A guide to Debt

INDIVIDUAL VOLUNTARY AGREEMENT (IVA)

This is a legally binding agreement between you and your creditors. You would need to prepare a proposal in which you specify your current financial status, the history behind it and, what you can afford to pay; then put the proposal forward in the hope that it gets accepted. This proposal is forwarded to all creditors and, if more than 75% accept it, then this agreement will be legally binding, and the creditors cannot chase you for any outstanding amounts.

Some creditors may also accept a one off lump sum payment in full and final settlement.

Benefits of an IVA are that it is legally binding so, once agreed, the creditors cannot contact you or arrange court action against you in any way. The interest rates will be frozen and your contributions will be based upon your ability to pay.

The requirements to be put forward on an IVA are: that you must have at least £15,000 worth of un-secured debts; at least a regular income of £200 a month available for payment in to the IVA, because the creditors need to get at least 25% of their money back before they will consider starting the IVA; and owe 3 or more debts to different institutions.

In order to apply for an IVA you need to contact a licensed Insolvency Practitioner.
Again you must shop around because some can prove to be very expensive.

For more information on IVAs you can read our Advantages and disadvantages of IVAs or go to frequently asked questions about Debt