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An individual voluntary arrangement (IVA) is one of the most effective ways of dealing with personal debt problems, but will involve making some changes to the way you live your life. Should you have accumulated more than £15,000 in unsecured debt, such as credit card balances and personal loans, to at least three different creditors, you may be eligible for an IVA. Debt solutions like this have a number of advantages, including that you can avoid bankruptcy and get your finances back on track without losing your home. The agreements can also result in your creditors freezing interest charges and writing off some of the money you owe - up to 75 per cent of the balance in some cases. But arranging an IVA is not simple and you will need to agree to stick to a payment schedule for at least five years after you have done it. So you must be certain you are capable of changing your spending habits and exercising financial discipline going forward. Your first step towards securing an IVA is to seek independent advice, as there may be some more suitable options that will allow you to clear your debts more quickly or it might be your problems are too severe and that bankruptcy is the only realistic route. If an IVA is the best choice, you will need to seek advice from an insolvency practitioner. They will assess your financial position and put together a plan to take to creditors, detailing how much you can pay back and over what period, as well as the sum that needs to be written off. If 75 per cent of the creditors approve the arrangement, you can start working towards becoming debt free. You will be required to stick to a strict payment schedule for the duration of the IVA, although the monthly sum should be affordable based on your income and outgoings. If you miss repayments, you risk invalidating the agreement and exacerbating your financial woes. So it is important that you draw up a budget that involves reducing your outgoings and spending much more modestly. The sort of things people often overspend on, such as socialising and clothes, are usually the easiest to cut back on, giving you a head start as you search for savings. It is also a good idea to spend some time shopping around for the cheapest energy deals and examining pre-pay options, as they minimise the risk of unexpectedly large bills. The other thing to be aware of is running up further debts during the term of your IVA. Steer clear of store cards and personal loans entirely and if you are worried about a return to bad habits, cut up your credit cards to avoid the temptation to overspend. If you have financial problems and think an IVA may be the answer, get in touch with Debt Options. We offer a range of debt solutions and our expert staff will be able to recommend the best choices for you.
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