Can an IVA Clear All My Debts?

An Individual Voluntary Arrangement is for a fixed period of time where in the borrower in debt pays a fixed amount. If all payments are made then all debts stated in the IVA will be written off. This means that the person will be completely debt-free upon making all the payments agreed on the IVA. The IVA is a legally binding scheme, meant to protect both the borrower in debt and the creditors therefore it is advisable to include in the IVA proposal all unsecured debts because you won't get cleared of the debts not stated in the proposal. It is also understood that the IVA is legally binding, therefore payments should be made and if missed then the IVA will fail to write off the debts.

When the purpose of IVA or Individual Voluntary Arrangement is to erase your debts, it cannot write off all your debts. Some debts cannot be included in an IVA including: mortgages and loans secured on your property, Hire Purchase Agreements where you still want the product, Magistrates Court Fines, Speeding/parking tickets, debts incurred through fraud, spouse maintenance arrears, CSA arrears, and arrears on a rental property.

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The following are the debts that can be included in an IVA: bank accounts, finance company loans, credit or store cards, outstanding VAT, outstanding Inland Revenue debts, loans from friends and family, hire purchase and repossession shortfalls. Usually in an IVA, the majority of creditors allow borrowers to pay back a proportion of the debt they owe the company over a set period of time, usually within five years.

If in huge debt and needing debt help, be careful not to just give in to several profit making IVA companies that offer IVA with misleading claims. Some IVA companies have adverts claiming that their IVA can write off 95% of their debts. Be wary of these because some are false claims and do not even make clear of the fees payable under the terms of an IVA. These are just mere marketing strategies to gather more profit and will not really write off a percentage of your debt. Do your research first before signing anything.

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