Over the past decade banks made it easier than ever before for people to get access to loans and credit. This has unfortunately meant that more and more people have succumbed to ever increasing debt. Individual voluntary arrangements were set up in the 1980s as a way for people and businesses to work their way out of serious debt and avoid bankruptcy. An IVA is an agreement that you make with your creditors. You agree to pay a specified amount each month (usually at least $ 300 a month) for no more than five years, or a one-off lump sum (for example from remortgaging your home) and your creditors agree to write off the rest of your debt. Thousand of people enter into IVAs each year because you can cut your debt by up to 75%, all interest and late payment charges are frozen, you are protected from court action by your creditors and, once your repayments have been completed (this is generally over no longer a period than five years), your credit rating will be repaired.
If you have amassed a large number of credit and debit cards, store cards, catalog debts, overdrafts and personal and business loans, an IVA may be your best option to possible reduce your debt by up to 75%. Although you must be in a position to be able to afford either a lump sum or a monthly payment of at least $ 300 per month. You will need to hire an insolvency practitioner to propose an IVA to your creditors – you can not do it yourself. How much they charge you will depend vary on the area that you live and experience of the practitioner. Many will include their fee in your agreed monthly IVA repayment, so at least you will not have to find extra money to pay them on top of your IVA repayments. Always shop around for a reputable insolvency practitioner as hiring an incompetent ones will lead you to wasting the money that you pay upfront for fees. It is generally accepted that an individual must have debts of $ 20,000 or more in order to be able to take out an IVA through an insolvency practitioner. In order for the IVA to be completed and legally binding, 75% of the creditors of the individual's debt must agree to the terms in the agreement.