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Are there different types of IVA?

25 January2010

An IVA (Individual Voluntary Arrangement) can offer an alternative to bankruptcy for people struggling with unmanageable debt.

IVAs are considered by some to be a preferable alternative to bankruptcy, as they avoid many of bankruptcy`s potential downsides, such as losing your home. However, in some cases bankruptcy (or another debt solution) can still be a better option, so it`s important that you speak to a professional debt adviser before you make any decisions.

What types of IVA are there?

All IVAs are the same on a basic level - a legally-binding arrangement with your lenders in which you`ll repay as much of your debts as you can afford over a set period of time, after which your lenders will write off what`s left. On completion of the IVA, you`ll be legally debt-free and your lenders will not be allowed to pursue you any further regarding the debts.

However, an IVA can be arranged in a few different ways, depending on your situation. These include:

Single IVA

This is the standard IVA, and the most common: a single arrangement in which the debts are in just one name. If you`re married, this means it won`t directly affect your partner in the future, unless you have joint debts (although it could indirectly, since some credit checks look into the combined finances of married couples).

Joint IVA

If your finances are closely linked with someone else`s (e.g. your partner`s - married or not), you may be eligible for a joint IVA. This works in the same way as a regular IVA, but your eligibility for the IVA (as well as your monthly payments and other terms, if the IVA is accepted) will be based on your and your partner`s combined finances and creditor commitments.

Final settlement IVA (also known as Lump Sum IVA)

This is an arrangement in which you will not usually make regular monthly payments, as with most regular IVAs, but instead you`ll pay a lump sum to settle your debts. A situation in which this might be appropriate could be if you have a significant amount in savings but are unlikely to be able to commit to regular monthly repayments. Your lenders are only likely to accept this if they believe it is their best option for recovering their debt.

Remember: an IVA is a big commitment that will have a significant impact on your credit rating, and it`s important that you seek independent advice to ensure it is the most appropriate debt solution for you.

For more information on different types of IVA, click here or call our expert debt advisers today on 0800 195 2911.

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