If you are new to Individual Voluntary Arrangements, you may be confused about several factors such as how these arrangements can help you escape bankruptcy, whether they are different from other nonregulated schemes such as debt management programs, and whether you will be eligible for using these arrangements to clear your debts.
Individual voluntary arrangements are government-sponsored programs that aid people in debt to avoid bankruptcy. They allow them to enter into an agreement with creditors to make smaller payments over a set period of time (usually five years).
In normal situations, when a person is unable to repay his creditors for a few months, then the creditors could take action to declare the person bankrupt and use the proceeds from his assets to recover their debts. Entering into IVAs protects the debtor's assets so long as he continues to make the payments as per the agreement.
To be eligible for Individual Voluntary Arrangements, a person must have more than PS15,000 in debt and three creditors. It will not suffice to have three different debt products such as credit cards, housing loans, and personal loans from the same creditor. The individual must have a regular source of income and must be able to make small monthly payments.
If he recommends an IVA, then the next step is to contact an Insolvency Practitioner who can look at your finances, work out the monthly payments that you can afford, and draw up an agreement with the terms.