When your debts have risen to levels where you feel you can no longer meet your monthly repayments or see a realistic end to paying your debts back you may feel bankruptcy is the only option left open to you. In many instances this is simply not the case because an IVA can help you deal with your debt situation and avoid the need for a full-blown bankruptcy.

IVA’s provide significant benefits to those with debts they unrealistically are expected to repay.

Firstly, an IVA will provide a definite time limit on how long you must make repayments and they usually last for five years though this may be flexible depending on your individual circumstances. If you satisfy the conditions of the IVA you can be completely debt-free after the period allotted is over though you may still have your mortgage payments to meet.

This leads on to another major benefit of an IVA – you do not need to give up your home. If you are a homeowner, bankruptcy generally means your home will be sold and the proceeds will be used to repay your creditors. Obviously this means you and your family will no longer be living there and it is a major blow and source of worry for people in serious financial difficulties. An IVA will not affect your home as it is not used to repay your creditors.

In practice an IVA is going to reduce your monthly repayments to your creditors who will collectively agree to take a slice of what will be assessed as a realistic total monthly payment you can make. If you currently have debt repayments of say, ₤800 per month you could end up paying as little as ₤200 per month if your financial assessment demonstrates this is what it ought to be.

But if you are paying only such a reduced amount for a limited period of time, doesn’t this mean you will not pay everything back to your creditors?

Exactly right!

A chunk of your total debt is going to have to be written off by your creditors who are looking for the IVA as a means by which they at least get something from you rather than nothing or get caught in a situation where it will be too expensive for them to collect the money from you. This is yet another major advantage to an IVA – a lot of your debts are going to be forgiven and the lenders cannot come after you for this if you maintain your IVA payments.

By the time people are considering an IVA they will already be dealing with collection agencies, bailiffs, County Court Judgment applications and a whole range of matters which create a great deal of stress and worry such as telephone calls at unsociable hours or even at your place of work, people knocking on your door and threatening to take your car and belongings and so on. Once you have started the IVA process, all of this will immediately cease as the matter is now being dealt with under the legal process and you are protected by the court.

If you think an IVA is for you, then there are IVA companies that will assess your suitability. The alternative is a debt charity like the CAB.