At present, the IVA is receiving mixed reviews and consumers rely on information from friends and family regarding IVA advice, but five fundamental IVA points can be found within this article.

1. If you have any equity on your property or own any other valuable assets, you may be asked to release some or all of the money as part of your IVA agreement.

2. An IVA is only suitable for people who have unsecured debt to the value of £12,000 or more.

3. Whilst you are working through an IVA, you will not be able to use any of your credit or store cards and your Insolvency Practitioner (IP) will expect you to cut them up. However, if you would like to continue using some form of credit, you can apply for a prepayment credit card so as you can still buy goods online etc… With an IVA, you will pay back at least 75% of your debt over the duration of your payments but with Bankruptcy some people have paid nothing back to their creditors.

4. An IVA is a fixed term, legal binding agreement with all of your creditors so it should not be entered into lightly. You will have a set date to make your payments which must be adhered to for around five years. Your monthly payment will consist of an amount that you can comfortably afford each month. This will leave you with enough money to live on but you may find that you will have to cut back on luxuries. However, the IVA does have its advantages in the sense that payment demands from creditors will cease and you will no longer receive intimidating calls from them demanding payment.

5. Another advantage to an IVA is that, your creditors will be unable to add any further interest or charges to accounts which are covered under the IVA. Once your payments have been settled, you will be able to borrow money and improve your credit rating. .

An IVA is a good protection barrier from your creditors but it is legally binding. If you fail to keep up repayments, you will tear down those protective walls and you could find yourself at the mercy of your creditors again and even face bankruptcy. If you experience difficulties making payments, you must inform your IP straight away so as your circumstances can be reviewed and repayments possibly adjusted. Unlike a debt management plan, you cannot make separate arrangements with your creditors. All creditors have to be included under the IVA and each will receive a fixed rate..