Individual Voluntary Arrangements, also known simply as IVAs, have become more widely known over the past couple of years, with awareness about this course of action raised through a range of advertising from IVA specialists. This is a debt management tool that has become known as a softer alternative to bankruptcy. In order to be eligible to go down the IVA route you need to meet specific requirements and this includes having unsecured debts of at least £15,000, you or your partner being in full time employment, and owing money to a number of creditors.

First of all it is important to remember that an IVA is not something that should be taken lightly, as the consequences can be long term and can really impact upon your financial future. There are many other debt solutions available that will not cause such long term problems, and these should be looked into before an IVA is considered. However, there are cases where the borrower has no real chance of paying off their debts, and this is where the IVA route can prove invaluable.

There are a number of benefits that borrowers can enjoy when going through an IVA, but it is important that you ensure that an IVA is the right course of action for you. You can do this by speaking to a specialist debt counsellor or even by discussing the issue with an adviser from the Citizen’s Advice Bureau. If you decide to go down the IVA route you should make sure that you can honour this legally binding agreement, otherwise you may find that the creditors are no longer prepared to accept you on an IVA program.

The benefits of an IVA include:

Easier financial management: You will only have to make one payment each month rather than making separate payments to a range of creditors, and this can make it far easier to manage your finances. You will make one set repayment each month to your IVA case officer and this will then be distributed amongst your creditors depending on how much your original debt with each creditor was. Payments will be made on a pro-rata basis.

Increased affordability: Your monthly repayments will be set at an amount that you can comfortably afford without overstretching yourself, and will be based on your income and outgoings. This amount will be set by your IVA case office at the start of the plan, so you know exactly how much you will be paying out each month and you will only have to make on payment, which will then be distributed amongst your creditors on your behalf.

Getting out of debt faster: With an IVA plan in place you could be free of debt far quicker. In most cases the IVA is set up for a period of sixty months, and once you have made the set repayment for that sixty months any remaining money owing to your creditors will be written off, and the debts will be cleared.

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• Keeping up with your secured loan repayments

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