When to Choose an Individual Voluntary Arrangement (IVA)?

Explaining the early and late options within debt i.e. DMP to IVA and when to upgrade

When dealing with your debt, it is important to know what the best course of action to take is. There are a number of factors that determine what type of solution is best for you, be it a debt management plan, an Individual Voluntary Arrangement, bankruptcy or debt consolidation, but there are also personal individual factors that need to be taken into account.

One question that is often asked is: 'when is Individual Voluntary Agreement (IVA) best option for me?'

An IVA is a formal agreement between yourself and your creditors and usually proposed for a duration of 60 months (5 years), with monthly voluntary contributions being made. Because of this, a guaranteed level of income is needed to make sure that you are able to meet the contractual monthly contributions for the full term. If you have entered into an informal agreement with your creditors, such as a debt management plan and your situation may now have improved, where your employment is more secure or you have taken on a new job, then an IVA may now be the best option for you.

An IVA stops creditors from forcing you to sell your home, car or other assets. It puts an end to late payment penalties, and puts a cap on your debt so you'll know exactly how much needs to be repaid each month and can start a manageable repayment programme.

Another important factor to take into account is whether your creditors are looking to take action against you. Some types of action that your creditors could take are below:

- Petitioning for your bankruptcy - this could result in forced monthly payments and even the sale of any valuable assets (e.g. your home);

- Court proceedings including:

- CCJs

- Attachment of earnings - where payments to your creditors could be deducted from your salary;

- An application for a charging order where a debt is secured against your property, which could lead to enforced monthly payments. If this was to happen then a creditor could enforce this by demanding monthly payments which if missed could result in the repossession of your property which they would be able to enforce by further applications.

An IVA can provide you with the security which stops your creditors from taking any further action against you through court or from debt collectors, so you can stop worrying about bailiff visits or the possibility of bankruptcy. It includes your loans, credit cards, store cards and other unsecured debts in full.