Who Should Consider an IVA?
If your debts are spiralling out of control than an IVA could help you to take control of your finances and help finally rid you of your debts. In order to be eligible for an IVA you must be insolvent, which means you can no longer pay off your debts without help. You must also have debts of at least £15,000 to three or more creditors. If you can afford to pay a minimum of around £200 a month for at least five years and have a steady monthly income then read on.
Try Debt Management First
It's recommended that you first approach your creditors with an informal debt management arrangement, if this fails, then an IVA should be considered. If you owe a lot of money to numerous creditors then the chances are that an informal arrangement is simple impractical.
Use IVA Before Bankruptcy
Similarly, if you are looking at the other end of the scale and facing possible bankruptcy then look at an IVA first. If you're homeowner then an IVA is a better solution as you will be able to retain your property. Although having said that, the majority of creditors would look at taking equity from your home as part of the repayment deal.
An IVA should also be a considered option for anyone who works in financial services, operates a business or works in a profession where you could lose your job if you were to be made bankrupt.
If you have access to a large sum of money then consider taking the IVA route, you might be able to negotiate a formal arrangement with your creditors whereby they accept the whole lump sum with the remaining debt cleared.
IVAs aren't suitable for those who struggle to get by from month to month. Ideally you need to be on a high monthly income as the minimum payment is £200. If you think this could be a struggle then consider an alternative debt solution such as a Debt Relief Order as missed payments can result in your creditors making you bankrupt.
In summary, an IVA should be consider before bankruptcy so long as you can meet the minimum criteria and can afford to pay the monthly repayments over a period of 5 years. An IVA not only protects your assets but allows you the freedom to continue working regardless of the industry you're in.
Related Articles:
- Alternatives to Bankruptcy
- IVAs - The Good and the Bad Points
- Bankruptcy or an IVA?
- IVA Benefits and Drawbacks
- Brief Bankruptcy Guide
Site is for information only and does not constitute financial advice. E&OE.
