All unsecured debts that you are unable to pay, are covered under an Individual Voluntary Arrangement. So, if you currently owed two thousand pounds to your credit card company, five hundred pounds to a storecard, four thousand pounds in self-assessment tax and twelve hundred pounds in council tax arrears, every part of that debt could be considered as part of an IVA proposal.

An Individual Voluntary Arrangement is proposed by a qualified professional on your behalf to a meeting of your creditors. Under the Insolvency Act of 1986, you will make one affordable monthly repayment sum to the IVA for the life of the arrangement, which is usually five years or sixty months. This is divided up and distributed amongst your creditors. Once the IVA has been agreed, no further charges or interest can be added for the debts declared in the agreement and no company can threaten you will legal action. The IVA is a legally binding agreement and you must maintain the repayment of your monthly sum in order to comply with the terms and conditions of an IVA. It is important to remember that bills for things such as Council Tax will continue to arrive at your door, as the Individual Voluntary Arrangement only covers the arrears on your Council Tax account, up to the date of the beginning of the agreement.

Once the five year or sixty month period has come to an end, your debts to these companies are entirely cleared and your credit record is expunged, although evidence of the IVA will remain on your credit file.

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