If you have fallen into the world of debt because of credit cards and other similar forms of easy borrowing, do not feel too bad because you are far from alone. You are just one of many thousands of people who have fallen into debt in recent times. For a lucky few these circumstances will be temporary due to short term problems, but for many the debts can pile up to the point at which it is impossible to repay them all.

Debt management plans are designed to help people repay the money they owe in a more affordable way, but when your situation becomes too serious, a payment plan of this sort simply cannot work. When your debts become too large for your income to reasonably deal with, a more drastic solution is required. The individual voluntary arrangement, or IVA, is designed to provide UK residents with an alternative to bankruptcy. It can provide a welcome solution to dealing with very bad debt situations without having to go through the stigma and trauma of bankruptcy.

Sometimes a debt management plan will not work if your debts are too high, but you are still going to need the help of a debt management company. They can set up an individual voluntary arrangement (IVA) for UK residents who are deeply in debt. Individual voluntary arrangements are only available in the UK and you must have an insolvency practitioner involved. By having debt management companies help you they can have everything set in motion. Most of the companies have insolvency practitioners working for them already. They know all the laws involved in setting up an individual voluntary arrangement to get rid of your IVA debts.

An IVA is a legal and therefore binding agreement that you set up with the people you owe money to. You agree to pay them a reduced amount of what is actually owed and they agree to accept that amount. You make regular payments to your creditors, for an amount that you can afford to make, and this continues for up to five years. At the end of the agreed period of time any debts left unpaid are then written off, so an individual voluntary arrangement can provide a solution to debts that otherwise cannot be repaid.

The first step in gaining control of your IVA debts is to draw up a proposal. This is done by you and your debt management company. You will supply them information about your financial situation including all your income and expenses. The information you submit is then used to apply to the courts for an Interim Order.

Creditors can no longer take legal action against you for what you owe them once an Interim Order is in place. A meeting will be arranged where the creditors are allowed to vote whether they agree to the IVA or reject it. If you can secure the agreement of creditors representing 75% of the monetary value of your debts, any other creditors are bound by it too and it can be approved.

The Advantages of an IVA

You will only pay back a percentage of your debts.
You will pay one monthly payment instead of lots of separate payments.
Your creditors cannot change their minds because this is a legally binding arrangement.
It is not publicized in the paper in the way that bankruptcy is, so everyone does not need to know.
Your property will not normally need to be sold, unlike with bankruptcy.
Your professional status is not affected.
An IVA can be a lifesaver when you have nowhere else to turn.

Author's Bio: 

Find out more about dealing with IVA debts on K D Garrow's website which provides help with debt. The site offers free, unbiased advice on a range of debt related issues including ways to get debt written off, recommendations for reputable debt companies and advice on debt settlement, budgeting and borrowing money.