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An should aid anyone who is beset by problems clearing their debt. It is an particularly tempting offer to homeowners who are at risk of losing their home if they were made bankrupt.

An IVA could help if;
Your creditors have already refused to accept an informal debt management agreement
You formerly had an informal arrangement, but you could not adhere to its provisions.

You have so many creditors that an informal debt management arrangement would not be practical. You could be made bankrupt, alternatively you have already become bankrupt and you want to reverse that position. You formerly had an informal arrangement, but you could not keep up withits provisions.

Your lenders have declined an informal debt management arrangement
You could be made bankrupt, alternatively you have already become bankrupt and you want to alter that situation.

You have so many creditors that an informal Debt Advice arrangement would be impractical.

You may have a small company which you would be unable to keep operating if you became bankrupt. You would lose your job if you are made bankrupt, jobs such as solicitor, accountant, the armed forces, police. You have a significant amount of disposable capital but it is still not enough to completely repay your lenders. You want a formal arrangement with your creditors to receive that lump sum and write off the balance of what you owe.

You have equity in your house. You will not necessarily lose your home if, with the agreement of the IP and your creditors, it can be kept out of the IVA or Individual Voluntary Agreement. However, your creditors will usually want as much of the equity in your house as they can acquire. With an IVA you are less hampered restricted as with bankruptcy. For example, with an IVA you are not obliged to notify your building society. So you can still be able to use your bank account.

The Disadvantages of an IVA
If you are unable to comply to the terms of your IVA, then the Insolvency Practitioner who is supervising your Individual Voluntary Agreement or your creditors, can ask for your bankruptcy.

If 75% of your lenders fail to acquiesce to your proposed IVA or Individual Voluntary Agreement you are subsequently back to where you started. It will be 12 months before you can make another IVA proposal. You should carefully consider your proposal.
If you are a mortgagee, it could be that under the terms of the IVA or Individual Voluntary Agreement you have to sell your house. An alternate method is to include a clause in your IVA whereby you have your home valued after an agreed time frame with a view to releasing the “equity” in your house at that time, to your lenders. Your lenders may agree to you paying monthly IVA instalments for an additional year to cover the amount of equity in your home.

If your financial position changes and you are unable to afford the payments, unless your Insolvency Practitioner can persuadeyour creditors to accept a revised contract, your IVA will end. This will mean you are facing bankruptcy.