IVA good idea?

An Individual Voluntary Arrangement (IVA) may become necessary for people who have got into financial difficulty and want to clear their debts without getting into bankruptcy.
To put an agreement in place an IVA practitioner is appointed and proposes to creditors that the debtor will pay back only a proportion of what is owed (typically between 30p and 50p in the pound). If 75% of the creditors agree the deal goes ahead and last for 5 years. No interest accrues during this period and when it is over the individual is debt free.
The IVA company will typically propose that the debtor pays back between 30p and 50p in the £1 and if the creditors agree, the IVA contract will last for five years. Interest will be frozen while the debt is being repaid and after the contract has ended, the individual will be debt free. During the contract the individual will not be able to apply for any credit. One of the key benefits of taking out an IVA over bankruptcy is that the individual is safe from repossession.
Although IVAs sound useful, in most instances a good debt management plan will be sufficient to help a person tackle their financial problems. Most IVA companies claim that only around 3% of people that phone its call centres are recommended to proceed with an IVA.
IVAs and bankruptcy are severe methods of dealing with difficult debts. Clearly it is far better to consider carefully your ability to repay personal loans but, where difficulties arise, a consolidation loan should be looked at first.