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The New Alternative Brits are Taking to Avoid Bankruptcy


In 2016, more than 790,000 people filed for bankruptcy in the United States. The United Kingdom have introduced new legislation through their Central Government to avoid following this path, but what exactly is an IVA? In England, if you’re struggling with debts and finances then you might find yourself considering an Individual Voluntary Arrangement (or “IVA”). An IVA can be a good solution for those with certain debt types but they’re not available to everyone so it’s important to look for IVA companies who can help point you in the right direction.

Is there a set criteria to enter into an IVA?

Yes.  You can only enter into an IVA in certain circumstances, i.e.:-

  • You have a least two separate debts (although these can be with the same creditor – for example, a bank loan and a credit card debt with the same provider)
  • Your debt amount exceeds £5000.
  • You can afford to make monthly repayments (usually a minimum of £100.00 per month)

What types of debts can I include in an IVA?

Most debt types can be included into an IVA although there are certain exceptions.  The most typical debt types which get included into an IVA are:

  • Loans and overdrafts
  • Council tax arrears
  • Tax debts
  • Mortgage or rent arrears
  • Utility bill debt (e.g. electricity and gas)
  • Credit card debts
  • Personal loans
  • Store cards, charge cards and catalogue debts

And what debts can’t be included into an IVA?

The four main debts which can’t be included into an IVA are:

  • Maintenance arrears
  • Student loans
  • Child support arrears
  • Court fines

So what happens to the debts which can’t be included into an IVA?

If there are debts which can’t be included in the IVA then you’ll need to make a separate arrangement to repay these. While they can’t be incorporated into the IVA it’s important you discuss these debts with your chosen advisor.  This is because he or she will need to determine how much you can afford to repay your other creditors under the IVA, taking into account you have other debts which can’t be included in it. Of course, most creditors will agree to an affordable repayment plan so it’s important to engage with them positively rather than simply hoping the situation will go away (which it won’t).

I owe debts with my partner.  Can we do a joint IVA?

Unfortunately you can’t enter into a joint IVA and your advisor won’t recommend that you include any joint debts into an IVA. That said, whilst you can’t enter into a joint IVA you can take out individual IVA’s which are then connected.  These are known as ‘interlocking’ IVA’s and your advisor will be able to give you more advice as to how they work. If the vast majority of your debts are in joint names – and the other person either doesn’t want to, or won’t enter into an IVA – then your advisor might discuss other debt management options with you.

How do I find out more?

If you are a citizen of the UK and you are struggling to repay your debts, you can get more information about IVA’s either online or through various debt agencies, including the Citizens Advice Bureau.

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