Individual Voluntary Arrangements

If you are significantly in debt, that is a figure upwards of twenty thousand pounds, chances are that you have considered filing bankruptcy. That is not your only option. You may have also heard of IVAs or Individual Voluntary Arrangements. These types of arrangements are similar to bankruptcy in that the term is often five years to full clearing of your debts. It does not, however, carry the stigma of bankruptcy, nor the legal implications. Essentially, an Individual Voluntary Arrangement is made between yourself and your creditors through an agent that specializes in such arrangements. In many cases, up to seventy five percent of your debt can be absolved, leaving you much more quickly out of debt and stress free.

An Individual Voluntary Arrangement is a formal and legally binding agreement between the borrower and the lender that, in most cases settles the debt for a lower amount and insures that the lender gets payment quickly and efficiently. If you own a home, you may be required to release some of its equity, either as a loan to pay back creditors, or to secure a loan. This means that if the arrangement terms are not met, you are at risk of losing your home. It is imperative, as such, that you agree to terms that are within your power to meet.

All of this sounds very scary, but there are a lot of benefits for the borrower in seeking out this kind of arrangement before things get too far out of hand. For one, all of your interest and finance charges on the accounts get frozen in place. Following the five year period through which payments are made, the remainder of your debt is typically written off. At the end of this time, you do not have the legal stigma on your record of having filed bankruptcy, but your record is clear and you can begin rebuilding your credit.

Individual Voluntary Arrangements are initiated by the borrower, but are administered by a professional who will get the best deal for you, the borrower by creating a plan and proposal to your lenders that has your best interests in mind. This provides you with a bit more piece of mind than writing the creditors yourself, and not knowing exactly how to go about repairing your credit. There are several agencies and organisations in the United Kingdom that can help you with the process of creating an IVA, and many of them offer free consultations to find out if there is a better solution for you.

Individual Voluntary Agreements are an available solution for citizens of Northern Ireland, Wales, and England, but are not available in Scotland. They are not the best solution for everyone, and if your debt does not exceed ten thousand pounds, there are probably less drastic options for you. However, if your debt is out of hand to the point that you cannot see any light at the end of the tunnel, and IVA is a great alternative to bankruptcy that can grant you the piece of mind that you have been seeking.