Single IVA

An IVA (Individual Voluntary Arrangement) can be a very effective way of clearing unmanageable debts. It`s a legally binding agreement with your lenders in which you`ll repay as much of your unsecured debt as you can afford over a set period of time, after which the remaining amount will be written off by your lenders.

IVAs are often considered a preferable alternative to bankruptcy, as they avoid many of its potential downsides. That said, bankruptcy can be a better option for some people.

What is a `single` IVA?

All IVAs tend to work in the same way on a basic level, but the way they are arranged can vary, depending on things like how many people are involved.

A `single` IVA simply means an IVA for just one person - unlike a joint IVA, which may be suitable for someone whose finances are linked with someone else`s.

How does an IVA work?

If you have spoken with an Insolvency Practitioner and they have advised you that an IVA is your best option, they will work with you to draw up an IVA proposal - the initial proposal outlining the terms of your IVA, such as how much you can afford to pay to each of your lenders, and how you`d pay it.

This proposal will be sent to your lenders. 75% (by debt value) of voting lenders must approve these terms for the IVA to go ahead.

If it`s approved, you`ll begin making regular payments towards your debts - usually once a month for five years, although this can vary depending on what is agreed. At the end of this period, your lenders will write off any outstanding unsecured debt and you`ll be legally debt-free.

Please note, though, that entering an IVA will have a significant negative impact on your credit rating for six years from the time it starts, and that you may need to release equity from your home (if you`re a homeowner) in the final year of the IVA, so you can pay your creditors more.

Is an IVA right for me?

You will only be eligible for an IVA if you can demonstrate that you can`t afford to repay your debts within a reasonable period of time. You must also be able to commit to regular monthly payments (usually at least £200, but this can vary). If this isn`t the case, you may have to consider another debt solution.

Finally, even if you are eligible for an IVA, you may still find that bankruptcy is a more appropriate option. You should always speak with a debt adviser before you make any decisions.

For more information, click here or call 0800 195 2911 today.

Tags: debt, iva, single iva

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