IVA or Individual Voluntary Arrangement free advice is a programme in UK, which is carefully planned to make a debtor, debt free within 5 years.
The Insolvency Act 1986 to help debtors avoid bankruptcy introduced it.
A debtor has to have at least £15,000 or more as debt with three or more lenders to be eligible for IVA.
It is a financial arrangement, which is legally binding on both the borrower and all his lenders.
It helps the borrower by writing off around 75% of his debt and the rest is payable in equated comfortable monthly repayments.
There are many online and offline companies offering free IVA advice.
One must be careful in choosing a company and should do a lot of research work, preferably on the internet.
A good professional company will help one to overcome his financial problems and debts and start anew his credit history.
However, not choosing the right company may land a borrower in more financial problems.
Usually a licensed Insolvency Practitioner or IP is appointed by the IVA Company to draw up the plan for the debtor.
He calculates the total debt, the number of creditors, the monthly disposable income and valuation of assets, if any.
After the calculation, he fixes a comfortable monthly repayment that the borrower needs to pay, to pay off his debts and come out of his financial burden.
This arrangement is for 5 years and any outstanding balance of debt is written off permanently.
The advantage of such an arrangement is that all extra costs like interest and penalties are frozen along with any pending legal notice.
As this arrangement is legally binding, the creditors cannot harass the debtor with threatening calls to pay off the debt and cannot alter the terms and conditions as laid down.