The Individual Voluntary Arrangement (IVA)

An IVA is the Equivalent of a Protected Trust Deed but is only available in England, Wales and Northern Ireland. IVA's have helped thousands of people who face severe financial problems.

Ms E had went through a divorce over five years ago and lived with her grown up kids in a rented house through her local authority. She had debt outstanding at approx £40,000. Her debts were two loans and a couple of credit cards.

After the divorce there was only her income and Child Support payments from her ex husband. As the kids were 18 she didn't receive any child support and was struggling to pay her creditors. She was robbing Peter to pay Paul and had reached her limits on both credit cards.

After looking at all avenues Ms E has decided to enter an IVA.

The nominee looking after her case had sent out the proposal to Ms E and also to her creditors. Ms E had a disposable income of £300 per month. The monthly contractual payments for debt added up to £920 per month.
The meeting of the creditors took place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E could look forward to a new beginning. Ms E now pays £300 per month into her IVA and will pay this until the IVA is complete at the end the rest will be legally written off. All interest and charges were frozen. (Unless the IVA terms are not met then these can be added back on).

Ms E could now see light at the end of the tunnel and had no assets that the supervisor would consider liquidating so she now had peace of mind.

To be suitable for an IVA you would need to meet the following criteria;

- Unsecured debt must be £12,500 or over
- You must have a monthly disposable income of £200 or greater
- You must live in England, Wales or Northern Ireland
- You must be in full time employment

Benefits Of An IVA

Your IVA would be legally binding meaning no further charges or interest could be added. It also means your creditors are not able to change their mind if they agree to your proposal

You will only be asked to make affordable repayments

An IVA enables a professional person (doctor, accountant, solicitor etc) to continue to practice whilst resolving their debt problem

Bankruptcy may affect their professional status. You may have to check your employment contract to ensure you can enter an IVA

You are likely to be able to keep your home within an IVA, usually
the Insolvency Practitioner will only be interested in any equity

You would face fewer credit restrictions entering an IVA compared to bankruptcy

Negatives Of An IVA

Any available equity in your house or other asset would have to be released for your creditors

An IVA is legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors will proceed with bankruptcy

Your income and expenditure will be reviewed on a frequent basis which can mean your monthly contribution could fluctuate up as well as down

Your IVA would be noted within your credit file and it would remain there until you complete the IVA, and for a year after that

An IVA usually lasts for 5 years, whereas Bankruptcy would only last for 1 year

Avoiding Credit Card Debt Problems - Debt Advice And Support

Credit cards are a way of life for people all around the world. Credit cards can be a useful tool which support us all when we are needing a little financial help. When waiting those extra couple of days before pay-day it can also help to have the ability to buy that treat for ourselves.

While it can be useful to have a credit card because you actually can use credit cards without racking up credit card debt as long as you have the knowledge and the will to do so. While most people will use the their credit facility wisely many have found themselves using the card to pay for the day-to-day cost of living, especially when they are out of work or having financial problems already.

The best way to manage your credit card debt is to manage your finances. This means setting up an income and expenditure to be able to see how much money is left over each month. Sometime people may find that they have less money at the end of each month than they did to begin with. In these instances reductions in expenditure will be required if possible.

Start by writing down all of your income and expenses. Household expenses include your phone, gas, electric, tv and any other household costs. Now subtract your expenses from your income. If you have a negative income you will need to cut what expenses you don't need to come into a positive. It is also a good idea to figure in money for emergencies (if you don't have an emergency fund) and money to put into savings.

Now that you have your budget set, you will need to stick to it and not over spend where it is unnecessary to do so. If in debt then it would be best not to use credit facilities (until after the debt has been resolved) which could further your problem.

If this method doesn't work/help then it would be best to seek professional debt advice from a charity/company who will be able to offer a range of solutions including general advice, debt management, iva, trust deed, lila, debt relief order, bankruptcy and sequestration. For some of these solutions a person may need to have more debts than credit cards but it would not be exclusive.

While a lot if these solutions can be hard to understand or to asses but there is help available to those who want to know what options they have at their disposal.