The Individual Voluntary Arrangement - What You Need to Know

By S Young

The Individual Voluntary Arrangement is a revolutionary provision for all individuals out there struggling to cope with heavy debts and is actually a viable alternative to declaring yourself bankrupt. As a result, the Individual Voluntary Arrangement can actually enable you to limit the amount of damage that you do to your credit rating!

An Individual Voluntary Arrangement is:

  • A formal agreement between yourself and your creditors
  • A document reducing the amount your pay back on your debts to make them more manageable for you.
  • An arrangement set up via an Insolvency Practitioner to ensure that all parties involved maintain it.
  • Usually completed after five years. After five years you will become debt free and all your remaining debts will have been paid off.
The provision for the Individual Voluntary Arrangement was made in the Insolvency Act of 1986 to try and help individuals become debt free without having to file for bankruptcy, and to help creditors recover as much of the debt as possible. All income and assets should be assessed during the initial stages of the application to establish just how much you can afford to pay. This may include:

  • Regular income
  • Savings and investments
  • Income from third parties
  • Assets, such as an endowment policy

All of these assets can actually determine just how much you can afford to pay back. Only disposable income is taken into account so an individual applying for an agreement will be able to afford the bills and housing costs, as well as having enough left over to eat and enjoy life to a certain degree!

In the same way that bankruptcy involved court action, so does an Individual Voluntary Arrangement. The court must be informed and appoint the Insolvency Practitioner to help you and to supervise your repayments over the years governed by the agreement.

All in all, an Individual Voluntary Agreement can be a good idea for many individuals facing the breadline and deliver peace of mind. After the stress that comes from being heavily in debt, this will no doubt make a welcome change!

Individual Voluntary Arragement

Need debt help? Visit http://www.debt-managing.co.uk/iva.php for some professional advice.

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