Is an IVA the best option?

Evaluating your debt options...

We receive a lot of calls and emails from the public asking; "Is an IVA the best option?".

The decision to apply for an IVA or choose another option is an important decision and certainly one the debt advice team can help you make.

The IVA was introduced as an option for people in debt in 1986 in the Insolvency Act 1986 as an alternative to bankruptcy for people in debt.

The IVA is an option to get out of debt for people with the following criteria:-

Debts greater than £15,000
3 or more creditors. This can not be three debts to the same bank such as Barclaycard visa, Barclay Loan and Barclay’s overdraft. The Criteria required to accept an IVA must be separate institutions.
Disposable income over £200 per month, assets to release or a 3rd party to contribute into the arrangement.
You must be able to pay creditors at least a 25 pence in the pound dividend. Many IVA cases fail because applicants can not afford to make a decent monthly payment.
You should have a regular income stream. Those who have some good months and some bad months will have to make sure they can make a regular payment. Some IVA cases fail because applicant’s income is irregular or unreliable.
Applicants must be able to show they have allowed for reasonable necessary living expenses such food, utilities, travel costs, council tax etc. Creditors are constantly criticising those who state too much or too little for food. Some IVA cases fail because applicants spend too much on car hire purchase payments.
The insolvency practitioner must make a positive 'Nominees Report' which portrays a professional opinion as to whether the Individual Voluntary Arrangement - IVA is a bonafide offer. He or she will decide whether the applicant is going be reliable and thus perform the IVA successfully.

If these criteria are met, then an IVA will not be an option.

When deciding which option to take it is suggested you read up on the alternatives:

The Bankruptcy Option

Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. In the UK anyone can file for bankruptcy. You can either have a petition made against you for bankruptcy or you can apply to declare yourself bankrupt.

Bankruptcy may not be your only option especially of you are a company director or have an important career. Bankrupts lose all control of their assets, including possibly even their share of the family home. The trustee divides up the assets and shares them out among the bankrupt's creditors. Before deciding to go bankrupt you should check first whether an IVA or another option may be more appropriate.

The Debt Management Option

Debt management is an option which involves; One affordable monthly payment, a stop to letters and phone calls from creditors and also no need to borrow money. If your debts are not too large and you have a regular income, then Debt Management could be an option for you.

The Trust Deed Option

A trust deed is a form of bankruptcy, and bankruptcy is always a tough option. While people must take responsibility for their choices, they should be given the information that they need to make the choice that is right for them. You should read our trust deed information if you are considering the trust deed option. This will include information on the alternatives to a trust deed.

The IVA Option

The IVA option that should be looked into if you do not want all the disadvantages of going bankruptcy such as stigma and bad credit. If your debts are over £15,000 an IVA could be your best option for reducing debt quickly and in a legal manner. It means people you owe money to will not contact you, your debts will be cleared in a specific time period and your monthly payments are reduced.

The advantages of the IVA option are listed below:

For Sole Traders or Company Directors the IVA option allows them to continue trading and will not affect a person’s directorship status at all.
An IVA can write up to 75% of debt off
In an IVA it is easier to get a mortgage.
An IVA will stop all interest on the debt.
The IVA will leave the client debt free after 5 years maximum.
After an IVA is completed the debts are clear.
In a IVA you can keep your property.
In an IVA you get to keep control of your assets.
An IVA is better for your career progression.
If you can do an IVA you can still be a director of a limited company.
An IVA has less social stigma than bankruptcy.
An IVA is easier on you credit rating than bankruptcy.
In an IVA it is easier to get a bank current account, whereas in bankruptcy it is very difficult.

Money Advice Direct exists to make sure the public is fully advised about all your possible options - from IVA to loans, so that you can make the right decision that best suits your individual situation.

If you wish to discuss the debts options and understand how they can help you please complete the following form or telephone freephone 0800 074 6918. This is a free no obligation service, at the end of which the team will be able to give advice as to the options available to you, answer any questions and ensure you are completely aware of the costs and implications of each option.

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IVA's

The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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Is an IVA the best option?

Evaluating your debt options...

The IVA is an option to get out of debt for people with the following criteria:-

The Bankruptcy Option

The Trust Deed Option

The IVA Option

The advantages of the IVA option are listed below:

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