An IVA, or Individual Voluntary Arrangement is an attractive alternative to bankruptcy. It's worth remembering, however, that the IVA is designed to help people who have extremely serious debts. If you can find a way to arrange new payments with your creditors, or you can cut back on your spending so that you can clear your debts, you should do so. IVAs are specifically for those who are so deeply in debt that there are very few options left to them.

Why you need an IVA specialist

When you apply for an IVA, you need to do so through an insolvency specialist. And IVA is a legal agreement, and it's important that your application and the agreement you make with your creditors is handled properly. The IVA specialist will talk to your lenders on your behalf, encouraging them to accept the terms of your IVA, which will be for fixed monthly payments over a typical five-year term. The specialist will become your lenders' first point of contact and will make sure that the monthly payment you make is divided between your creditors according to the agreement. Here's an illustration of how that might work:

IVA Case Study

You owe money to three credit card companies, your gas and electricity supplier and on your car loan. These five creditors need to be paid as soon as possible. Your IVA adviser will contact all give creditors to ask if they are willing to accept a certain payment each month for the next five years. Once the five years is over, the loan will be treated as cleared.

• Your credit card companies agree to a monthly payment of £50 each; £150 in total.

• Your gas and electricity supplier agrees to a monthly payment of £42.

• Your car loan company agrees to a monthly payment of £137.

The total monthly payment that you must make to the IVA specialist is £329. There may also be an administration fee to pay. You simply make this payment every month and your adviser splits it between your creditors in the agreed amounts.

Please remember that this is only an example. You may have more or fewer lenders, and you may owe greater amounts, which will increase your monthly payments. The most important thing is that you agree a monthly payment that you can afford and that you will be able to continue to afford for the whole of the IVA period. By selecting an experienced and sympathetic IVA adviser, you'll find the process runs smoothly and you will be relieved of the stress that severe debt can cause.

Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find a solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0800 031 9802 or fill in our online enquiry form.