Individual Voluntary Arrangements (iva): The New Debt Solution?

The UK is facing a debt crisis fuelled by over spending and over
borrowing In June of this year personal debt in the UK broke
through the £11 trillion barrier and Britain’s personal debt is
reported to be rising by £1 million every 4 minutes
The rise in the number of people seeking to set up Individual
Voluntary Arrangements (IVA), the government’s much touted
alternative to bankruptcy, demonstrates both the extent of the
problem and the perceived advantages of this new debt solution
But is the Individual Voluntary Arrangement (IVA) really all
it’s cracked up to be?
Until very recently when people were overwhelmed by debt,
bankruptcy was the only solution However, the introduction of
the Individual Voluntary Arrangement (IVA) by the government has
created a new alternative to bankruptcy which is beneficial for
both the debtor and the creditor
The idea behind the introduction of the Individual Voluntary
Arrangement (IVA) was to enable people facing financial
difficulties to come to a formal agreement with their creditors
rather than having to face bankruptcy
If an Individual Voluntary Arrangements (IVA) is agreed between
the debtor and creditor:
* Interest on the loan is frozen * Legal proceedings are stopped
* The overall debt is reduced
An Individual Voluntary Arrangement is generally seen as a more
favorable option than bankruptcy from both the debtor’s and
creditor’s perspective
This is because there are no fees or legal proceeding involved
with an IVA, unlike with bankruptcy and unlike bankruptcy an IVA
doesn’t have any stigmas of disqualifications associated with
it Furthermore, from the creditor’s point of view, an
Individual Voluntary Arrangement offers a greater repayment of
the debt than would otherwise be achieved if the debtor were
made bankrupt
The only real disadvantages of an Individual Voluntary
Arrangement (IVA) are that you can’t borrow more money when an
IVA is in place (but this is a good thing since more borrowing
leads to more debt); an IVA tends to run longer than bankruptcy
(usually for 5 years) and it is possible that you might have to
release some of the equity in your home (or in another valuable
asset) as part of the IVA agreement
In conclusion, an Individual Voluntary Arrangement (IVA) can be
an excellent way of getting to grips with your debt issues by
allowing you to only repay what you can afford over an extended
period of time whilst avoiding the stigmas and restrictions
associated with bankruptcy

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