An IVA goes like this: as it is a legally binding arrangement, it can only be set up by a licensed Insolvency Practitioner. This is good for you as long as this person will only recommend you to choose an IVA if this is the best option for you. He will also make an attentive examination of your eligibility, assessing your financial circumstances, and will surely tell you if other possible choices should be taken into consideration. But if you together with the Insolvency Practitioner choose an IVA, he will act as a supervisor during the process. So you are assured that everything goes right and both you and your creditors keep the terms and conditions.

But why are you recommended to choose an IVA?

What are the main advantages of this process? You should know that an IVA is not the best option for everyone with debts, and there are many debtors who are not eligible for it either. However, for those who have essential debt and many problems with making the monthly payments, it can be a very good and effective solution. You might ask: ‘Why?’ It is because after making an IVA, you won’t have to worry about your creditors’ legal actions. You will have lower and realistically affordable monthly repayments, and an IVA lasts for a fixed period of time, which is usually no longer than 5 years. So you will know from the very start the exact date when you are finally debt-free. Moreover, after the IVA is over, the outstanding balance of your debt will be written off, and you’ll owe nothing.

It’s essential to see the IVA’s compared advantages over bankruptcy. The most important thing is that you do not have to sell your home. It is true that you might be asked to release some of your equities, but this is bearable in some measure compared to selling your house. You will also get rid of a court process, and more than that, an IVA will not disqualify you from certain jobs which bankruptcy certainly does.

Let’s go on and see the specific advantages of an IVA for the individual, the sole trader or a partner. For the individual debtor, an IVA has many benefits. Perhaps the most important of these is that the debtor escapes from the severe consequences and restrictions of bankruptcy. The costs of an IVA are also lower than they would be in case of bankruptcy, which has very high administrative fees. Their careers will not be put at risk, and this is attractive principally to accountants, lawyers, policemen, directors or to those who work in the financial field. An IVA also offers the debtor the benefit of making his or her own proposal and accommodating his or her own circumstances. It is possible for the debtor to exclude his or her property from the IVA. For a sole trader, on the other hand, the main benefit is the ability to continue to trade. Without this, the trader would not have the necessary income towards paying the creditors. More than that, by choosing the IVA, one does not loose the chance to get personal credit although this might be quite difficult in practice to obtain.

Besides the former advantages, you can also think about the possibility to run a small business which would be almost impossible if you went bankrupt. More than that, you can still use your bank account and you do not have to tell you have an IVA, and your credit rating will not be as severely damaged as it would be the case with other options. Another benefit of an IVA over bankruptcy is that your name will not be published in the local paper, as an IVA is a private agreement between you and your creditors. But it is true there is a searchable insolvency register on the internet.

Let’s move on and try to have a look from the other side. Why are creditors likely to agree with an IVA? The primary reason is that they believe an IVA provides a higher return for them as it would be the case if you filed for bankruptcy. The administrative costs are also lower for an IVA than with bankruptcy. More than this, an IVA is regarded as an insolvency case. As a result, creditors can still reclaim tax relief against bad debts.

As a short reminder let’s go over some of the benefits and advantages of choosing an IVA as a debt solution. First, you will have lower and realistically affordable monthly payments. Then, if an IVA is agreed, it becomes legally binding for all the creditors, even for those who have not voted for it. Creditors cannot make you pay further fees or interest, and they cannot ask for payments either. So there will be no harassing calls or letters any more. More than that, if you manage to pay regularly, you are protected from your creditors’ legal action, and after the completion of the IVA you are debt free! In this way up to 70% of your total debt can be written off legally. Is it unbelievable? The process also protects your home as you can most probably exclude your house from the IVA. Moreover, you can still use your current bank account, and an IVA will also help you to fix up your credit rating. And finally, your professional status will not be affected by an IVA. On the other hand, creditors also prefer to choose an IVA because they can still claim tax subvention for the bad debt. So there is nothing to stop you to make a successful Individual Voluntary Arrangement and become debt-free! Just keep on your monthly payments and believe in your final success!