IVAs have become a popular tool to reduce debt and work out personal solutions for thousands of households in the UK threatened with bankruptcy. Originally designed for business insolvencies, an IVA has quickly turned into the option of choice for many private individuals, with their overall number today well exceeding that of bankruptcy applications. Clearly, there must be an inbuilt advantage over some of the traditional techniques at the disposal of debtors and creditors.
What is an IVA?
The term Individual Voluntary Agreement itself already spells out some of these benefits: An IVA effectively constitutes a private agreement between you, as a debtor, and your creditors and therefore allows for far more flexible solutions than the rigid framework of a bankruptcy procedure. At the same time, it also ensures greater legal protection than an informal debt management plan. By combining what may seem to be paradoxes, it thus offers advantages to both sides of the deal – even to creditors, who stand a good chance of receiving more of the sum owed to them than in case of a fully-fledged insolvency.
What are the Benefits?
The main benefit of an IVA, however, is that it allows you to renegotiate your debt according to your own circumstances and needs. These circumstances and needs may be based on assets not normally available in bankruptcy, including, for example, the use of third party funds or income from your continued trading or employment. Thereby, an IVA provides you with more say in how your assets are dealt with than in case of a bankruptcy. Importantly, an IVA will also protect you from the most radical effects of a bankruptcy, greatly improving your chances of finding a new job, among others. Since an IVA is essentially a private agreement, it will, to a certain degree, allow you to keep living your life and pursue your goals for a debt free future.
Getting Help
Having said this, not every IVA is a success and it requires careful preparation from your side to reap its benefits. Make sure to get professional assistance to find out the all-important details and whether an IVA constitutes the right choice for you in the first place. At the Debt Advisory Line, we’re working with the IVA-specialists of our sister company Mitchell Farrar Insolvency Practitioners LLP, which means you’ll be in the hands of experts with years of experience in the field of IVA advice. Don’t hesitate to call our free IVA line at 0800 157 7254 for further information.
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This post was written by...
Robert – who has written 317 posts on The College Investor.
Robert is the founder and editor of The College Investor, a personal finance site dedicated to young adult and college student finances. You can learn more about him here and connect with him on Twitter or Facebook.
