Individual Voluntary Arrangement
Individual Voluntary Arrangement
An individual voluntary arrangement also known as an IVA, allows a person in debt to avoid the stigma of bankruptcy by coming to a payment arrangement with creditors. An individual voluntary arrangement allows a debtor to pay creditors a percentage of what is owed over a set period of time. An individual voluntary arrangement is essentially a haggling process between debtor and creditors that avoids bankruptcy and court action against the debtor. An individual voluntary arrangement must be arranged by an insolvency practitioner and is a legally binding declaration. Individual voluntary arrangements vary from person to person because the amount paid back depends on the level of debt owed by the individual. Advantages of an individual voluntary arrangement include:
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Having as much as 65 per cent of the debt written off (this does depend circumstances)
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At the end of the fixed period the debt will be completely cleared
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How much is paid back is assessed constantly depending on the debtor's situation and changes accordingly
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The avoidance of bankruptcy which can be demeaning
You could apply for an individual voluntary arrangement if you owe £12,000 or more. It is one way of clearing debts but it is important to get advice from a professional before going ahead.