Avoid Bankruptcy And Discover The Advantages Of An IVA

At the moment, the UK is in debt more than has ever been known before. Mortgages, secured loans, unsecured loans and credit card debts total to billions of pounds and the overall debt is increasing by a whopping £1 million every four minutes, as of July 2007. With this in mind, it is no wonder that individuals are finding it harder and harder to cope with their own personal debts and are failing to keep up repayments. However, there is far more than their individual credit ratings at stake today. They face the very real threat of bankruptcy. Or at least they would do if there were no other viable solution. This is where the IVA comes in.

The Individual Voluntary Agreement, or IVA, is an arrangement that individuals put into place with the consent of their creditors in order to get rid of their debt within a fixed period of time. It can help them to get back on the straight and narrow where their finances are concerned. However, there are some conditions that may affect whether or not the IVA is actually put into place. Firstly, an individual would have to qualify. They would have to have debts totalling greater than £15,000 that are also more than their individual annual income, and they would also be unable to keep up with their monthly repayments. When the initial proposal is made, 75% of the creditors involved in the overall debt would have to agree to the IVA proposal in order for it to come into force and automatically and legally bind all of them to the agreement.

If you are considering an IVA as a viable debt solution then there are several advantages that may actually enable you to make up your mind one way or another as to whether you would like to set the process in motion:

• Your debt can be reduced by up to 75% – The whole point of an IVA is that you cannot repay your debt and so have to come to an arrangement with your creditors. As a result, your debt could be drastically reduced to a level at which you can afford to make repayments. Depending on your finances and your circumstances, you could actually have your debts reduce by up to 75%, but this is obviously subject to approval.
• You only have one fixed monthly payment to deal with – Instead of paying several creditors at different times of the month you simply have to manage one repayment, which is a fixed amount. There is never any variance of how much you repay and this can help you to manage your finances effectively and prepare for life after debt.
• The repayment schedule is based around what you can afford – There are no inflated payments with an IVA because the final settlement amount is based around what you can afford. You set the repayment level based on your proposal so that you do not have to struggle or live on the breadline for the duration of your IVA.
• Your debt will be gone in five years – Most IVAs last three to five years, depending on the level of your debt, after which the remainder of your debt will be wiped out. You therefore only have to stay in debt for the period of the IVA before starting afresh!
• Interest and charges stop – As soon as your IVA is put into place, all charges and interest stops. Your debt is frozen and you finally have a running total to pay off. Your debt reduces rather than increases and this can give you peace of mind that everything is in hand.

As you can see, the advantages of an IVA are great and may well prove to be a far better alternative for many than bankruptcy. You can manage your debt effectively and work towards that debt free day that may indeed prove to be a little chink of light at the end of the tunnel.