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As an increasing amount of people face ever-mounting debt, some have started to consider individual voluntary arrangements (IVAs) as a way of avoiding bankruptcy. First created in the 80s to help businesses avoid bankruptcy, they are now also available to individuals who are unable to solve their financial problems. To avoid falling into bankruptcy, borrowers can set up an individual voluntary arrangement with their creditor(s). The agreement consists of organizing the return payment either over time or immediately of the owed sum in return for the debt to be written off. Payments can be made either in one lump sum or monthly at a minimum of around $300 a month for a period of a maximum of five years. The benefits for taking up an individual voluntary arrangement with your creditors are vast. The reason more than 6000 people take up IVAs with their creditors every year is down to: protection against court action from your creditors, frozen interest and late payment fees, and a repaired credit rating once your debt is written off. If you have amassed a large number of credit and debit cards, store cards, catalogue debts, overdrafts and personal and business loans, an IVA may be your best option to possible reduce your debt by up to 75%. Though you must be in a position to be able to afford either a lump sum or a monthly payment of at least $300 per month. In order to set up an IVA, an insolvency practitioner must propose the agreement to your creditors; you are not able to propose it yourself. The charges that these insolvency practitioners charge you will vary, but most will take their fees from your monthly payments. It is always good practice to shop around for recommended insolvency practitioners as if up front payments are made and the agreement falls through then you have wasted money you have not got. $20,000 is commonly the minimum amount of debt you need in order to qualify for an IVA. The most important point to consider is that 75% of your creditors, that is, the creditors that own 75 per cent of your debt, must agree to the terms negotiated in the individual voluntary arrangement; if fewer than 75% agree, then you will have to consider other alternatives to protecting your solvency. If the remaining 25% do not agree, they are legally bound to the arrangement anyway.

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