Individual voluntary arrangement (IVA)

 Despite the name, this is a court ratified arrangement with creditors. Often a large element
of the debt is written off.

Advantages

• Opportunity to write off a significant amount.
• Interest can be frozen.
• Can repay over time (usually 5 years).
• Legally protected.
• Creditors must stop chasing debt.
• Discreet solution.

Disadvantages

• Creditors have the right to vote against proposal.
• Regular monthly payments must be met.
• IVA fails if monthly repayments stop and this could lead to bankruptcy.
• In the fourth year it is usual for the debtor’s assets to be revalued and any increase
  allocated to creditors.
  

Case Study IVA
Mr A had amassed £37,000 of unsecured debt costing £75O a month to service. He had a regular,
high-rate tax income, few assets and debtDr advised him to seek an lVA. We arranged it agreeing with his
creditors that he would pay £175 a month over 5 years - a monthly saving of £575, effectively writing,
off 60% of his debt.