size and type of debt, number of creditors, employment status, and assets.
If it is possible to liquidate some assets in order to pay down your debt level, you will not be approved for an individual voluntary arrangement. For the most part, you also have to be employed with a regular source of income. The exception to this may be if you are sick or disabled and receiving benefits from that while a partner or spouse is working and willing to be named in the arrangement. Insolvency experts say that you are more likely to be approved for an IVA if you have three or more creditors even though there is no legal minimum.
The size and types of debt that you have incurred are probably the biggest areas to look for. People seeking to set up an IVA must have at least fifteen thousand pounds in specific kinds of debt. These types include loans, store cards, Credit Cards, and catalogues and overdrafts. Self-employed individuals have extra areas, including tax and VAT. Secured loans and mortgages cannot be a part of the individual voluntary arrangement. The benefits to your financial future are extensive for going with an individual voluntary arrangement as opposed to Bankruptcy if you qualify for the eligibility requirements.

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