When an individual's debt spirals out of control and they need debt help, there is unfortunately no general-purpose method. Depending on their individual circumstances, including the amount that they owe, their level of income as well as other factors, they might want to consider Bankruptcy, a Debt Relief Order, a DMP (Debt Management Plan) or an IVA (Individual Voluntary Arrangement).

With IVAs in particular, individuals often ask the question "how does an IVA work?"

The first step will be for the debtor to evaluate their debt situation and to contact an IVA advisor. Based on the specifics of their particular circumstances (e.g. how much they owe, how much they earn, etc.), an expert debt advisor should be able to advise whether an IVA is the most ideal course of action, or if another form of debt relief would perhaps be a preferred option. Usually, an IVA is suitable for a person who owes more than ?15,000 in debt to multiple creditors and who has assets they do not want to lose (e.g. their home).

After the information has been ironed out, the advisor will create an IVA proposal to give to the creditors, which will be sent to them before the creditors meeting.

Obviously, before sending it, the advisor should run it by the debtor, who must be okay with it too. At the subsequent creditors meeting, the creditors will have the chance to ask for modifications to be made to the IVA, if required. In the end, if at least 75% of the creditors agree with the terms of the IVA proposal, then its application will be successful - making it legally binding - and payments can begin.

The on-going amounts paid to the creditors will have been set as part of the proposal process, with creditors in agreement with the amount paid back (if they previously agreed to the IVA's terms). An IVA goes on for five years (sixty months), during which time creditors are not allowed to take any legal proceedings against the debtor - unless the IVA fails partway through, of course.

When the last payment on the final month has been issued, the IVA is regarded as completed. Any remaining debts are written off - regardless of how much is left - as part of the process and the IVA agreement. Although the IVA will feature on the debtor's credit history for a further year, they will be declared legally debt-free.

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