Everyone has heard of Individual Voluntary Arrangements these days. After all they are heavily advertised on daytime tv and daily newspapers. Often abbreviated to IVAs, they offer people in debt a possible alternative to going bankrupt. So how, you might wonder, do you know whether an IVA would be a good solution for you?
One word of caution here before we even get started…there is a further alternative nowadays called a Debt Relief Order (DRO) and if you have debts below £20,000 and not much in the way of assets (no assets really) and no surplus income then you should probably look at a DRO first. They are cheaper at just £90 and you are in and out of it in 12 months.
If your debts are greater than £20k, or you have assets, or you have some monthly surplus income then it may be that you need to consider entering into an IVA and avoid the alternative that you might be facing of bankruptcy.
The main feature of an IVA is that it is generally a 5 year Arrangement with your creditors during which you will make 60 monthly payments into the IVA for your creditors. If you own your own home and there is equity in the house then you might need to arrange a remortgage to release some of the equity or as is often the case, extend the period of the IVA in lieu of the equity in the property.
We shall give you one very good piece of advice which was passed to us by some specialist personal insolvency advisor contacts of ours who work with IVA companies in Liverpool and all over the north-west. Take great care when preparing your income and expenditure account. In fact prepare it before you even get on the phone to an IVA firm. No-one knows your income and expenditure better than you do and preparing it carefully in advance will help ensure that the IVA company has a full and accurate set of figures. This is VERY IMPORTANT!! The Insolvency Practitioners will use it to work out what you can afford to pay each month in your IVA. We understand that a number of people enter into an IVA with very little care and attention paid to true affordability. It is all very well getting an IVA agreed but if you can’t afford the monthly payment, the IVA may fail and you will be exposed to possible actions against you by your creditors.
Be careful picking your IVA company as well. Make sure you are comfortable with them when you speak with them and that you are happy with the advice and service they are providing to you. Unfortunately, some IVA firms are better than others. You may want to be especially careful if you are self-employed as some IVA firms often lack the required expertise in dealing with such cases. Don’t hesitate to shop around and ask lots of questions. IVAs last a long time and you want to be sure that you will be working with a firm that you are going to be happy with over a 5 year period.