If you are in debt and your debts total at least £15,000 and are unsecured then an IVA otherwise known as an individual voluntary arrangement could be suitable for you as an option to becoming debt free. An IVA can be more suitable than bankruptcy and it is comes with fewer restrictions. However there are many considerations that you do have to take into account when considering an individual voluntary arrangement and it is not suitable for all individuals in debt.

In simple terms an IVA is an agreement that is made between the debtor (the one who is in debt) and the creditors (those you owe money to). You would work with an insolvency practitioner who will supervise the agreement while it is in place and is usually taken over a period of 5 years. During this time you would pay a fixed amount each month which goes to your creditors and once the period of the agreement reaches an end the rest of the debt would be written off.

There are many advantages and disadvantages to taking out an individual voluntary arrangement and you should take advice from a debt management specialist who will be able to answer any IVA questions you may have. An IVA is just one of the many solutions you can consider when in debt with unsecured debt but there are also other alternatives to consider and weigh up.

• You should have debts that total at least £15,000 when considering an IVA
  
• Only unsecured debts can be taken into account when considering an IVA. These would include such as credit card debt and unsecured loan debts
  
• You would have to have funds available to meet the cost of setting up an IVA
  

Here are some of the many advantages and disadvantages you should take into account in comparison to other debt solutions.

• An IVA comes with fewer stigmas attached than taking bankruptcy as it would be a private agreement between the debtor and their creditors. If you choose bankruptcy then this will be advertised in the local newspaper
• An IVA is usually taken out over 5 years though it could be longer whereas bankruptcy will usually be discharged in 1 year
• If you have your own company then you will still be able to trade and earn an income
• An IVA will remain on your credit file for up to 6 years which will affect any future borrowing
• There will be fees associated with setting up an IVA and these can be considerable
• Your home could be at risk and you may have to sell it
• At least 75% of your creditors would have to agree to your IVA

Bankruptcy should really only be seen as the very last resort and in many times an IVA is more suitable. While at times it can be the ideal solution for many it would be huge mistake. There are many restrictions set on you if you are made bankrupt which usually make it a viable choice in the very extreme cases. An individual voluntary arrangement can offer much of the same relief for your debts than bankruptcy would which means it is worth considering. When you are made bankrupt your home and any other assets would be more at risk than if you look into taking out an IVA. There are certain jobs that you would not be able to have if you take bankruptcy which would include estate agent, councillor, magistrate or a company director.