An IVA or also known as Individual Voluntary Arrangement is a formal solution which allows you to repay back an affordable monthly payment to your creditors. The term usually lasts five to six years and any remaining debt after this period is written off allowing you to be debt free. It is one of the insolvency acts introduced in 1986 and many people are taking advantage of this Government legislation. In an IVA you gain more control over your assets as opposed to bankruptcy.
The amount you pay each month goes to an Insolvency Practitioner who will split the amount to your creditors. An Insolvency Practitioner is someone that is licensed and will handle your IVA case. Any threatening letters from your creditors (the companies you owe) are completely stopped and the interest and charges on your debts is frozen.
How much you pay per month in an IVA is decided on an initial consultation when going through your Income and Expenditure. Let’s take a look at a typical example below.