When you're choosing between and individual voluntary arrangement (IVA) and bankruptcy it can seem like you're stuck between a rock and a hard place. Neither option is a bed of roses, but making the right choice can make a massive difference to your life.

Individual voluntary arrangements were introduced to the UK more than 20 years ago to provide an alternative to bankruptcy. They were set up because it was felt that Britain did not have an entrepreneurial culture – unlike the USA, where significantly more people are willing to take the risks involved in starting up small businesses – because of the fear of going bankrupt.

Terms of individual voluntary arrangement

The kinds of debts that can be dealt with by individual voluntary arrangements can include personal loans, credit card balances and other forms of unsecured loans. If you have more than £15,000 of unsecured debt then an individual voluntary arrangement could be suitable for you.

An individual voluntary arrangement is a legally binding contract between a debtor and his or her creditors. It allows a person to make a formal proposal to settle a debt within a reasonable and fixed period of time. If you are a homeowner and have equity in your home then you will have to remortgage the property and use the equity to pay some of your debts before paying the individual voluntary agreement.

Individual voluntary arrangement versus bankruptcy

Once you have paid off the part of the debt agreed under the terms of the individual voluntary arrangement, the rest is written off and you will not have the financial restrictions imposed by bankruptcy hanging over you.

This makes an individual voluntary arrangement attractive to many people. Being declared bankrupt – which means your assets are sold and the money distributed, less costs, to creditors. Then, for up to the next 15 years, you will find it hard to get credit of more than £500 and will not be able to run a business in your name – which makes things especially difficult for small traders and the self-employed.

Talk to Varden Nuttall about an individual voluntary arrangement.

Varden Nuttall has been established for more than 15 years and is dedicated to helping people in financial difficulty find a debt management solution through an individual voluntary arrangement (IVA). We employ 90 people, including trained and skilled individual voluntary arrangement administrators, we are one of the largest individual voluntary arrangement companies in the UK and handle more than three per cent of all individual voluntary arrangement applications. To find out more about the company, or to make an appointment to talk about putting an individual voluntary arrangement in place, call us today on 0800 031 9802 or fill in our online enquiry form.