An IVA (Individual Voluntary Arrangement) is a debt solution for people in serious debt. It's a less severe option than bankruptcy as it usually lets you keep your house and car, and it has less social stigma associated with it. AN IVA is drawn up by an Insolvency Practitioner and it is an agreement to pay a set amount each month 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. To start an IVA you must prove that you have a stable monthly income. The minimum monthly payment is around £250-£300; again, there is no maximum, but you must be able to prove that you can keep up the payments for the 5 years.

If you don't, you might face the danger of bankruptcy which you were trying to avoid in the first place. In this case, your IVA fees won't be returned. So if you think you won't be able to make your monthly payments, it might be better to declare bankruptcy straight away instead of starting an IVA and put the money you'd be otherwise using for IVA fees towards paying off your debt.

If you owe less than $15,000 or you're afraid that paying a fixed amount to your creditors for 5 years might be challenging for you, then the IVA is not the best solution for you. You could be better off with another debt solution, like a consolidation loan or Debt Management. In any case, it is important that you seek professional debt advice to help you deal with your money problems.

Source: Article Source: http://EzineArticles.com/?expert=Ola_Powazynska