If you find it a struggle to meet minimum debt repayments and your unsecured debt level if over £12,000, you may be considering an IVA as your possible debt solution. An IVA (Individual Voluntary Arrangement) is a formal agreement between you and your unsecured creditors where you repay as much of your unsecured debt as you can afford over a typical period of 60 months and, on completion of your IVA, your creditors will clear debt which has not been paid.

Can I Clear my Debt with an IVA?

Struggling to make your debt repayments is a worry for many people who find themselves in this situation, and dealing with multiple unsecured debts, such as store cards, credit cards or personal loans, can be very difficult to manage if you find yourself slipping behind with these repayments. If this is you, you may be considering your debt solution options, and an IVA is one of these which allows you to clear a proportion of your debt.

Your IVA proposal allows you to make agreed payments towards your debt over a set period of time. IVAs have helped many of those who were struggling with debt and thought that being debt free was just an impossible dream. An IVA is a big commitment as you agree to an amount that you can afford to pay towards your debt and you must continue to make these payments until the end of your IVA agreement or else your creditors could start bankruptcy proceedings against you.

For the IVA to be agreed, 75% (by debt value) of your creditors must approve the terms of your IVA proposal. If this happens, your other creditors will also be bound by the terms even if they voted against the IVA. Once the IVA has been approved and is in place, it is a legally-binding agreement meaning that your creditors won’t be able to take further action to reclaim these debts as long as you keep up with your IVA payment commitments.

What Debt Can I Clear with an IVA?

An IVA does not include all of your debts. It can only cover non-priority debts including your credit card debt, store card debt, overdraft debt, catalogue debt etc. You can not clear any priority debt with an IVA, such as your mortgage or secured loan. However, an IVA will indirectly help make these more affordable to you since these outgoings would be taken into account.