IVA Advice – IVA Advice and Information

If you are thinking about consolidating your debt with an IVA the advice given on the websites and by the companies that offer them may be a bit prejudiced. While an IVA might be just what you need to get your unsecured debt load under control there is some information that you should know up front before going to a company and asking them to help you set one up.

First off let's take a look at exactly what an IVA or Individual Voluntary Agreement is and what it involves, this way you will be better able to understand the advice that explains the pros and cons of using an IVA to get your debt under control.

The IVA is legally binding contract between you and your creditors that is used to reduce and pay off your debts. The idea is to consolidate all of your unsecured debt payments into one single payment and within 5 years (6 in Scotland) you will have paid of the biggest portion of your debt with the rest being written off.

The requirements to undertake an IVA are that you have less than L15,000 in unsecured debt (this does not include debts like a mortgage or child support) that you can no longer afford to pay. You must owe this money to at least 3 creditors and you must have some form of income. If you think this all sounds good so far read on.

To establish an IVA you must be able to get 75% of your creditors to agree to the plan. This value is not based on numbers of creditors it is based on the amount you owe each creditor. If you can get 75% of your creditors to agree the rest are bound by law to accept the deal and most will anyway just so they can get paid a portion of what you owe rather than see you file a bankruptcy.

If you are still considering an IVA you need to make sure that the company you choose can negotiate with your creditors to get your debt reduced as far as possible. In most cases the Insolvency Practitioner who is handling your case will be able to reduce your debt by anywhere from 50 to 75%. If you come across a company that claims it can get your debts reduced by 90% you might want to look around or see if they are including another form of debt reduction as the average reduction in debt is only 50%.

The next thing you need to look at is your IVA monthly payment, the whole purpose of an IVA is to reduce your monthly payment so that you can afford to pay your essential monthly bills and take better care of your family, if the IVA payment does not do this you need to either try a different IP and company or find an alternative method of reducing your debt.

If you are still considering an IVA the best advice is to thoroughly check out any company you are considering using to make sure that they are licensed to perform these services. You should know to that there are free services that offer IVA advice and help such as the National Debtline, the Consumer Credit Services and the Citizens Advice Bureau. A properly managed IVA can be the perfect way to get out of debt, but only if it is handled properly from the beginning.