IVA Advice

Introduction to IVA Advice

Due to the introduction in the late 1980s of Individual Voluntary Agreements, or IVAs, bankruptcy is no longer the only option for those that find that they have lost control of their financial debts. Bankruptcy is not only a costly affair, but also a highly publicised one. Debtors not only lose the control they have over their personal property during a bankruptcy proceeding, but their credit ratings also suffer irreparable damage. This is what makes the option of an IVA so much more beneficial in so many respects.

Benefits of an IVA

Unlike in bankruptcy, the amount of income an individual earns is taken into account with an IVA. This creates much lower monthly payments for the life of the IVA, and any payments remaining at the end of the arrangement are written off. From the date of the arrangement, all of the charges such as interest will be frozen.

There are much fewer restrictions applied to an IVA that there are to an actual bankruptcy. Business owners, for instance, do not run the risk of their businesses being taken or frozen; however, the business owner must make the best possible offer to his or her creditors in order for the IVA to be approved. For instance, if there is an asset that is deemed not necessary to the livelihood of the individual, he or she will be required to sell said asset. He or she is not required to sell items such as his or her home, but refinancing will be in order to help cover the costs of the debt repayment. Vehicles are other items that are not required to be sold. When an individual has been declared as bankrupt, it is still an option to avoid bankruptcy by filing for an IVA.

Drawbacks of an IVA

Any unsecured debts may be added to an IVA arrangement; however, secured debts cannot be included. The repayments that are required of one to pay on a secured loan can be counted in the Individual Voluntary Agreement. What this means is that the payments required on the IVA may be lower because of the individual's responsibility to repay the secured loan amounts as well. Also, as with bankruptcy, any child support payments that an individual is responsible for paying cannot be included within an IVA agreement.

It is extremely crucial to adhere to any and all terms specified by the IVA and failure to do this can result in one of the creditors petitioning the courts for the individual to have to file for bankruptcy as the IVA would then be dissolved.

Except for credit that is deemed necessary to an individual's survival, such as that of his or her livelihood, any credit applications the individuals fills out at the time will not be approved and many times, will be reported to the agency handling the IVA.


In the long run, it is much more feasible for individuals whose debts are not that great to try to obtain an IVA before declaring bankruptcy. Bankruptcy will stay on one's credit report for a minimum of seven years, whereas an IVA is discharged and expunged as soon as the creditors have been satisfied.

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