IVA ‘can be the best option’

Taking out an individual voluntary arrangement (IVA) can be the best option for many consumers, a debt expert has said.

National PR officer for Christians Against Poverty Marianne Clough noted there are various ways in which people in debt can seek to tackle their problems and more than one solution.

She noted: “Our experience is that most people with debts want to pay them off and, given the right level of support, they do.”

“However, there are people, like one gentleman recently, who would have been paying off his debts for another 41 years as his income was so small. These people need the insolvency option,” Ms Clough added.

An IVA is one form of insolvency, but a less drastic one than bankruptcy. The latter would involve totally eliminating debts, but has a much more ruinous effect on a credit rating, will disqualify those taking them from holding certain employment positions and cannot be confidential, with the local press allowed to publish news of a filing.

The IVA route involves a negotiated settlement with creditors based on reducing the amount owed and the monthly repayments, with interest frozen and the lower amount being paid back monthly by the customer over a period of up to five years.

Such a move would also help people to achieve at least part of the desire Ms Clough noted to pay back what they owe, with the expert stating people who get into debt tend to do so because their personal circumstances take a major turn for the worse, like illness, redundancy or bereavement.

Media officer for the Money Advice Trust Paul Crayston said recently that one of the advantages of an IVA is that it can protect against repossession.

By Joe White