What is IVA or Individual Voluntary Arrangement?


Full and final IVA settlement or lump sum IVA settlement is a legal process where there is a contract between you and your credit which cuts your debt to an affordable level and helps you come out of enough debt overhead and thus avoid the consequences of bankruptcy, CCJ'S .

To qualify for IVA you must have minimum debt of around £ 15000 form at least 4 or 5 creditors.

Based on your budget or income a single manageable monthly payment is fixed for 3-5 years, which cuts around 70% of our debt and let you debt-free.

Have a Look of how IVA settlement cuts your debt.

Suppose you borrowed £ 20000 from five creditors so called A, B, C, D and E, but can not afford to repay the loan, you are able to manage only £ 8000.

Amount borrowed from each Creditor






After Full and Final IVA settlement you have to pay ….




D – 1600


So your debt is fixed to an amount, you can easily managed and become free.

We have already discussed about IVA which is legally binding and cuts around 70% of your unsecured debt

Similar to IVA, Debt Management Program is also an agreement between debtors and creditors but it's not legally binding and the monthly transactions or payments are set by a commercial debt management broker, whereas full and final IVA is strictly formal.

Unlike IVA which runs for just 5 years and debtor gets free paying a partial negotiated payments and no further legal actions will be taken in future, In DMP the debt may be negotiated to a minimum partial amount but it may run for several years or may be the case you have to pay enough.

Thus the debt can be severely reduced in IVA, but it badly affects your credit history which appears for 6 years and will create trouble in getting loans or mortgages in future

But with DMP, once you have met your debt you are free to get further loans or mortgages.

If you are having enough debt and can not manage monthly monthly payments and not willing to borrow anything in future, then IVA will be the better option over DMP.


Source by Jeremy Disusa

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