Things are bad – really bad. You can’t manage your debt and as it mounts still higher making even the minimum payment on all your obligations becomes increasingly difficult or impossible. Facing the fact that you are in over your head you may start looking at your options for debt management including the dreaded bankruptcy. But before you decide to file for bankruptcy consider an IVA.

An IVA or Individual Voluntary Agreement has several benefits over filing for bankruptcy. An IVA is an agreement between a debtor and creditor that is legally binding. It allows a borrower to pay a portion of the total amount owed over a period of usually five years. By paying only what is affordable the creditor agrees to write off the remaining debt.

Whereas in bankruptcy you have publicly declared insolvency, an IVA allows you to avoid the credit disaster that bankruptcy creates and keeps your payments reported as paid as agreed. This has implications for after the five year time frame has run its’ course as you can actually improve your credit rating during the IVA pay off period.

With an IVA your creditors must first agree to the terms set forth by your provider. A provider is a third party who will examine your income and debts and prepare a plan to present to your creditors. Being debt free is attainable to many – even those with current financial situations that appear dire.

Bankruptcy should be used only as an absolute last resort, and an IVA is a good alternative to this. Things may be bad, but they can start to look better.