what is an IVA?

An IVA (Individual Voluntary Arrangement) is drawn up by an Insolvency Practitioner. It is an agreement to pay a set amount each month and usually lasts for 5 years. The interest on the debt is frozen and if the debtor keeps to the agreement, the debt will be cleared after 5 years. 75% of the creditors must approve before IVA can be set up.

The payments are based on what an individual or household can afford and not everyone will qualify. An IVA can be set up if you have around a minimum of £15,000 - £20,000 of unsecured debt. There is no maximum amount. So no point in trying to set up an IVA if you have debts of £8,000.

You must prove that you have a stable monthly income (though these days can anyone say that they have?). The minimum monthly payment is from £250-£300, again there is no maximum. So you must be able to prove that you can keep up the payments for the 5 years. If you default then you will be made bankrupt.