More than half us would consider taking out an Individual Voluntary Arrangement if we were faced with serious debt. 40% of people said they would only consider an Individual Voluntary Arrangement (IVA) as a last resort, but a further 11% said they thought that such arrangements were perfectly acceptable. So says a recent report.
At the same time, 17% said IVA’s were a good alternative to bankruptcy and 9% said they thought IVAs would help alleviate debt and should be made more widely available. Worryingly though, 49% of people said they didn’t know what an IVA really was. To us that’s not surprising. After all why would you go to the trouble of reading up about IVA’s if they were of no interest to you?
So for those that are interested, an IVA is a form of insolvency in which unsecured creditors agree to freeze interest payments on debts and write off part of the debt in return for a set amount being repaid each month for a term of usually 5 years. (Please note: In Scotland, their equivalent to an IVA is a Trust Deed.) But once entered into an IVA will demolish your credit rating for many years. Even getting everday credit such as a mobile phone contract, will be almost impossible.
For people suffering from over bearing debts, an IVA may be an ideal escape route. However, they are not something you should enter into lightly and without considered thought. You also need to take professional advice.
Government figures have showed a 55% jump in the number of people taking out an IVA in England and Wales during the start of this the year.