IVA: everything you need to know

Serious debt is becoming a common problem amongst many individuals in the UK. If you are struggling to repay your creditors and your monthly payments are only managing to repay the interest on your current debt, then a serious solution is needed.

Fortunately, IVA’s are available which can help you rid yourself of debt over a generous period of time, allow you to avoid bankruptcy, and get your life back on track. IVA’s are becoming increasingly popular throughout Britain as the most accessible solution to debt-free living. If you have never heard of one before, then here is everything you need to know:

What is an IVA?

An IVA (Individual Voluntary Agreement) is a plan which is set up between an individual and a creditor for serious debt of £10,000 or more. When taking out an IVA against unsecured debts, all interest is frozen.

The individual begins to pay off as much of their debt as possible over a period of time agreed upon by the creditor, with all remaining debt that an individual cannot afford to pay erased. It is an agreement based on what you can afford to pay.

What can it do?

The most important thing that an IVA does is freeze your interest. Interest that accrues on a serious debt can leave an individual trapped in an endless cycle in which actual debt cannot be repaid and where regular monthly payments simply cover the interest.

This is a serious problem and in many cases can result in bankruptcy. To avoid this, an IVA is drawn up to ensure that all interest is frozen, bankruptcy is avoided and over a period of time, (usually around 5 years) your debt is cleared.

What are the main benefits of an IVA?

Avoiding bankruptcy at all costs is the one major benefit of an IVA. To be declared bankrupt is the most damaging economical scenario that you can find yourself in.

If you are bankrupt you may find it difficult to do many things; these can be as simple as buying and using a contract mobile phone to more serious considerations such as finding a place to live.

An IVA, from Harrington Brooks for example, will help you avoid this and get yourself firmly back on your feet. Similarly, freezing your interest, as previously stated, is another main benefit. These factors will help you eliminate your debt and give you a fresh start through the struggles.

What are the other benefits?

One fringe benefit of an IVA is that you will no longer be hassled day and night by your creditors. This can have a profound affect on individuals and cause untold amounts of stress, friction, insomnia and in many cases, depression. When embarking on an IVA your creditors will ease off completely, allowing you a greater amount of freedom to pay back your debt when you can.

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